Forex Scalping Part I – What is it?
Posted by on Saturday, February 3rd, 2007 at 1:59 amForex scalping involves the trading of currencies with the objective of obtaining small, quick profits from the market.
It is possible to scalp on an ECN-type platform that gives a day trader the ability to play market maker; i.e., allowing him to buy at the BID and sell at the ASK or make the spread. Even though one of our platforms of preference has this capability, I’m not too much of a fan of this style of trading. Since currency prices are erratic, by the time a trader’s BID is hit, the ASK or offer might have moved in the wrong direction against him (or vice versa). I prefer scalping when the price is also likely to go up immediately after buying or down immediately after selling. A scalper that employs this method will also try to exit the market quickly (characteristic of a scalp), but will try to make more than the spread (whenever possible) from the move in price. This type of forex scalping is frequently used by experienced traders during very volatile market environments, like after certain important news or economic releases.
October 25th, 2007 at 2:32 am
Hi, heard alot about scalping… but most brokers i wanted to open a live account with say they do not want their traders to scalp. is it wrong to scalp, and what brokers allow scalping?
October 25th, 2007 at 12:08 pm
There’s nothing wrong with scalping or day trading. In fact, it’s one of the funest way to trade if you ever get good at it. What you’re saying is true. Many forex brokers don’t want you to scalp. Why? Because they run a dealing desk and are taking the other side of all your trades. They want traders that give them time to react – not scalpers that want to make a quick buck. The only brokers that allow forex scalping are ECN-type brokers (like EFX – even though their commissions are among the highest in the industry) or institutional type brokers that provide platforms such as Currenex.