- June 2014
- Posted By Ninoslav
- 0 Comments
For ambitious, intelligent, and quick witted investors from around the world, forex scalping is an ideal method for making money on the foreign exchange market while keeping risk at relatively low levels – but it’s certainly not for everyone. Forex scalping is a type of incredibly rapid trading, with trader maintaining their investments for a few minutes at the most, and often no more than a few seconds. Profit is made by ‘skimming’ (or scalping) profits from tiny moves in the market, often only a few pips (or a few thousandths of a currency unit), but multiplied through very high volumes to create a profit. The risk with forex scalping remains relatively low, because the transactions are so quick, and the foreign exchange market is stable enough, that it’s unlikely there will be any major downward shifts in the market before the trader is divested. Forex scalping requires many things: a market liquid enough to allow for these high volumes of trades, a brokerage that offers instantaneous (or as close as possible) trades and a high level of precision, and a very specific temperament of investor.
Because it relies on such tiny movements, forex scalping relies on intensive, unrelenting observation of market trends, often using mathematical analysis models such as Fibonacci levels and moving averages, and charts that are able to track stocks on a second by second basis. At the same time, the shrewd investor must observe news alerts and major world events, as so much forex scalping relies on anticipating how the rest of the market will react to these late-breaking developments. The investor must also have a clear head and quick reflexes, so they can rationally evaluate these developments and act upon them before everyone else does.
Finally, this mode of trading also requires an investor who has a large amount to invest, and yet who doesn’t mind a type of investment that’s only going to yield moderate gains with quite a bit of work. The moves are so small that even extended over a very high volume, it may only result in tens of dollars. Of course the trades are quick enough that one can do this 20 or more times per day, if the opportunity arises, making for a slightly higher profit – but this is by no means a ‘get rich quick’ method of trading. Trading from a highly leveraged account is also a good idea, as it will allow the investor to trade with higher volumes.