Scalping

Scalping is a trading strategy in which the trader makes dozens or even hundreds of trades daily, looking to capture a few pips per trade. Generally, scalpers stay in trades for less than a minute, getting out as soon as their position captures a few pips. Scalpers often trade with electronic communication network (ECN) brokerages, which circumvent the dealing desk allowing online traders to trade directly with one another. ECN brokerages usually have less liquidity than dealing desk brokerages and charge a per trade commission, but their pip spreads are narrower. To be a successful online Forex scalper, traders must follow strict risk management rules. One big loss can wipe out dozens of succesful trades. Traders should be sure to use stop loss orders, ensuring that the profit/loss margin on each trade is very small.

Sunday, April 19, 2009