Scalping strategies in Forex have become especially popular today. Many consider them the easiest, most reliable and efficient method of trading Forex. These strategies are based on the fact that the price is constantly fluctuating, while being in a certain range. Positions are opened for a short period of time and in small lots in order to get 10-20 points of movement in the right direction and take profits.
What are the advantages of such strategies? First, they assume relatively low risks, since the entry into the market is carried out in small lots. Secondly, in a day you can open a huge number of positions and get a profit on each of them, which in fact does not limit your earning potential. And this is all despite the fact that your starting capital can be as low as a few hundred dollars.
Why are scalping strategies not actually used by leading traders and rarely allow you to really get impressive profits in the long run?
First, any broker removes a certain commission for opening a position. And the profit from the transaction should override this commission. If the latter is large enough, then you will have to open a deal not for 10-15, but for 20 or more points. At the same time, the price may not go in a given direction, and instead of the expected profit, an impressive loss will be received.
The second drawback of the strategy is that the profit earned on each transaction is minimal. But if the price is not in the intended direction, and you are trying to keep an open position, you can get a huge loss.
What are the winning strategies for Forex scalping?
If we talk about winning strategies on scalping, then any long-term winning strategy should assume:
– opening a large number of positions;
– the use of elements of technical analysis to predict price movements;
– risk management and money management;
The big drawback of manual forex trading in the scalping strategy is the need to spend a huge amount of time behind the screen of the trading terminal, constantly opening and closing positions. This is very exhausting for any person, even a true professional, not to mention a novice trader.
Of course, the best Forex scalping strategies involve the organization of automated trading, but in this case it is worth considering that the constant change in the market often makes them profitable only in the short term.
In view of the foregoing, it should be said that scalping strategies carry great risks, and their profitability is very doubtful, especially in the long term.