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Learn what is Scalp? Scalp in forex trading

Scalp is a popular forex trading strategy. This is an attractive, challenging, and profitable forex scalping strategy. However, it also requires traders to have many factors such as time, experience, skills, planning, broker, psychology, etc. This article, Learn Forex Trading will introduce you to what is scalp. How it works, pros and cons, rules, notes, and some popular scalping strategies.

what is scalp and what do traders need to know

Scalp is a concept quite familiar to traders who regularly trade forex. However, for newbies, this concept is still quite new. Join us to find out more details through the section below.

what is scalp?

In forex, scalp means “surfing”. Traders who perform scalping are called scalpers. Scalpers are people who specialize in surfing the forex market. Don’t hold the position for too long, just aim to gain a small number of pips. Scalpers often trade with high leverage, high volume, and high frequency.

How forex scalping strategies work

Forex scalping strategies are based on the assumption that small market fluctuations are more predictable than large fluctuations. Scalpers use technical analysis tools such as charts, indicators, price patterns, trend lines, support, and resistance to identify market entry and exit points.

Scalpers often trade on short time frames such as M1, M5, M15, or M30. In addition, traders also need to monitor economic news, political events, and factors affecting market psychology.

See more: What is a trader that becomes successful?

What are the popular strategies for scalping?

What are the common strategies that traders can apply with what is scalp? There are many different scalping strategies. It depends on each trader’s style, goals, and experience. Here are some popular scalping strategies:

Trend Scalping: Scalpers take advantage of the market’s up or down trend to buy when prices increase and sell when prices decrease. Scalper uses trend lines, moving averages (MA), Bollinger Bands, MACD, RSI, and Stochastic indicators to determine trends and entry and exit points in the market.
Scalping by divergence: Scalper looks for divergence signals between price and indicator to predict market reversal.
Scalping by spike: Scalper takes advantage of price spikes caused by economic news, political events, or other unexpected factors.
Range Scalping: Scalpers take advantage of periods when the market fluctuates within a certain range, with no clear trend.
In addition, traders also need to understand and take advantage of advantages such as what is commission when trading to maximize profits.

Advantages and disadvantages of what is scalp?

Scalp is a forex trading strategy that has both advantages and disadvantages. Traders need to consider carefully before deciding to apply scalping.

Advantages of scalping when trading forex

Trading forex according to the surfing style gives traders many advantages as follows:

Scalping allows traders to make small but regular profits. Traders do not need to wait for great trading opportunities.
Scalping helps traders minimize risks due to large market fluctuations. Because scalpers do not hold positions for too long.
Scalping helps traders make the most of small market fluctuations. Because traders can trade multiple times in a day.
Scalping helps traders improve their technical analysis skills, risk management, and trading psychology because scalpers must make quick and accurate decisions.
Advantages of trading with a scalp strategy

Disadvantages of forex scalping strategy

Besides the advantages, this school also brings many risks and disadvantages as follows:

Scalping requires traders to have a high level of experience, knowledge, and trading skills because scalpers face great pressure and stress.
Scalping requires traders to have good equipment, software, and an internet connection, as scalpers must monitor the market constantly and place orders quickly.
Scalping requires traders to choose a reputable broker, have low spreads, high leverage, and not re-load orders. The reason is that scalpers have to pay a lot of transaction fees and are affected by slippage and requote.
Scalping requires traders to have discipline, rules, and a clear trading plan, as scalpers must strictly adhere to market entry and exit points and stop losses.
What are the advantages and disadvantages of scalping?

Trader rules when trading what is scalp?

To scalp trade effectively, traders need to follow some of the following rules:

Choose a suitable time frame for trading. Shorter time frames will have more trading signals, but also more noise. Longer time frames will have fewer trading signals, but also less noise.

Choose a currency pair that is suitable for your scalping strategy. Currency pairs with high volatility, low spreads, and high liquidity are suitable for scalping.
Choose a trading time that is suitable for scalping. Trading time affects volatility, spreads, and market liquidity. Traders should choose trading times when the market has high volatility, low spreads, and high liquidity.
Choose a scalping strategy that matches the trend, divergence, spike, or range of the market. Traders should choose a scalping strategy that they understand, trust, and can apply consistently
Set an entry-level, stop loss, and take a profit level suitable for the scalping strategy. Traders should set an entry level based on technical analysis signals, and a stop loss level based on acceptable risk levels.
Monitor the market and adjust orders according to changing conditions. Traders should continuously monitor the market and quickly adjust orders when there are changes in trends, divergences, spikes, or market ranges.
What are the rules when traders trade with scalping?

Which traders is the forex scalping strategy suitable for?

Forex scalping strategies are not suitable for all traders. Traders need to consider the following factors to determine whether scalping is right for them:

Trading time: Scalping requires traders to spend a lot of time monitoring the market and trading. Traders should have at least 2-4 hours a day for scalping. If traders do not have much time to trade, they should choose longer-term trading strategies such as swing trading or position trading.
Trading experience: Scalping requires traders to have high experience, knowledge, and trading skills. Traders should have good technical analysis, risk management, and trading psychology abilities.
Trading personality: Scalping requires traders to have a quick, accurate, and consistent trading personality. Traders should be able to make quick decisions, accept small losses, not be greedy, and not be afraid.

See more: Instructions for registering an XTB account

What are the notes for traders when trading using scalping strategies?

To trade effectively, what do traders need to keep in mind with what is scalp? Traders can note some of the following:

Choose a reputable broker with low spreads, high leverage, and no re-loading of orders. The broker has a great influence on the effectiveness of scalping because scalpers have to pay a lot of transaction fees and are affected by slippage and requote.
Have a systematic and disciplined trading plan to strictly follow.
Continuously update economic news, political events, and factors affecting market psychology. Economic news, political events, and factors affecting market sentiment can cause price spikes.
Maintain your trading mentality and not be influenced by emotions. Traders should maintain their spirit, confidence, calmness, and patience when scalping. In addition, it is necessary to prepare strategies to prevent what is hedging risks when trading.
Notes for traders when trading scalping

The above article, Learn Forex Trading, has helped you answer the question of what is scalp. This is an engaging, challenging, and profitable forex trading strategy. However, traders should consider carefully before deciding to apply scalping and follow the rules and notes when scalping. Wishing you successful and profitable scalping trading.