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FAQs About Foreign Exchange Rate Scalping

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Scalping is not an easy trading style for profiting from foreign exchange rate fluctuations. In fact, traders who choose this trading style are either extremely experienced and knowledgeable about the market or very brave and confident. This is especially true for new traders.

However, just because scalping forex rates is difficult and you are new to the market, you should not stop yourself from aiming high. However, what you should make sure of is that you learn as much as there is to learn about scalping before you start attacking the foreign exchange rate movements. Here are some of the most frequently asked questions about scalping.

What Market Conditions Should I Look For?

Scalping is a trading style that is suitable for all types of market conditions. Even so, many experienced traders seem to think that scalping is most beneficial if it is used in ranging markets. However, the exact market condition you should be looking for depends on the type of scalping strategy you are employing.

When Should I Trade?

Most scalping systems are better suited for the Asian session because the Asian session provides the perfect balance between volatility and stability. In other words, the Asian session sees foreign exchange rate fluctuations but not fluctuations that are extremely drastic. Such situations are usually ideal because you can be certain of trends without worrying about unforeseeable circumstances.

Which Currencies Are Good For Scalping?

The answer to this question also depends on the exact type of scalping strategy you are employing to benefit from foreign exchange rate fluctuations. For instance, systems that are based on ranging markets tend to work better with cross currency pairs like EUR/CHF and EUR/GBP.

There are two reasons for this. The first is that these pairs exhibit the most range based behaviours and the second is that their spreads are very attractive for scalpers.

How Should I Deal With Spreads?

For scalpers, there is nothing more important than spreads. Spreads are so important for scalpers because the number of trades they place in the market is high and the money they pay to the broker is based on spreads. This is why it is important for you to simply find brokers who offer the tightest spreads if you want to scalp foreign exchange rate movements.

How Should I Choose Lot Sizes?

Your choice of lot sizes depends on one single thing. This is the amount of drawdown you can handle through a series of 10 trades. The best thing to do would be to calculate the worst case scenario of 10 straight losses with your position size and assess whether your account size can handle the combined drawdown. Make sure that you also incorporate leverage usage into this calculation.

Should I Go For Automated Systems?

For traders who scalp forex rates, the question of automated systems is very potent. Automated systems can be very beneficial for you provided you can trust the one you have chosen. It is a better option for you to take your strategy of profiting from foreign exchange rate fluctuations and create your own automated system.



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