How to Scalp the Forex Market
October 26, 2009 by
Filed under Forex Scalping
Scalping for small profits is one of the most popular strategies in Forex trading. Scalpers rely on trading regularly and taking consistent small profits. They usually liquidate their trades on the same day. However, the problem with this strategy is that it has the tendency to turn you into a compulsive gambler (especially for beginners). Why did I say that? There are various reasons for leading a new scalper into a compulsive gambler. When a trader turns into a compulsive gambler, he/she will be doom for failure. In this article we will take a quick look at the 2 common reasons for that and discuss on tips to scalp efficiently;
1. Addiction to Random Profits
Most newbie thought that they can make some quick profits by taking small profits in the Forex arena everyday. They enjoy the random rewards from the market, which may turn into an addiction. It is just like teaching your dog to perform a task and randomly rewarding it every time a task is done. In this way, there is no way your dog can know when it will be rewarded. As a result, there is no reason for your dog to quit doing the task, even without being rewarded for doing it.
2. Trading for Revenge
There is a common saying among scalpers; “Trade for today, not yesterday”. Many newbie try to recoup their money back after their losses a few hours ago. They cannot swallow a loss or losses and became mesmerized with their fond memories of their past winnings. They keep thinking on how to win back their money, which tends to cloud their judgment on the market. They begin to fantasize opportunities in the market to enter a trade. This will eventually lead to their emotional attempt at revenge that is doomed to failure.
Tips to Scalp Efficiently
1. Determine the direction of the day by first looking at the daily chart.
2. Using candlestick studies, trendline or pivot points to enter a trade in the hourly chart.
3. For the above it must be use together with support and resistance.
4. Trading on continuous trend has a higher probability of success.
5. For contrarian trading, always enter at a better filled price or average your lot size to enter the trade
6. Scrape your trade if you do not feel comfortable after the point of entry or it takes too long for the trade to go in your direction.
7. Stop trading for the day if you have 3 losses in a row
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