Forex Scalping Strategy work?

A Forex scalping strategy is a business methodology that uses the shortest available time (known as a tick) for 1 minute, 3 minutes and periods of 5 minutes. Forex Wick focus on very small price movements and escape the volatility as a primary consideration. They are looking for commercial jobs that allow them to carry several trades in very short periods of time while targeting the small profits from time 1 to 5 pips each.

For example, while the main objective of a more traditional strategy may be to undertake three trades per day with 100 more pip target each, a Forex scalping strategy would seek to fully action of hundreds of trades in similar time periods while targeting only 5 pips times each.

As you can verify, the former strategy could produce a maximum profit more 300 pips compared to that of the Forex scalping strategy which would be in the region of 500 pips.

However, to obtain optimal results for a scalping Forex strategy implies that its users will have to risk more by pip than other strategies for valid profits can be produced. As such, that this requirement means that operators must risk much more than 2% of their total of own funds by trade this action violates the main concepts of most risk management strategies and money.

Forex scalping strategy will normally inform you must try to Trade Forex during his periods of leave when business models tend to be more predictable and the level of volatility is much lower. Thus, the time period that is normally chosen for this type of trade is between 5 pm and 9 am hours EST during which key of time, such as United States, United Kingdom and the euro area countries, normally no important economic data releases.

For consistent profit, Forex scalping strategy must have a high win-loss ratio and well tested stop-loss strategy. Thus, many advocates Scalp use pip very small target profit with relatively important judgments and a win-loss ratio high. However, the use of such parameters normally means that the applicable Forex scalping strategy will possess as very bad risk-reward ratios.

Is it still useful to develop or to develop a strategy Forex scalping if it will only have finally a very poor risk-reward ratio? This is Yes, if you consider the following example. For example, suppose that you have selected a target of 5 pips profit and stop-loss of 100 pips per trade.

Think that your Forex scalping strategy produced a win-loss of 98: 2 ratio. Now, even if your risk-reward ratio will be extremely bad at 100: 5, you would still achieve a profit which would be equal to (98 * 5)-(2*100) equivalent 290 pips. However, although this seems impressive that you must also realize that you only need two further losses to completely reverse this result virtually annihilate all your profits in the process.

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