What is scalping in Forex?

[Adam Morrison 0]

Hello, I would like to learn about scalping in Forex.

[Lincoln Ferguson 0]

HI, thank you for your question! 

Scalping in Forex is a method used by traders, where they buy a specific amount of money, and then sell it in a short time period, hoping to earn profits based on the currency’s recent increase in value.

This can be done in automatic or manual style, manual style means that the trader is 
active in real-time, looking for the signs that may indicate a profitable scalping, and acting on these signs. In automated systems, there are already pre-made computer programs that signal a trader when he should buy or sell currencies.

Scalping is usually most profitable when an important event related to the economy occurs, this is because these events cause a large value shift in a short amount of time. With profits come risks, and when a loss in value happens and a scalping strategy is employed, losses are usually more significant and larger in value than the ordinary ones.

The most common strategies of scalping are trend-following and counter-trend ones. The former means that traders should anticipate short-timed positive improvements in trends, and using this, gain profits, while the latter advises traders to expect to counter overall trends.