It is one of the most popular ways to trade, especially among newbies. It is a fast, exciting and full of adrenaline.
The main purpose of scalping is to rush to negotiate in the busiest hours of the day, pick up a very small amount of pips and exit the market immediately. While the gains from a trading can be limited, a trader can increase their returns by performing dozens of such trades throughout the day. But the scalper should always know where to stop, as negotiating too much can quickly destroy the balance of the account when it (a) gets into a bad deal.
The great advantage of this style of trading is the high potential returns (well, if you are fast and skilled enough to execute your trading in very short periods of time). Leverage allows scalpers with modest amounts of earning resources to make larger gains, but you must be careful about substantial losses that you may experience when using leverage improperly. A pip in your favor can bring you lots of money with leverage. In contrast, a pip against you can result in heavy losses. So this is a kind of “hit or miss” negotiation.
Scalping does not suit those who are not accustomed to trading in a high risk environment.
This type of negotiation requires deep knowledge of your trading platform; you should not think too much about operating procedures; you must be totally focused on price movement.
Example of a Merchant
If you choose to trade scalping, you may be interested in getting professional advice from the most successful scalper of all time, Paul Rotter. According to reports, this trader earned $ 65-78 million a year over 10 years scalping the net contracts at Eurex.
“I’ve always been the guy who traded a lot, sometimes up to 100 deals a day, I’m just looking for the next 3-5 ticks,” our scalper reports.
What did he do to avoid negotiating too much? He simply set daily goals for his profits and losses. Before running to negotiate, he defined the stop limit, the maximum loss he could have per day. He assumed very risky positions, but when they began to act in his disfavor, he closed them ruthlessly. He always said, “As a trader, you should have no opinion. The more opinion you have, the harder it is to get out of a losing position.”
On the other hand, in his victorious phases he became truly aggressive; assumed greater risks and receded only in moments of loss. Sometimes it is very difficult to do this. So Paul Rotter always tried to have someone on his side, a neutral person, who could force him to turn off his terminal once he had reached the stop limit.
His business is not aimless, he bases his decisions on a deep analysis of the markets. Before opening the terminal, Paul Rotter seeks to check all the economic reports that are about to be published, speeches by influential political figures and central bank presidents – all of which can influence the direction of a price – until you get a clear picture of the market.