Monday, June 30, 2008

WHAT IS SCALPING

Because forex scalpers participate in a trade for a very short period of time and more importantly control the risk per trade very tightly, they are less likely to be hit by adverse market turns. Because forex scalpers participate in a trade for a very short period of time and more importantly control the risk per trade very tightly, they are less likely to be hit by adverse economic news events or overnight gaps as both swing and day traders are. You are not affected by adverse economic news events or overnight gaps as both swing and day traders are. In essence, scalping is a defensive trading method because it allows you to decrease your exposure to the market.
This is opposite to more conventional and commonly accepted approach where a trader "lets his profits run" risking to lose them on reversal or severe pullback and trying to make up for diminished win/lose ratio by bigger ratio of size of a winner vs. Scalping is also a defensive trading method that is based on an assumption that it's easier to get a high amount of winning trades when profits are taken faster, minimizing the cases when relatively small profit evaporates and turns into loss. It is about taking small profits and learning risk management techniques to win more consistantly and frequently.

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