Trading is one of the types of speculation, the principle of which is to make short-term and long-term transactions. In recent years, intraday trading has been especially popular, which is preferred by beginners and experienced traders. A well-known strategic approach to such speculative activity is scalping. It has a number of features and benefits. In addition, the system has minor pitfalls that a trader should be aware of.
Basic rules for the scalping strategy
Forex scalping strategy for trading on m1 is an economic term that has an English origin and a peculiar interpretation. The main concept is an intraday trading strategy, during which the scalper’s task is to conclude a huge number of trades with minimum stop loss and take profit values. This approach is characterized by a peculiar method of cutting the top of the profit. During scalping, the amount of a Forex participant’s earnings depends on the number of open positions. For example, a scalper can make a profit equal to one medium-term operation for 30-50 successfully closed positions. From this it follows that the cost of one transaction using this strategy is only a few points, or, as advanced traders say, pips. That is why analysts, experts and professionals are used to defining scalping by another name pipsing.
What are the principles of trading with scalping?
To achieve a positive result in Forex trading, site participants who buy or sell assets must follow certain trading principles. The Expert Advisor is strongly recommended for beginner traders, before starting to work with the scalping strategy, to practice on medium-term trading and reach a stable profit. To achieve this goal, investors must fully understand the market situation and be familiar with its main components.
Professional advice will help you to make successful and stable Forex scalping trading.
1. The trader will need a step-by-step scheme of actions with strict implementation.
The trading plan is the main tool for maintaining discipline and self-control in the market, observing every step of the strategy. Do not give in to the desire to make a profit faster, because a change in the direction of the trend is possible at any moment, even if before that it had the opposite movement that did not correspond to the forecast. It is worthwhile to look at the situation soberly and follow it using a well-developed approach.
2. Use a demo account to master the strategy.
To test the generated system, you should use a demo account, which is relevant for all clients of brokerage firms. With the help of a demo account, it is possible to work out a strategic decision and, if necessary, make adjustments. Thanks to such a program, there is absolutely no risk of losing money when concluding an unprofitable deal, because fictitious deposits are placed on the user’s balance. According to the analyst of the Alpari organization Eduard Sungatullin, most trading schemes, with stable rising and falling trends, make it possible to make a profit. However, if stagnation is observed on the stock exchanges, only high-quality and reliable strategies can help a trader.
3.Using the Trailing Stop function to automate the closing of trades and fixing profits.
With the help of the built-in program, which is available on any trading terminal, you can create favorable conditions for making large profits without disrupting the plan for conducting market relations. For example, a signal comes from a trading strategy to close a position with income, but the state of the market dictates its own rules, arguing that there is a chance to earn even more. This situation most often occurs after the release of important economic news. That is why, in this case, it is better to resort to a protective order, which acts as a “floating” stop loss, moving behind the price line.
4. For the analysis it is necessary to combine technical and fundamental methods.
An unexpected release of hot news can fundamentally destroy the results of the technical analysis, which indicated the upcoming uptrend. That is why, before the start of the trading day, it is worth studying the economic news calendar, which will help to exclude sudden changes in the state of the market.
5. A beginner should learn how to close positions on time.
You can get a profitable opportunity from the market to hold an open order on minute timeframes in isolated cases. From this we can conclude that scalping is not in vain the main part of day trading, which involves closing positions within 24 hours. Sometimes traders can leave positions open for several days, but this is quite risky and is done only when the investor is fully confident in making a huge profit.