Saturday, December 27, 2008

How to scalp the forex

The only way to make small account big in a short period of time is through the use of really high leverage. But hold on a minute ... do not jump out of your seat right away. Start with reasonable leverage for scalping, for example 20:1 or at most 50:1, then move on as you see scalping technique improve. But even before that do not be lazy to demo trade your scalping technique - make sure it will not disappoint you later...

The best way to trade with high leverage without risking blowing up an entire account in only 10-15 trades is by trading with a tight stop loss. Trading without stop loss is like jumping off a cliff with any para shuts on.that i tell you can be very very risky.

It is smart to decide on the size of the trading lot and exposed risk involve in any trade in advance.
Do a simple math: calculate the worst possible situation, e.g. 10 consecutive losses in a row; then check if your account will survive and if there be something remaining to move on. although 10 losses in happening in a row is a very unlikely scenario, you cannot deny it...

Another factor to keep in mind is spread which brokers charge for each currencies pairs.
The higher the spread the harder it will be to collect targeted pips why because once trading position is opened a trader must cover the spread cost and earn pips for broker first and only then make his own pips.

And, of course, the lower the spread the easier/faster it is to accumulate pips.