Forex Scalping Strategy

The term 'Forex', is basically an abbreviation of the words, 'foreign exchange'. The Forex is a securities market where different currencies of nations is the subject of trade. Like any other market, Forex market works on the buy and sell basis and is more like a barter exchange system, where currency for currency becomes the medium through which the exchange takes place. The Forex market works on the simple principle that there is a difference between the prices of two currencies. For example if you want to sell off 50 USD (United States Dollars) in the Forex market you will get back about 37 Euros. The rate of conversion changes every day and in many cases, it also changes almost after every hour. In fact, Forex scalping strategy is based on this short term changes on the rate of currency exchange.

Conventional Forex Strategies

There are some strategies of Forex market trading that been successfully tried and tested by traders in the past. The simple principle, that is applicable goes as follows…

The basic code that traders follow is, '…buy when cheap, sell when expensive…'. Confused? Here's an explanation. Suppose that you buy foreign currency at a price X. Due to the economic conditions, the market value of that currency drastically shoots in an upward direction. In such a situation, you will be able to sell that currency for a price, Y, which is of course, greater than X. The difference is your profit and the investment is the initial low price X. The key to become successful is to understand the rise and fall in the trend of the currency, that you are dealing in. A severe drawback in such cases that there is a high risk of the trend falling down and people losing money in the process. Since the Forex market is an international market, a trend that enters falling cycle, takes time to recover and the trader might end up losing a lot of money or the liquidity (in case if he decides to stay put). The Forex scalping techniques, are preferred in almost any business model or market, as the main emphasis is given on short term buys and sells. Thus, the risk of any dicey trend crashing down is eliminated.