When it comes to scalp trading, day traders try to make use of the short term trading opportunities. Traders gave to enter and exit within a minute or so and they can develop confidence gradually and trade without fear when they are at it consistently. During day trading scalpers can make several small profits which can add up to a decent total.
There can be only minimal losses to a few ticks at most. Scalp trading does not tale place overnight. The easiest trade to make is a small profitable scalp. You must have the skill to get in and out of the market quickly which is the secret behind scalp trading success. You can scalp properly and with success only if you have a lot of mental discipline and can make quick decisions.
When scalping strategies come to the point, some scalpers buy on the bid and sell on the offer to profit from the spread or they can work around the bid/offer. Three different trading patterns namely bounce off support and resistance, breakouts from consolidation and retracements in a trend determine long lasting scalp trades.
In the case of scalp trading, profit target can be small. The scalper will generally be happy to benefit from a few points while the breakout occurs unlike the long term trader who may wait until the breakout turns out to be a trend.
Different approaches can be followed with different market conditions and hence scalping can just be one of the instruments in the box of the trader which can be used at the right time.
Until they are over tops may be difficult to call. You can call a top easily by understanding candle stick patterns and candle sticks. The main theory behind scalp trading is that a trader can jump in as a response to an important event or news release and can show a profit before exiting immediately to minimize the risk.
A trader in this way can start making smaller profits little by little and can at the same time avoid losing a lot of pips by staying away from large market swings.
Before entering into a position one must have an exit and stop in mind which is the crucial part of scalping. The position can be closed instantly in this way when the market moves in either direction. The advantage that comes with scalp trading is that it can reduce potential losses.
However on the downside it can also limit potential profits because the transactions take place quickly. Hence you may have to exit quickly before entering into a breakout market. You can benefit from forex trading by using a dependable long term system because scalping is only an extreme version of day trading which requires immense skill to master it.
Source : ezinearticles
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