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.
- 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!