This article looks at the pros and cons of currency trading with scalping.
There are a lot of people who want to use scalping as the strategy that they trade with. If you want to use scalping you need to know all about the pros and cons that come with this. You should also consider the reasons why many people are drawn to scalping. This type of currency trading is not ideal for new traders because of the fast-paced nature of the strategy. You need to carefully consider this when you look at currency trading through the use of scalping.
Why Traders are Drawn to Scalping
There are many people who wonder why so many traders are drawn to scalping. There are a number of reasons for this and you need to be aware of them. The first reason is that scalping offers less exposure risk. Exposure risk is the risk that you face when your trading is open on the market for a length of time. When you scalp the trade is not open for that long.
Another reasons why traders look at this type of trading is the greater number of trade opportunities and the number of trades that you can complete in a day. This is generally much higher than any other type of trading strategy. You can also fight emotions easily with the use of scalping because of the small profits and the short timeframe you trade in.
The Pros of Currency Trading with Scalping
There are a number of benefits that you will find with the use of scalping. The first is that the trades are held for short amounts of time which means that you are not going to be subject to reversals on the market. The short period of time that the trade is open for also means that you do not have to wait very long for the trade to profit or make a loss. This is ideal for traders who are not very good at waiting for their trades to mature.
Another benefit is the face that scalpers generally have a higher strike rate. This means that the risk to reward ratio you are using will be 1:1. When you do this you are going to make profits more often, but you are not going to be trading with a high reward rate.
The last benefit that you should know about is the fact that you will not have to complete long-term analysis. The short-term timeframe that you are trading in makes long-term analysis unnecessary.
The Cons of Scalping
While there are a number of pros you also have to consider the cons that you face. The primary problem that you can have with scalping is that many brokers do not allow this. You will need to look for brokers that allow you to scalp which could limit the choices that you have.
The 1:1 ratio that you are trading with can also be a problem. This means that the one loss that you make can take out the profits that you have made from a number of trades. The last problem you face is that you are going to be making very small profit amounts with each trade.
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