A guide to scalping forex
Published on: 26/01/2022 | Modified on: 16/09/2022
Forex scalping is a short-term trading strategy that attempts to make a profit out of small price movements within the forex market. Scalpers will buy and sell a foreign currency pair, only holding the position for a period of a few seconds or minutes. They then repeat this process throughout the day to gain frequent returns, by taking advantage of price fluctuations.
In the forex market, another name for the smallest price movement a currency can make is a pip (percentage in point), which traders use to measure profits and losses. Forex scalpers usually aim to scalp between 5-10 pips from each position, aiming to make a more significant profit by the end of the day. Forex scalping is a form of arbitrage trading.
- This is considered to be one of the shortest-term strategies for trading
- As it involves placing a high volume of trades in a short timeframe, not all brokers allow it, although it’s not illegal
- Scalpers tend to look for currency pairs with tight spreads, low margin rates and a high trade volume
- Some of the most popular markets to scalp include currency pairs and stocks
- It can be a costly strategy as brokers will charge fees for entering positions frequently