Beginning clients in the OTC market are often interested in what is a scalping on Forex? The term refers to a Investment strategy in which a client seeks to profit from holding a position in a short period – from several minutes to several seconds. After the position has become profitable, the scalper closes the deal. To use the method, you need a large input account and the ability to quickly do mathematical calculations.
There are 2 types of scalping applications:
- Pure – when a client adheres only to this Investment strategy;
- Mixed (variational) – the scalper applies other strategies. In this case, the client has already opened long-term positions, but when new opportunities appear, he opens short-term transactions.
The advantages of the Investment strategy include the frequency of movements in the market – it is much easier to catch small price fluctuations than fluctuations in a wide range.
The disadvantages of the method include:
- Great demands on platforms – any delay is fraught with losses, so the connection should be high-quality and ping fast;
- A small profit from the transaction, from 5 to 10 points – therefore, it is necessary to perform a large number of operations during the day. Using leverage increases profit, but also increases risks.
- Psychological moments – concentration and speed of reaction are required.
Thus, Forex scalping is best tried with a demo account to test your skills, reaction speed and ability to analyze the situation.