Forex trading might look like a fast and easy way to make money. Just put on a trade at high leverage, aim for a pip or two, and then, voila, collect the money. Sounds easy, right? Not until a trader loses several times in a row and finds out that the losses are much larger than the wins, ending up in a hole a trader can't dig their way out.
Now, what if a trader plans to use scalping as the trading method? The answer is, unfortunately, to put the sights lower as far as how much the trader wants to make per trade. And possibly, set the targets higher.
Using scalping as a trading method is not really recommended. A lot of traders who use this do not have a solid reason for their trades. And this makes a knee-jerk-kind of trading, which usually ends up not serving anyone well.
But for traders who still insist on making money scalping, once they position the trade, put many trades on in a currency pair and end up with an average price. The type of position and the risk are all up to the trader. But, if they want to try and be creative with that, take the same approach on an intraday basis and carry out smaller positions.
- Trade in a small amount. It might be tempting to trade big for fast money, but it's a definite road to ruins. Keep the trades small and give some space to get out without going broker if ever there was a mistake.
- Always trade with stops. Scalping is continuously on the edge of going wrong. And it is not one of those things that use an incredible risk-reward ration usually. A trader must set a stop that suits their maximum loss and leave it alone. Then, if it gets stopped out, just accept the loss and move on.
- Be familiar with trading. This might sound easy, but all in all, scalping is not a viable trading method. Sometimes, it can be used in combination with other methods and not to be used by itself only. If a trader is scalping, instead of really trading, learn to trade forex.
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