Foreign exchange trading can be done short term or long term. Almost all of the day traders are short term traders who open positions every day and close those positions before the close of the day. Some traders use fundamental research as a trading system. They are generally long term traders opening a trade for two weeks or some months. Scalping is an example of the strategies to trade forex on a short term basis. It's a trading style where little price openings made by bid / ask spreads are exploited. It routinely involves closing a position within just a few mins or perhaps 2nd. Scalping means making 2-5 pips per trade ; it is predicated on the proven fact that almost all of the time the markets are consolidating. To explain the majority of the time there are no important movement in the markets. Scalpers look for the period when the market is consolidating and ranging like when between the closing of the US currency markets and the opening of the European currency markets. In this period forex markets incline to range for hours without much movement. This is the time when scalpers like to trade. However, the more you trade, the higher your trading cost becomes. For instance if the broker gives a four pips spread to you than this four pip is your trading cost per trade. You'll have to make more than four pips per trade to start making profits. To become successful at scalping you want in depth knowledge of technical research. You must have an idea of the way to establish over / under brought, support and resistance levels, trendlines, trading channels etc before entering into a trade. Forex brokers do not like scalpers. Plenty will try and ban you on one pretext or another if you are using scalping as your trading technique. So, first check with your broker before adopting this style of trading. To make profit with scalping, you want to scalp many times in a day. At the end of the day, the pips made should be more than the pips lost. To make good profit with scalping you may have to use high leverage. Is it a good thing? Is leverage dangerous? Yep , it is similar to a dangerous weapon that cuts all ways. Leverage works in your favor so long as you are on the right side of the markets. But it'll finish you if you get caught on the incorrect side of the market. Understand leverage before you employ it.
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