Scalping is referred to as a short term trading strategy. The traders open orders by analyzing the lower period to find high-quality trades. Usually, the trades are closed within an hour. Since the scalping method requires high volume trading, the new Aussie traders often find it hard to master this technique. If you read books and articles on trading, you might think scalping is an aggressive trading strategy. Though this is true to a certain extent but by using some minor tweaks you can start scalping the market like a conservative trader. You don’t have to take too much risk to book quick profit. Let’s learn some amazing technique which will help us to become a professional scalper.
Create a robust plan
People start to trade the market conservatively. After losing patience, they use the same conservative trading strategy to scalp the market. They forget the fact, the conservative trading strategy is mostly designed to deal with the daily and weekly time frame. So, if you start using the same technique to analyze the minute 1 or minute 5 period, you can expect any good result. You must create a robust plan to trade the lower period. And development should be done in the demo environment. Stop trying to create your scalping strategy in the real market as it ruins the career of the retail traders.
Do you have a valid strategy?
You need to prove the system works before you start scalping. Let us give you a simple example to make realize why it’s so important to backtest the strategy. Are you going to buy an expensive car without going for a test drive? Chances are high you will check all the minor details of the car before you many any payment. Just like that, you must test the Forex scalping strategy in the demo environment. If you can make a consistent profit in the demo environment, you have a valid strategy. If not, fix the bugs so that you can make a profit.
Avoid the high impact news
Avoiding the high impact news is an easier way to protect your trading capital from the wild swings. The naïve traders are losing most of the trades by trying to scalp the major news. News trading is only for elite traders who have years of experience. Unless you can scalp the market for three consecutive years, you should never think to the scalp during the high impact news. Safety should be your priority as a fulltime scalper.
Always use protective stops
Executing trades without a stop loss is more like jumping off the helicopter without any parachute. So, imagine what can happen to you if you start to the scalp without having the protective stops. Stop-loss is the most powerful tool for professional scalpers. Those who think they will manually close the market don’t understand how unpredictable this market is. Let’s say, you are scalping the gold without any protective stops. All of a sudden, Australia declared they are having a tough time mining the gold. Within the blink of an eye, the price of gold will shoot higher since production will decline. No trader can close the trade in such market conditions.
Trade with less than 1% risk
The professional scalpers should have extensive knowledge of money management. You can’t afford to trade with a 2% risk in each trade. The scalpers should risk less than 1% since they will be placing 5-10 trades in a day. However, the number of trades greatly depends on the market condition and skills of the traders. But no matter what, limit the risk so that you don’t have to lose a major portion of the investment. Try to learn from the experienced scalpers. They will give you a clear insight into managing risk exposure. Follow their technique and you can scalp without using any aggressive approach. In other, you will be able to scalp conservatively.