Why do a lot of newbies prefer the scalping method in Forex Trading? Did you know that when you put multiple and speedy trades throughout the day, you can increase your chance of winning in the Forex market?
Scalping is making small trades regularly while refusing to wait for mega-profits that can last for a couple of months to years. These short trades give you an ample of time for yourself, pursuing your hobbies and social life.
Unfortunately, FX trading is not that simple. It does not mean that you took more trades and gain more profits. FX trading is not about the number of trades you make every day, it is how you hit the target, the jackpot as they say.
Despite this, you must not lose hope with scalping as there are certain ways to make it profitable. What you need to do is to know its strengths as well as its weaknesses and set straight your strategies and realistic expectations.
The Capital is VERY Important
New traders often get too excited to open their trading account knowing that they can invest as little as $25. Doing some calculations, they’d think that this $25 can turn into thousands of dollars but doing small trades. There is certainly a misunderstanding here.
It doesn’t mean that you are allowed to open a trading account for as low as $25, then you think you should do it. FX trading is about leveraging. Most traders fail because they didn’t capitalize much. You must understand the importance of leverage in Forex trading and how it works.
Transaction Costs Shouldn’t Be An Issue
As you all know, trading and transaction costs go together all the time. These transaction costs include taxes, broker fees, and commissions. It is important to note that the more you trade, the more transaction costs your broker gets. Being said, to be able to earn profits, you need to make sure that you earn more money than your broker. Think of this idea every time you perform small trades to avoid losses.
Find the Best Strategy
Finding the best strategy comes after identifying the facts that can possibly move currencies at shorter time frames. To be able to succeed in short term trading, you need to practice doing it and find the best system that can fit your trading style and personality.
Handle Properly Your Trading Psychology
Did you know that short trades can pose more psychological challenges? Short-term traders actually get more exposed to trading pressure and stress compared to those who trade in long terms.
You must be able to handle the pressure of placing orders and quickly setting a price in information as these things can create trading mistakes. Before risking your hard-earned money, you must make sure that you have discipline in trading and strategies to handle the risks involved in day trading.
There are a lot of Forex Traders who fail in this field not because they don’t have enough capital or knowledge in trading. They fail because they look forward to earning “easy” money without getting any preparation.
Did you know that there are a lot of part-time traders? Despite the limited time they can allocate to the Forex market, they are making the most out of it by becoming profitable in every trade they make. When picking a time to trade, make sure that you are stress-free and less distracted. You must only focus on trading on that particular part of the day.
