fbpx

Scalping – Winning Strategy or Trader Trap?

ForexFraud
Brought to you by: Stratton Markets LogoYour capital is at risk

You’ve surely heard of scalping (i.e. trading style) before, and hence you are well aware that opinions on it diverge. Some claim it to be a profit mine, while others advise against it. What’s the truth? Let’s take a look and see for ourselves.

What is Scalping?

In a sea of trading styles – scalping stands out as one of the most active forms of trading. Unlike day, swing or position trading, opening and closing a scalping position doesn’t occur within a day, few days or weeks. Instead, positions are opened and closed within minutes, or, sometimes, even seconds, adding up to hundreds of transactions per day.

The idea of scalping is to make small profits from frequently-occurring price changes, with trades often opened in opposite directions. The idea of “letting profits run” doesn’t apply here. The primary focus lies on making as many small trades as possible.

Is it right for you?

Choosing a trading style is a complicated notion. Not only does it take understanding and sticking to a chosen pathway – it is also greatly dependent on your personality type.

Scalping is considered a fit for impatient traders, who don’t want to wait out for a potentially bigger win. Scalpers prefer small, but fairly constant gains. Active by nature – they don’t like to have their positions sit, and possess the necessary amount of time and energy to spend hours opening and closing positions at every minor fluctuation.  

If this sounds like you, could it be worth a shot? Well, before you jump in – consider asking yourself: why do the majority of regulated brokers, including Stratton, forbid scalping?

The Other Side of the Coin

Seemingly innocent, scalping is in fact, one of the most controversial and risky style selections out there.

To begin with, in order to make it as a scalper – a high initial investment is required, simply due to the fact that scalping is, on average, done with a spread as low as 0.5 – 1 pip. The achievement of this spread level is hardly ever possible without an initial deposit of around $10,000.

Furthermore, since scalping relies on having a high percentage of winning trades (and because the average winning trade tends to be smaller than the average losing trade), one or two false decisions can easily wipe out all profits.

To make matters worse, major market volatility is one of a scalper’s greatest enemies. A sudden piece of economic or political news can easily result in an over 100 pips’ fluctuation, leaving the scalper helpless and unable to set his/her stop losses.

So where does that leave us?

Simply put, the choice is yours. Some traders do, indeed, find scalping to be the right style for them. Nevertheless, we encourage you to always abide by your risk management practices, and pick a style, dependent on your attitude towards risk, as well as on how much you are prepared to lose.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82% of retail investor accounts lose money when trading CFDs with this provider.  You should consider whether you can afford to take the high risk of losing your money.

Are you ready to trade?

Sign up with Stratton Markets LogoYour capital is at risk
ForexFraud

Latest news

British cryptocurrency trading platform shut down
A cryptocurrency trading platform that lied about its celebrity backers has been closed down by an arm of the British government. Read more
Assessing if an online broker might be fraudulent
  Introduction There is a myriad of online brokers, under different regulatory environments to choose from, and it is expected that they will represent your best interests as a fiduciary. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2012 Global CFD and FX broker
Number One Broker
Best FOREX BROKER Visit broker
5
#2 Forex Broker Pepperstone LogoYour capital is at risk Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
5
#3 Your capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
5
#4 Plus500 Logo80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008 Global CFD Broker
Number One Broker
Best Trading App Visit broker
5

    Forex Fraud Certified Brokers

    Plus500 Small Logo
    iTrader Logo
    LegacyFX Small Logo
    City Index Logo
    ROinvesting broker logo
    Pepperstone
    IQ Option Logo
    FXTM Logo
    Swissquote logo
    VantageFX Small Logo
    Oinvest Small Logo
    XTB Logo
    XM Logo
    ATFX Logo
    Forex.com Logo
    Oanda Small Logo
    Exness Small Logo
    OctaFX Logo