|
Welcome to Forex Subject - Free Forex Articles, Trading Tips And Resources!
» Forex-Discussions >> View Article
|
|
Superior Forex Strategy
Stop your trading losses, it's time to make a living with Forex!... read more
The Enlightened Trader
Best forex tips and products that improve your trading outcome... read more
Free Forex Materials
Free articles and information exclusively for the forex market... read more
Super PIPS
The forex trading tools that bring unfair advantage to serious traders... read more
Be a Trader
Want to be rich and powerful? Be a trader! Get free trading tips here... read more
Forex Tools For Winners
Trading without tools? Be serious, don't be another loser!... read more
|
|
|
 |
|
 |
| Forex Scalping - Beginners Beware! |
By:
Darrell van Zyl |
|
Using "Scalping" as a forex trading system is an idea that has seduced many beginners. Like many seductions, the fallout can be dangerous to your health - in this case, the beginner's financial health.
Scalpers take small profits very quickly. There are certainly successful scalpers (although not many of them are beginners), and their approach is to aim for a profit of about three times the spread - the difference between the buying and selling price.
Trades happen very quickly and can sometimes be closed out within seconds of being opened.
Beginners like the idea of scalping because: The action is fast, and successful scalpers see profits almost immediately; Beginners like speed for another reason - many worry about leaving contracts open for any length of time. They feel they must watch their positions constantly, and can't face the idea of leaving positions open overnight, let alone for two or three days; Because the action is short term, beginners can feel that "it's OK if this one goes wrong", so they feel much more relaxed about the mistakes they are bound to make when starting out.
But are these real benefits, or do they come with substantial drawbacks?
The biggest problem that "speed" conceals is the stress that is an unavoidable by-product.
Scalpers must make very swift decisions, so scalping stress levels are even greater than in mainline forex trading - which even on a good day is not a relaxing occupation. So scalpers who make many buy and sell decisions in any one trading period, are subject to much greater levels of stress.
The average beginner already feels stressed because of the strain of working with real money rather than a demo account; add the extra stress of making more decisions, and you have a very nervous neophyte trader, one who will make more wrong calls than would be the case if there was more time to think.
And then as the number of mistakes multiplies, it really does start to matter as "one goes wrong".
Speed carries with it another issue. There's no time for fumbling with charts and software; scalpers need to use their technical tools and trading platform as though they are on autopilot. And those are exactly the skills the average beginner has not yet acquired. Result? Slower decisions, wrong timing, more things going wrong.
The average beginner is probably not yet a fulltime, self-employed forex trader, and probably also does not have a quiet, distraction-free time or space in which to work. The outcome is predictable - lack of concentration, more stress, needless mistakes, higher losses.
The downside of the quick profit earned by the usual scalping trade is the small profit that is usually earned. This can be a serious problem, as it tempts impatient beginners to use higher leverage to try and force higher profits. Over-the-top leverage is bad risk management and endangers working capital.
The final problem is that some brokers either don't like or won't allow scalping, because there is often not enough time for those who are market makers to cover the trade. This exposes them to additional risk, which is not an attractive option to the average broker, even those who like helping beginners with good technical analysis, a worthwhile trading platform, news updates and demo and micro accounts.
All in all, beginners should treat scalping very cautiously until they are more experienced and have banked some profits to prove it.
About the author:
If you spend a lot of time watching the trading screen, you need to think about keeping fit and in shape. Visit http://www.ellipticalstep per.net to find out how a home gym with a compact Elliptical Stepper can help you lose weight and stay fit - and still have time to trade. |
|
|
 |
 |
 |
 |
It's easier to copy the whole article if you are logged in.
|
|
