Forex for a trader
Why is forex scalping illegal

Why is forex scalping illegalForex Scalping – Criticism and Disadvantages. This article is part of our guide on how to use scalping techniques to trade forex. If you haven’t already we recommend you read the first part of the series on forex scalping. Scalping is popular, and profitable for some traders, but it is not without its risks. While trading, many scalpers are similar to marathon runners. They need to capitalize quickly on arising opportunities, and if those opportunities fade, a profitable trade must be a losing one, because a typical scalper will not wait long enough for another opportunity to arise for the same trade. The advantage of this approach lies in the many profit opportunities presented. For a long term trader, even a swing trader, one loss in a trade is by definition a big and important loss. Long term trades require considerable investment in time, and energy before they are profitable, and failure in one is an important setback. The scalper doesn’t suffer from this problem. He can fail in any single trade, regardless of its time or place, and still make a profit if the overall balance of his positions is profitable. This aspect can sometimes reduce stress, and create a more optimistic trading psychology as well.

Yet, short-term trading does not, by any definition, offer the keys to a smooth and risk-free path to great profits. The scalper is playing a game of probability, while the long-term trader is playing the same game with the help of fundamental analysis and strategies. Although each trade is a lot less important for the scalper, in order to profit, he must still succeed in the overwhelming number of his decisions. A scalper will enter and exit his positions while trading a trend, but he still has to make choices about the direction of the main price action. While trading a ranging market, the scalper may not need to make many decisions about directionality, but he has to have a good idea on how long the low volatility environment will last. In other words, discipline and planning are just as important for scalpers, but in a different way in comparison to what is usually experienced by other traders. In this section we’ll analyze the scalping strategy and discuss some of its disadvantages so that you can trade with calmer, more reasonable expectations while employing it. Our purpose is not contradicting the experiences of successful scalpers, or discouraging those who desire to adopt this method for future profits, but merely to help you recall that the strategy does not offer risk-free, easy trades for beginners or undisciplined individuals. The “Brokers Hate Scalpers” myth. First of all, let’s consider this venerable myth that has been publicized over the internet on both forums and blogs dedicated to forex trading. The argument of the propagators of this myth goes as follows: “Scalpers take little risk while trading, and are often successful. In order to hedge their positions, forex brokers counter-trade their clients, with the consequence that if a trader makes a profit, the broker, by counter-trading his position, suffers losses. Of course that makes brokers hate scalpers.” Let’s first state that no forex trader will do himself any good by making real, or imagined enemies of brokers. Regulated brokers are monitored by authorities, and most of the firms in the business are legitimate actors with decent practices.

There’s no way of trading the market without brokers (or ECN’s, but they are not used very often, and have their own disadvantages). And there’s no logic or merit in demonizing brokers as crooks or thieves. We, as traders, want to trade the markets, and to do that we need the services of firms which are monitored and regulated by the authorities. In previous sections we have already discussed how brokers hedge against client losses, and noted that a majority of client positions can be netted out against each other without the broker having to commit any funds. In fact, when such matches can be found, the broker does not even need to pass the buy or sell order client to the bank: all that it must do is matching the order with another customer’s opposing order while pocketing the commission, and assuming zero risk. The problem with scalpers arises because their rapid entryexit orders make the task of hedging hard for forex brokers with slow servers or outdated software. When they can’t do so, they get nervous, become worried that the scalper is trying to manipulate the system (exploiting latency issues, as they are called), and sooner or later terminate the forex account of the scalping trader. There are no statistics on the success ratio of scalpers, but there is no reason to assume to their success rate is any different from that of the overall market. Indeed, scalping is a demanding, and somewhat more sophisticated trading style in comparison to day-trading, or swing trading; there is no reason to expect that beginners will do better in scalping in comparison to their performance in these other trading styles. Our analysis is confirmed by the public statements of many forex brokers present on websites and blogs throughout the web. The majority of established brokers actually have the stated policy of allowing scalpers to open or close positions in as short a time period as they desire. What is more, since scalpers trade much more frequently than regular traders, they are a good source of revenue for any kind of forex broker. No broker with an updated software and platform would be willing to deny scalpers the style which they like most unless he wants shrink his own business. Is it a good idea to scalp in strongly trending markets? Many traders favor scalping in strongly trending markets.

This approach is defended on the basis of the notion that scalpers thrive in volatility, and that trends cause a great deal of volatility creating many trading opportunities. But is this idea justified on the basis of facts and analysis? Let’s first remember that while scalping, one misplaced, carelessly created trade can wipe out the gains of tens of successful trades in a short time. A scalper needs consistency above everything else. Discipline in trade sizes, take profit, and stop-loss orders, and a degree of skepticism towards arising opportunities are important components of a successful trading strategy. Let’s ask ourselves, then, which kind of markets offer the best conditions for the implementations of these principles? Would scalpers thrive in strongly trending and volatile markets, or quiet, calm markets where activity is subdued and volatility is low? Naturally, the best conditions will be found in the latter. Calmer markets allow us to exploit small fluctuations over a long time with little risk and good profits. Trending markets move rapidly, with widening and contracting spreads, where exiting a position before it reaches its full potential can be dangerous, and maintaining a calm and composed attitude is an additional problem. We read online that scalping is best in strongly trending, liquid, volatile markets, and some of us wonder why so many people subscribe to these beliefs. This attitude is present either because the traders who write the articles don’t have that many experiences in scalping or because they use scalping strategies on a trend following scheme. The latter approach is not very useful to beginners, however, because they mostly choose the scalping style to make quick profits without worrying much about analysis or strategy. Picking up coins from a railroad.

Indeed, scalping after news releases, or during very strong, volatile micro-trends can be similar to picking up coins from a railroad for a living. A determined practitioner can create a sizable income from this practice if he is persistent and patient enough, but also takes a small risk that can be extremely costly if it is not properly protected against. What is the risk? Of course, it is that he will be run over by the approaching train of a market shock, and will lose all his profits, and his ability to make any profit in the future as well. Is this a valid negotiation, a compromise? The answer to the question depends on your personality and approach to life in general. During a trend, the scalper cannot exploit “idle volatility”, or the directionless fluctuations that are often found in ranging markets. Since the market is strongly directional, he has to find a way of identifying the trend and exploiting it with small sized, and numerous orders. Scalping is probably not the best choice for a beginning trader. The style demands constant attention, concentration, and diligent adherence to principles. The fact that trades are small-sized and quick means that there is a need to be very methodical about trade sizes especially, because irregular sizes will make us blind while trying to determine the performance of our account, and prevent the achievement of a smooth, regularly rising trading account. For a real scalper, fear is not the main emotional issue, unlike the case with many other types of traders. Since risk in each trade is usually very small, and it is possible to stop and exit any position without much trouble, there is little danger of the account being wiped-out or greatly reduced as a result of any single trade. Yet, the major emotional issue faced by scalpers is overtrading and agitation.

Scalping requires patience. The trader must open many positions in the course of a single hour on an ordinary day, and at times, the slow accumulation of profits can be very frustrating. The trader may regret that he’s spending so much time trying to profit from minute price fluctuations. He may feel dismayed that so much effort bears so little fruit. Many other factors can lead to dissatisfaction and unhappiness which can cause the trader to enter an agitated state of mind. And yet, agitation is the worst enemy of a scalper. His finger must press the right buttons on the screen, must enter the correct prices, and place the proper decisions many times during the trading hours, and an uneasy, nervous mind will be prone to making many errors. A nervous mind will make the scalper feel like he’s fighting the markets, and lead to many unjustified and deleterious trading decisions. The scalper must know where to stop, and yet if he’s nervous, he’ll be unable to stop.

Overtrading, based on the belief that the next trade will be the successful one “since one’s luck can’t go wrong so often” may quickly erode the account balance of any trader, and it’s especially dangerous for the scalping strategy. It is on the whole a good idea to suspend scalping activity if you’re feeling that the emotional burden of scalping is too much for you at any time. Do not fight yourself, or the market, but stop trading for a while. It is certainly better than losing your wits trying to profit by battling the market, in other words, trying to improve by worsening your condition. Getting rich, or enriching the broker? The scalper is running against time in his dealings with the broker. He will make profits, suffer losses, open and close positions with different scenarios in mind, but in all that while he will still be paying the broker his due in the spread. Regardless of the size of profits or losses, the broker’s share must be paid, and the trader has to earn at least that much to make sure that his account is not bleeding money. The broker’s fee in the spreads is almost negligible when trading on a long term basis. A 3-pip spread cost is insignificant for a trader who makes 50-60 pip profit in trading, or even more in positions held over even a longer time. But the scalper’s profits are usually much smaller, in many cases closer to 5-10 pips for a competent person, and the spread is anywhere between 30 to 50 percent of the gains.

Any scalper should keep a list of his trades which shows his actual gains, losses, and the amount that is paid to the broker. If the cost of the spread is about twice as big as the profits of trading, it is a good idea to change the trading strategy used, or to change the broker and open an account with another one which requires lower spreads. If average profit in pips is equal to the spread, our trade record can be improved, and better profits are possible. In the unusual case that the scalper’s profits are a lot larger than the spread it is time to add funds to the account, or perhaps increase leverage gradually. Traders need not be worried when the broker is making good profits. As long as the relationship is reciprocal, there is no harm in seeing the broker making gains which are even more sizable than what is achieved by the trader. The threshold is profitability. As long as we are gaining from activity, there’s no reason to be worried about the fact that the broker is also benefiting from the relationship. Let’s conclude this part by briefly discussing the dangers posed by faulty interpretation of data. Sadly, many beginning scalpers still evaluate their results on the basis of some ethereal concept termed luck. In a string of wins, good luck is thought to be the causal agent, while a strong of losses makes us think that we have no luck on that day. Since many believe that one cannot have bad luck continuously, there’s a tendency to expect profits soon after a string of losses, and vice versa. Since individual results in short term trading are random, there is no justification for this reasoning, and at least as far as mathematics is concerned, a gain or a loss are equally likely even after a string of ten or twenty gains or profits in a raw. The other issue which traders must grapple with while evaluating their results is the clustering illusion. In this case, traders will see “order” in a string of random data (such as a list of scalping trade results). After seeing a string of, let’s say, five wins, they will begin to assume that this time their strategy makes wins more likely, and in response they will increase trade sizes, with often disastrous results. In order to achieve profitability and a degree of safety in scalping it is extremely important that consistency in trade sizes be maintained.

If you make small profits with ten 1 lot scalps, and occasionally decide to throw in 3, 2 lot trades where you feel you’re doing well, you’re taking the risk of never going beyond breakeven, in the best case scenario. Make sure that you don’t get deluded by luck, or the clustering illusion to randomize your trade sizes. You can instead use methods like the z-score to see if the win-loss streaks of your scalping strategies are any different from random results. Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. 171 . wrayjustin Trading Pennies for Dollars FXMarketMaker Professional Trader Hot_Biscuits_ Models and Bottles spicy_pasta RichJG Financial Astrologer El_Huachinango MOD finance_student Prop Trader AutoModerator » the front page of the internet. and subscribe to one of thousands of communities. 1 marcm28. Want to add to the discussion? –NormanConquest Live Trader 6 7 8 1 (7 ) –Tride5 2 3 4 1 (5 ) –Tride5 0 1 2 1 (3 ) –Tride5 0 1 2 1 (1 ) –marcusrider Live Trader 2 3 4 1 (0 ) –enivid Live Trader 2 3 4 1 (0 ) –Rebuta 0 1 2 1 (1 ) Reddit for iPhone Reddit for Android mobile website. , . © 2018 reddit . . REDDIT and the ALIEN Logo are registered trademarks of reddit inc. ? Rendered by PID 14636 on r2-app-0cebafb89f81629dd at 2018-08-25 16:37:56.711091+00:00 running b1939d2 country code: UA. Scalping in the Forex Markets: A Beginner's Guide. In the investment world, scalping is a term used to denote the "skimming" of small profits on a regular basis, by going in and out of positions several times per day. Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is to make a profit by buying or selling currencies and holding the position for a very short time and closing it for a small profit. Many trades are placed throughout the trading day and the system that is used by these traders is usually based on a set of signals derived from technical analysis charting tools, and is made up of a multitude of signals, that create a buy or sell decision when they point in the same direction.

A forex scalper looks for a large number of trades for a small profit each time. Scalping is not unlike day trading in which a trader will open a position and then close it again during the current trading session, never carrying a position into another trading period or holding a position overnight. However, while a day trader may look to take a position once or twice, or even a few times a day, however, are much more frenetic and trade multiple times in a session. And whereas a day trader may trade off the five-minute and the 30-minute charts, scalpers will often trade off of tick charts and one-minute charts. In particular, some scalpers like to try and catch the high-velocity moves that occur around the time of the release of economic data and news, such as the announcement of the employment statistics or GDP figures – whatever is high on the economic agenda. Scalpers like to try and scalp between five and 10 pips from each trade they make and to repeat this process over and over throughout the day. Using high leverage and making trades with just a few pips profit at a time can add up, especially if your trades are profitable and can be repeated many times over the course of the day. Remember, with one standard lot, the average value of a pip is about $10. So, for every five pips of profit made, the trader can make $50 at a time. Ten times a day, this would equal $500. Scalping, though, is not for everybody, and one thing is for sure: You have to have the temperament. Scalpers need to love sitting in front of their computers for the entire session, and they need to enjoy the intense concentration that it takes to scalp. You cannot take your eye off the ball when you are trying to scalp a small move, such as five pips at a time. Even if you think you have the temperament to sit in front of the computer all day, or all night if you are an insomniac, you must be the kind of person who can react very quickly without analyzing your every move. There is no time to think. Being able to "pull the trigger" is a necessary key quality for a scalper. This is especially true in order to cut a position if it should move against you by even two or three pips. Market-Making Versus Scalping.

Scalping is somewhat similar to market-making. When a market maker buys a position he is immediately seeking to offset that position and capture the spread . (This is not referring to those bank traders who take proprietary positions for the bank.) The difference between a market maker and a scalper, though, is very important to understand. A market maker earns the spread, while a scalper pays the spread. So when a scalper buys on the ask and sells on the bid, he has to wait for the market to move enough to cover the spread he has just paid. In the converse, the market maker sells on the ask and buys on the bid, thus immediately gaining a pip or two as profit for making the market. Although they are both seeking to be in and out of positions very quickly and very often, the risk of a market maker compared with a scalper, is much lower. Market makers love scalpers because they trade often and they pay the spread, which means that the more the scalper trades, the more the market maker will earn the one or two pips from the spread. (Find out how this tool magnifies both gains and losses. Check out "Forex Leverage: A Double-Edged Sword .") How to Set up for Scalping. Setting up to be a scalper requires that you have very good, reliable access to the market makers with a platform that allows for very fast buying or selling. Usually the platform will have a buy button and a sell button for each of the currency pairs , so that all the trader has to do is hit the appropriate button to either enter or exit a position.

In liquid markets, the execution can take place in a fraction of a second. Remember that the forex market is an international market and is largely unregulated, although efforts are being made by governments and the industry to introduce legislation that would regulate "over the counter" forex trading to a certain degree. As a trader, it is up to you to research and understand the broker agreement and just what your responsibilities would be and just what responsibilities the broker has. You must pay attention to how much margin is required and what the broker will do if positions go against you, which might even mean an automatic liquidation of your account if you are too highly leveraged. Ask questions to the broker's representative and make sure you hold onto the agreement documents. Read the small print. The Broker's Platform. As a scalper you must become very familiar with the trading platform that your broker is offering. Different brokers may offer different platforms, therefore you should always open a practice account and practice with the platform until you are completely comfortable using it. Since you intend to scalp the markets, there is absolutely no room for error in using your platform. If you press the "Sell" button by mistake, when you meant to hit the buy button, you could either get lucky if the market immediately goes south so that you profit from your mistake, but if you are not so lucky you will have just entered a position opposite to what you intended. Mistakes like these can be very costly. Platform mistakes and carelessness can and will cause losses. Practice using the platform before you commit real money to the trade. (Learn more about how to set each type of stop and limit when trading currencies in " How to Place Orders With a Forex Broker .") As a scalper you only want to trade the most liquid markets . These markets are usually in the major currency pairs, such as EURUSD or USDJPY.

Also, depending on the currency pair, certain sessions may be much more liquid than others. Even though the forex markets are trading for 24 hours a day, the volume is not the same at all times of the day. Usually, when London opens at around 3 AM EST, volume picks up as London is the major trading center for forex trading. At 8 AM EST, New York opens and adds to the volume being traded. Thus, when two of the major forex centers are trading, this is usually the best time for liquidity. The Sydney and Tokyo markets are the other major volume drivers. Guaranteed Executions. Scalpers need to be sure that their trades will be executed at the levels they intend. Therefore, be sure to understand the trading terms of your broker. Some brokers might limit their execution guarantees to times when the markets are not moving fast. Others may not provide any form of execution guarantee at all. Placing an order at a certain level and having it executed a few pips away from where you intended, is called " slippage ." As a scalper you cannot afford slippage in addition to the spread, so you must make sure your order can and will be executed at the order level you request. Redundancy is the practice of insuring yourself against catastrophe. By redundancy in trading jargon, I mean having the ability to enter and exit trades in more than one way. Be sure your internet connection is as fast as possible. Know what you will do if the internet goes down. Do you have a phone number direct to a dealing desk and how fast can you get through and identify yourself?

All these factors become really important when you are in a position and need to get out quickly or make a change. Choosing a Charting Time Frame. In order to execute trades over and over again, you will need to have a system which you can follow almost automatically. Since scalping doesn't give you time for in-depth analysis, you must have a system that you can use repeatedly with a fair level of confidence. As a scalper you will need very short-term charts, such as tick charts, or one - or two-minute charts and perhaps a five-minute chart. Getting Prepared to Scalp. 1. Get a Sense of Direction. It is always helpful to trade with the trend, at least if you are a beginner scalper. To discover the trend, set up a weekly and a daily time chart and insert trend lines , Fibonacci levels and moving averages . These are your "lines in the sand," so to speak, and will represent support and resistance areas. If your charts show the trend to be in an upward bias (the prices are sloping from the bottom left of your chart to the top right), then you will want to buy at all the support levels should they be reached. On the other hand, if the prices are sloping from the top left down to the bottom right of your chart, then look to sell each time the price gets to a resistance level.

Depending on the frequency of your trades, different types of charts and moving averages can be utilized to help you determine direction. Is Forex Scalping illegal ? Is forex scalping illegal ? This is a question I get asked very often. You would often find brokers that say you cannot use scalping as your trading strategy on certain accounts. You also find some brokers that use this as an excuse not to pay you out when you request a withdrawal. Scalping in itself is not illegal, there are types of scalping not permitted at all and different forex brokers do have different policies on scalping. Make sure with your broker before opening a live account. Forex Scalping Illegal Practices. When I say illegal in this sense I use the term quite loosely. There are some scalping strategies that are frowned upon and take a shape similar to card counting in casinos. There are 2 strategies which most brokers will not tolerate. Arbitrage – this is a method whereby a trader ( known as an arbitrageur ) compares pricing mismatches from 2 or more brokers and takes advantage of this. In most cases the price mismatch would happen due to a delay in the data feed of one of the brokers. If the broker can prove that you are using this method then they will not pay your profits.

To find out more about arbitrage and to see how it works : forexbrokerz. comforex-arbitrage this method, according to many brokers, makes forex scalping illegal. Churning – this method is used by introducing brokers (people who introduce clients to a forex broker and get paid for every trade that the client enters). Churning is entering into hundreds of trades every minute to get the maximum commission out of a forex broker. The goal is never to grow the actual trading account but rather to make commission which is higher than the original trading deposit thus resulting in a net profit. Using this method also makes forex scalping illegal according to brokers. So is forex scalping illegal ? The answer is NO , there are methods which incorporate scalping which are not allowed by forex brokers but this does not make scalping illegal. Before opening a live account with a forex broker ask them whether or not scalping is allowed, most brokers nowadays do allow forex scalping. Forex Scalping – Extensive Guide on How to Scalp Forex. Forex scalping is a popular method involving the quick opening and liquidation of positions. The term “quick” is imprecise, but it is generally meant to define a timeframe of about 3-5 minutes at most, while most scalpers will maintain their positions for as little as one minute. The popularity of scalping is born of its perceived safety as a trading strategy. Many traders argue that since scalpers maintain their positions for a brief time period in comparison to regular traders, market exposure of a scalper is much shorter than that of a trend follower, or even a day trader, and consequently, the risk of large losses resulting from strong market moves is smaller.

Indeed, it is possible to claim that the typical scalper cares only about the bid-ask spread, while concepts like trend, or range are not very significant to him. Although scalpers need ignore these market phenomena, they are under no obligation to trade them, because they concern themselves only with the brief periods of volatility created by them. Is Forex Scalping for you? Forex scalping is not a suitable strategy for every type of trader . The returns generated in each position opened by the scalper is usually small; but great profits are made as gains from each closed small position are combined. Scalpers do not like to take large risks, which means that they are willing to forgo great profit opportunities in return for the safety of small, but frequent gains. Consequently, the scalper needs to be a patient, diligent individual who is willing to wait as the fruits of his labors translate to great profits over time. An impulsive, excited character who seeks instant gratification and aims to “make it big” with each consecutive trade is unlikely to achieve anything but frustration while using this strategy. Attention is essential for the forex scalper. Scalping also demands a lot more attention from the trader in comparison to other styles such as swing-trading, or trend following. A typical scalper will open and close tens, and in some cases, more than a hundred positions in an ordinary trading day, and since none of the positions can be allowed to suffer great losses (so that we can protect the bottom line), the scalper cannot afford to be careful about some, and negligent about some of his positions. It may appear to be a formidable task at first sight, but scalping can be an involving, even fun trading style once the trader is comfortable with his practices and habits. Still, it is clear that attentiveness and strong concentration skills are necessary for the successful forex scalper. One does not need to be born equipped with such talents, but practice and commitment to achieve them are indispensable if a trader has any serious intention of becoming a real scalper. Automated trading systems. Scalping can be demanding, and time-consuming for those who are not full-time traders.

Many of us pursue trading merely as an additional income source, and would not like to dedicate five six hours every day to the practice. In order to deal with this problem, automated trading systems have been developed, and they are being sold with rather incredible claims all over the web. We do not advise our readers to waste their time trying to make such strategies work for them; at best you will lose some money while having some lessons about not trusting anyone’s word so easily. However, if you design your own automated systems for trading (with some guidance from seasoned experts and self-education through practice) it may be that you shorten the time which must be dedicated to trading while still being able to use scalping techniques. And an automated forex scalping technique does not need to be fully automatic; you may hand over the routine and systematic tasks such as stop-loss and take-profit orders to the automated system, while assuming the analytical side of the task yourself. This approach, to be sure, is not for everyone, but it is certainly a worthy option. Some words on trade sizes and forex scalping. Finally, scalpers should always keep the importance of consistency in trade sizes while using their favored method. Using erratic trade sizes while scalping is the safest way to ensure that you will have a wiped-out forex account in no time, unless you stop practicing scalping before the inevitable end. Scalping is based on the principle that profitable trades will cover the losses of failing ones in due time, but if you pick position sizes randomly, the rules of probability dictate that sooner or later an oversized, leveraged loss will crash all the hard work of a whole day, if not longer. Thus, the scalper must make sure that he pursues a predefined strategy with attention, patience and consistent trade sizes. This is just the beginning, of course, but without a good beginning we would diminish our odds of success, or at least reduce our profit potential. Now let’s take a look at the contents of this article where forex scalping is discussed with all its details, advantages and disadvantages. Our suggestion is that you peruse all of this article and absorb all the information that can benefit you. But if you think that you’re already familiar with some of the material, to shorten your route, we present the table of contents of this article. 1. How scalpers make money: Here we will take a look at the logic behind scalping, and we’ll discuss the best conditions and necessary adjustments which must be made by a scalper for profitable trading. 2. Choosing the right broker for scalping: Not every broker is accommodative to scalping.

Sometimes this is the stated policy of the firm, at other times the broker creates the conditions which make successful scalping impossible. It is important that the novice scalper know what to look for in the broker before opening his account, and here we’ll try to enlighten you on these important points. 3. Best currencies for Scalping: There are currency pairs where scalping is easy and lucrative, and there are others where we advise strongly against the use of this strategy. In this part we’ll discuss this important subject in detail and give you usable hints for your trades. 4. Best times for Scalping: There is an ongoing debate about the best times for successful scalping in the forex market. We’ll present the various opinions, and then offer our own conclusion. 5. Strategies in Scalping: Strategies in scalping need not differ substantially from other short-term methods. On the other hand, there are particular price patterns and configurations where scalping is more profitable. We’ll examine and study them in depth in this section. a. Range Scalping: Some traders consider ranging markets better suited for scalping strategies. Here we’ll examine why, and how to scalp under such conditions.

b. Breakout Scalping: We’ll examine news breakouts, and technical breakouts separately and discuss suitable scalping strategies for both. c. Trend Scalping: Here we’ll take a general look at forex scalping in trending markets. 6. Trend Following while Scalping: Trends are volatile, and many scalpers choose to trade them like a trend follower, while minimizing the trade lifetime in order to control market risk. In this part we’ll examine the usage of Fibonacci extension levels for scalping trends. 7. Disadvantages and Criticism of Scalping: Scalping is not for everyone, and even seasoned scalpers and those committed to the style would do well to keep in mind some of the dangers and disadvantages involved in using the style blindly. 8. Conclusions on Scalping: In this final section we’ll combine the lessons and discussions of the previous chapters, and reach at conclusions about who should use the forex scalping trading style, and the best conditions under which it can be utilized. Forex Scalping: Why it is bad for you. Hello traders! Today we will be talking all about forex scalping and why people do not recommend it. But first, let’s have a little background check of what is forex trading. So, forex trading is the trading of foreign currencies. The forex market is the place where currencies are traded. The forex market is one of the biggest and fast-paced markets in the world. You should also know that in forex all the currency trading is done in pairs. It operates differently from the stock market wherein you can buy or sell a single stock. Forex trading is a 24-hour market that only closes from Friday evening to Sunday evening.

Now, let’s jump into our main discussion which is forex scalping and why it is bad for you. First of all, forex scalping is a trading strategy used by forex traders to buy or sell a currency pair and then they hold it for a short period of time in an attempt to make a profit. However, we will not focus about what is forex scalping. We are here to talk about how bad this kind of strategy is. Forex scalping contains a large amount of leverage so that a small change in a currency may equal to a respectable profit. Forex scalping can be most lucrative around periods of high volatility and significant moves in the market. As a trader, you should take note that scalping does come with risks that will put you into a bad situation. Because when a trader enters a position which he or she cannot exit, he or she can be left with an open position that can potentially wipe out some of his or her profits. What Does a Scalper Do? A scalper is the one who trades in the equities and futures market. He also holds a position for a very short period in an attempt to profit from the bid-ask spread. A person will buy large quantities of in-demands items, including new electronics or event tickets, at a regular price, expecting that the items will sell out immediately. Then a scalper will enter and then resell the items at a higher amount. Transactions like this can often occur on the black market. You should know that this kind of scalping is illegal under certain conditions. This alone can lead you to the end of your trading journey. The rapid trading that occurs in the legitimate scalping usually results in small gains. This is not suitable for you or to anyone who wants to earn.

Another reason for you to know that this type of strategy is not suitable to anyone is this illegal type of scalping in investments wherein an investment advisor buys a security, then recommends it as an investment, after that he will guard the price as it go up based on his recommendation, then later sells the security for a profit. The Cons of Forex Scalping. Now, we will be discussing the cons that come with forex scalping. This will help you determine how bad this strategy is for you and to your profits. Cons. One of the biggest disadvantages of this strategy is that it can be very hard to predict how the market will move on a minute to minute basis. While some individual can follow the trend and make profit over the long-term, it can be more difficult to say what will happen within the next five minutes. Meanwhile, some experts believe that it is impossible to use technical indicators in order to consistently be profitable with short-term scalping trades. You have to be a consistent winner in order for you to be profitable. In this type of strategy, you need to win one trade after the other in order for you to accumulate a large amount of return.

However, when you utilize a long-term trading strategy, you can potentially make a sizable amount of money with only one trade. With forex scalping, you have to win repeatedly in order to make a difference. With just these two cons mentioned above are enough to know that this strategy is not good for you and anyone in the field of trading. Forex scalping may seem easy to use to make money in the field of trading but once you get into it you will find that your losses are so much bigger than your wins. Forex scalping will put you into a hole that you cannot get out of. Most of the types of forex scalping are illegal and that could literally destroy and end your trading carreer. Just remember that these cons will show you that using forex scalping as your forex strategy is not good for your profits since you could lose all of it if you cannot win a trade consistently. Because once you get into it you might lose everything you worked hard for. There is so much more to learn than forex scalping, learn more about trading and their strategies today by visiting and joining us at HQBroker . We will give you a daily news roundup about forex, stocks, commodities, and indices. If you want to be updated daily open an account today!

Forex Scalping can also be called a quick trading. It is a method where traders allow their positions to last only for a matter of seconds, to a full minute and rarely longer than that. (As a rule if a trader holds to a position for more than a minute or two it is considered no longer a scalping, but rather a regular trading.) The purpose of scalping is making small profits while exposing a trading account to a very limited risk, which is due to a quick openclose trading mode. There wouldn’t be any point in scalping for many traders if they weren’t offered to trade with highly leveraged accounts. Only ability to operate with large funds of, actually, still virtual money, empowers traders to profit from even a 2-3 pip move. How do they do it? Suppose a scalper opens a trading position of 100 000 units with EURUSD. For each pip he will now earn $10… Closing in with only a 3 pip profit brings it up to $30 — not bad for less than a minute of work… Now, you would probably ask what Forex brokers think about it , because if a scalper constantly wins, the broker would obviously sustain some losses. That is why the other popular discussion topic is always at scalpers’ attention: What Forex broker would allow you to scalp the market? Obviously, dealing desk brokers would not agree with scalpers’ trading style and most likely will ask a trader to change hisher trading habits or to find another broker. But, even if a scalper stays in, there is another method to slow scalper's performance down and it is to set delays between an initiation of the order and its actual filling. The reason behind it is that dealing desk brokers need time to countertradeprocess each order to prevent own losses in case a trader closes in profit.

The broker that will not object to scalping is the one that has the best trades processing automated platform. Using straight through processing there is no intervention between a trader and a market maker — the software is taking care of the whole business process. So, it’s more likely a broker with a “slow” business processing platform would object to scalper’s trading style. You can read some more info about scalping and find useful tips for scalpers at Facts about Forex Scalping and useful Tips. Now, we welcome you at our Forex Scalping Strategies Collection to discover trading strategies that can be used for scalping in Forex. Forex Scalping EA Results. EURUSD M5 $5,000 Deposit $549,078,465 Net Profit. GBPUSD M5 $5,000 Deposit $581,579,308 Net Profit. EURCHF M5 $5,000 Deposit $2,196,974,295 Net Profit. EURGBP M5 $5,000 Deposit $1,413,514,344 Net Profit. What is Forex Scalping?

Scalping trades can last just a few minutes and add up to many pips when done consistently and accurately just like the Forex Scalping EA does. Instead of waiting hours, days or even weeks for trades, forex scalping gives plenty of quick fire trading opportunities. These quick scalping trades can grow your account balance very quickly and with little risk. However, it takes years of training and scalping experience to be able to scalp the forex market successfully which is why you need this Forex Scalping EA to do all of the hard work for you whilst you just enjoy the HUGE profits it generates! What is the Forex Scalping EA Strategy? This forex scalping strategy has been around for many years and is extremely profitable as you can see from the trading results on this page. It has now FINALLY been automated to perfection thus making it much easier to use and giving everyone access to it. It will continue to work well as the coding logic behind this forex scalping robot ensures that it enters and exits trades depending on the current market conditions and sticks to the rules of this proven scalping strategy. In fact, the trading startegy incorporated by this forex robot worked all the way back in to the 90's! There is no need to change what is working now and has been since the 90's turning a few hundred dollars into MILLION$ during the process! MyFxBook Verified Results. How do I use the Forex Scalping EA? It is very easy to start using the Forex Scalping EA. All you need to do is download the Forex Scalping EA and install it on the free MetaTrader 4 trading platform. If you use Dukascopy there is a JForex version provided. Easy to follow instructions are included and it will only take you around 5 minutes to setup.

You can then run the Forex Scalping EA on multiple currency pairs on your demo or real trading account. Once up and running you don't need to do anything else so you can enjoy your free time whilst this forex scalping robot looks for trades and makes money for you on auto-pilot! This is the easiest and the best way to make money from scalping the forex market. If you do not like the Forex Scalping EA then you get your money back - as simple as that! Forex Scalping EA Profit Calculator. Earnings Disclaimer. U. S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to BuySell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING.

ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. Hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. All information on the Forex Scalping EA website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold Forex Scalping EA and any authorized distributors of this information harmless in any and all ways. Your purchase of Forex Scalping EA serves as your acknowledgement and representation that you have read and understand these TERMS OF USE and that you agree to be bound by such TERMS OF USE ("Agreement"). You accept that the agreement can be changed at any time and that you must comply with any changes made to the agreement.

Copyright © Forex Scalping EA. All Rights Reserved. The use of this website constitutes acceptance of our user agreement and any changes made to the agreement. Forex Scalping Facts And Fictions. So, you think you want to try scalping! Just because it seems like an easy way to score a small profit within a minute, this is not always true. Although it is very fast-paced, it can be rewarding as long as you can make the correct decisions within split seconds, and of course as long as your broker doesn’t try to make you lose through increasing the spread, re-quoting and… . It is much like a fast motion video game and though it may seem like fun, it isn’t always. Still, scalping is a trading skill you may want to learn, or at least know how it works, and can build your confidence when engaging in alternate forms of trading such as day or swing trading. So what is scalping, in case of forex, forex scalping? Scalping is a method of trading where a trader “skims” small profits continuously. It is the act of entering and exiting positions several times in one day while trying to make profits during high velocity moves, a scalper will act quickly on releases of economic data and other significant news events that influence trading activity. Although similar, scalping is not the same as day trading. While day trading, a trader will open a position once or twice within one day, but close it before the day is through. He will never leave the position open overnight or carry it into another session. A day trader opens and closes positions once or maybe a few times a day based on information they obtain from five minute, fifteen minute or 30 minute charts. A scalper is even more feverish as he aims to skim tiny profits multiple times through going in and out of positions numerous times within a single day. This trader makes trades according to data from tick charts or one minute charts.

As day traders chase after few profits involving dollars and cents per share or unit, scalpers aim to make numerous gains on trades involving between five and ten pips (fractions of pennies). They act fast and furiously when conducting transactions. When trading on standard lots, these petty gains add up. The average made on one pip for trading one lot is $10 and if five pips are involved, $50 can be made on a single trade. If this trade is successfully made ten times within a trading period, the trader can profit by $500. Of course, if everything goes properly and without any problem. Sometimes just one single position takes the profit made through several winning positions down the drain. Should You Consider Forex Scalping? What about you? Should you consider scalping? Scalping is very fast paced and requires great persistence and concentration. You must focus steadily on economic activity and react on it quickly. Also, you must be comfortable sitting at a single computer screen for hours on end. You need to be able to make decisions on the spur of the moment and thus, be on your toes at all times. If your attention strays for even a second, you can easily miss out on profits.

Hence, it is not advisable to attempt forex scalping. Redundancy is yet another aspect of forex scalping. By carrying out the same actions over and over, you can minimize your chances of facing catastrophe. Likewise, you need the skill to jump into and out of positions using more than one method. Fast and reliable Internet access must be a high priority for you as well as knowing how to react if your system goes down. You need to be able to contact a dealing desk via phone and identify yourself quickly. Keeping good records must be a high priority to you as well. Once you maintain a hard copy of your past training activities, you can review them periodically. This will help you improve your trading skills as you learn from your past mistakes. Simply take screenshots of your trades and make a printed copy of each to put in a journal. Do you really have to handle all these stress and hassles that forex scalping has? Novice traders like to try forex scalping or day trading, because they like to make some money everyday and close the computer. They don’t like to leave any positions open for several hours, days, or weeks.

They hate setting any stop loss and lose money because of it. They are afraid to see they have lost money the next day they turn on their computers. Maybe these are all good reasons, but the problem is scalping or even day trading is not the solution, and if your goal is making some money through forex trading, you can not do it consistently if you do scalping or even day trading. Making some money here and there doesn’t make you a profitable trader in long term. You have to choose a way the makes money for you consistently. I will tell you how. Why Is Scalping So Popular? What are the best ways of scalping? And why has scalping become so popular? First of all, there is no one popular method, but this act has become so extremely main stream with traders (as much as 95%) and is overwhelming the Forex market. Over the years, myths about price movements in Forex trading have developed, all which have no factual proof. A first myth is that Forex prices move according to some form of scientific formula making these movements easy to predict. This is nonsense since the Forex market is made up of humans and because humans are unpredictable, so are these markets.

Forex prices move with great uncertainty on the short time frames like 1min and 5min, and thus after so many trades, you are trading on random volatility or maybe even “market noise.” To win, you need to get the odds on your side, but that is not always so easily done. A second myth is that because of the scientific accuracy concept, you can win the majority of your trades (as much as 90%). However, past successful scalpers are likely to say they won less than half of their trades rather than almost all of them. Even those that have said to scored up to 90% trade wins have no basis to prove why they have done so. A third myth is that you can trade with an incredibly tight stop loss or on as little as five pips. That is merely based on random volatility and there is no evidence that such a trading practice will work in the real world. A five pips stop loss can easily get hit by a small price or spread fluctuation. No matter what anyone says, playing on the Forex market is not a way to make easy money. Also remember, brokers like scalpers since they conduct numerous transactions and thus, it means more money in commissions for them. Hence, the forex scalping strategies and market are extremely dangerous, especially for those who enter it with pure emotional impulse. When Can Forex Scalpers Trade?

Since scalpers are doing high-speed trading, high liquidity is extremely important. This enables them to execute trades within seconds. They have to stick with trading major currencies since they are most liquid and only when trading activity is high, such as the hours when trading sessions overlap. Since scalping requires alertness and fast-paced action, they have to not to attempt it if they do not feel up to it for whatever reason. If they feel tired or stressed out or are consumed with an emotional issue in their lives, they will have to avoid scalping altogether – of course if greed allows them to cease trading for one day. Having a cold or the flu or perhaps any type of illness will not only hamper the scalpers ability to make quick and effective decisions, but may require frequent trips away from their terminal. Also, if they feel they are on a losing streak and need time to rest, they have to stop trading. They can trade only when they feel well rested and energized and prepared for action. Conclusion. Even if we believe that some people make money through scalping, but scalping is not for everyone, and most probably you are among those who can not make any money through scalping. It is mainly for traders who are highly focused on their activities and can make effective decisions without thinking things through (although I have never seen any of these traders make money consistently through scalping).

Also, one must be OK working at a computer for as long as an entire trading session and not become easily fatigued. Unlike what most people think, scalping needs a lot more experience and knowledge compared to the other trading styles. Don’t believe positive things you hear about scalping from people you know. There is no one established formula that will guarantee you success at scalping at least 90% of the time. Likewise, if something sounds too good to be true, it most likely is, especially in the forex scalping atmosphere. There is a much easier way to make money through forex trading (or any kind of trading). To make money through forex trading, you don’t have to do scalping or day trading. You don’t have to sit at the computer several hours per day, and you don’t have to push yourself to handle a lot of pressure and stress. If you want to trade forex to make money, then you have to forget about dealing with short time frames. They can not show you the right way. Working with the long time frames not only is more profitable, but it is easier and safer. This is what we have been doing for the past several years and we are so happy with it. Just before you go, did you check This System? Make sure to do it now, otherwise you will regret.


  • Why is forex scalping illegal