One of the best ways to make a small account big within a short time period is by using a high leverage. Wait a bit….. No need to jump over the cliff instantly. Begin with a reasonable leverage for the purpose of scalping, for instance 20:1 and at the most 50:1, start moving on when you find that the scaling skills is getting enhanced. But before that you should not feel lazy to show the scalping system. Ensure that it will not cause any type of disappointment later.
The best way to deal with a high leverage without blowing the whole account is ten to fifteen trades are by dealing with the stop loss. Dealing without a stop-loss will damage the investment within a short time period.
It is good to decide the dimension of trading and exposed danger in advance.
You do a simple calculation. Calculate the worst situation like for example, ten consecutive fatalities in a continuous row, after this see if the account will continue and if there is something left to continue. Although ten losses in a continuous row is regarded as an unlikely scenario, we cannot deny this fact.
Even though Forex is active for 24/7, every hour is not perfect for scalping
You will not find any scalper who likes to spend the whole time by sitting in front of a computer for long hours getting disappointed and bored with a “sleeping cost” as it does not move anywhere literally.
Scalpers look for liquid and volatile market. There are mainly four sessions including New York, London, Tokyo and Sydney session. For trading in an effective manner a scalper should learn performance of a selected currency pair and explain most of the active sessions, even specific hours for this couple to catch good cost moves.
Another important thing to remember is to spread the brokers charge for various currencies. The higher will be the spread; harder will be to gather wanted pips. And obviously, lower will be a spread, the faster or easier is to accommodate pips.
Another important factor that should be considered is an average regular range of the cost for selected currency. Wider it is more accurate is an alternative to gain profit from cost shifts. One of the favorite money pair of most of the scalpers is USD/EUR with regular cost range and low spread.
While utilizing high leverage by combining with high speed trading, the scalpers should be really careful regarding the price of general trading as every pip makes a dramatic alteration after several trades. This signifies that being very cautious with exits and entries, limit and stop orders looks very realistic regarding the gain targets.
Once you are engaged in trading, scalpers have to manage the risks of trading by:
• Shifting the stops to break as soon as the situation allows
• Taking gains at logical levels at the round market cost numbers: 00, 20, 10, 50 and many more at earlier resistance or support level.
• Coming out of trade if the cost freezes for a long time period that it was thought.
Scalp trading is considered to be really demanding and needs large amount of focus, repeated monitoring of the cost and making of quick decision. Also, the frames of short time used in a scalping plan, needs an adequate grasp of trade complimented with skills of technical analysis. It is not regarded as a place meant for the beginners.
Scalping includes substantial dangers
Several beginners have common issue while trading high leveraged accounts-they incline to increase gains by dealing with entire capital at a single point of time. You should not do this. The dimension of positions that are opened must be evaluated in an accurate manner so that the whole account does not get wiped with just a single unfortunate trade.
Another significant factor that raises the dangers for the scalpers is spread dealers pay a large amount while opening a trade. Every time a trade opens, spread cost should be paid to the dealer, therefore opening ten small trades in place of one permanent trade raises the price of trading ten times.
With the USD/GBP money pair, the scalper sets the target of profit of ten pips and the stop loss of nearly ten pips. It is nearly 1:1 reward ratio or danger.
In the following step, when spread is added, the picture goes on changing. For instance, spread the charges of a broker for the USD/GBP by four pips. When the scalper opens certain position he is nearly negative four pips. On the contrary, in order to raise the stop loss the cost should shift. Negative four is in actual place.