We have heard of scalping as one of the various tested strategies in spread betting. However, does it really work in the foreign exchange market considering the innate nature of this market? Well, like the other short-term modes of trading, scalping is applicable when you are trading forex too. After all, it is true that this is still the strategy posing the lowest risk because of its minimal exposure to the market. It is in this light that it is highly recommended for beginners.
Looking for the triggers
First and foremost, it cannot just be applied randomly. This is because you still need to spot opportunities when you can use it. Specifically, you should be rooting on markets that will most likely move in the next couple of hours. It is in this regard that it is very much applicable in the foreign exchange market. Consequently, you need to watch out for news items and trends that will serve as the triggers for the market to move.
Is it for you?
If you want to have little, but assured, earnings, then you should go for this strategy. You only need to patiently identify opportunities where you can earn little by little profits. However, this seems to be not applicable or ideal for those experienced traders. This is because they tend to prefer those spread betting strategies that will require less work, but greater returns or profits.
Setbacks and Downfalls
On the other hand, however, while this may offer little but almost ensure earnings, it has some costs too. For instance, broker fees could accumulate. This is because the more you will trade using this strategy. The most fees you need to pay for the broker. Aside from that, traders leave this kind of technique through time because of the minimal earnings. Of course, anyone would want great profits. With this strategy, you really need to work hard in order to gain significant profits at the end of the day. In other words, this will surely test you patience too. Aside from a lot of work, traders might end up discontented with the profits they have at the end of the day. Hence, it may not be worth the time and effort for some people too.