what is scalping in forex

Hi Glo, scalping is actually a forex trading strategy where you open and close a trade quickly without waiting for a long time.

The logic behind scalping is to make little profits on several traders so that in the long run they add up to something respectable.

The typical forex scalper trades on lower time frames (such as 1 minute, 5 minute) because they want to see what the market is doing in the short term.

Scalping requires a thorough understanding of price action in forex trading and for me I would rather use an automated trading robot when scalping because robots are faster and there is a need for speed when scalping.

Scalpers will also need a forex broker with fast execution speed and tight spreads... and speaking of spreads, the lower the spread is, the less time you spend on a trade.

I would not really call scalping a strategy, it is more of a method of trading.

By itself, it is just a word for when the trader is getting in & out of trades quickly, to capture small price movements instead of bigger moves.

A scalper may or may not have an edge depending on the actual underlying strategy. You could have a scalping strategy with 90% accuracy making 20 pips, but still lose more on those 10% of the trades to make your expectancy negative.

So, I would say, try to very carefully look for repeatability with an edge. For example, breakout of some 1H during pre-Frankfurt open (I'm just giving an example, it's not an actual strategy).

Try to test if or not the trade has an edge. If yes, your job is to execute it every time you see that trade, regardless of the outcome.

scalping is a trading style where you open a trade and close it as soon as it becomes profitable. People who practice this sort of trading are called scalpers.

When you look at candlestick charts, you will notice that the candles are sort of "breathing" meaning going up and down constantly.

Scalpers can trade upward or downward and could trade on one candle and they try to buy when the candle breathes upward and sell when it breathes downwards.

Scalpers may not make a lot of money per trade but they execute several trades and the cumulative profit can be reasonable.

I would argue against the fact that scalpers don't make a lot of money.

From what I've read, very large HFTs employ systems that place large volume orders in futures markets to gain a very small fraction of an edge & get out really quickly.

They are not targeting very large movements, but only trying to capture small inefficiencies.

All that matters in the end is how much money you are making when you are right & what is the downside. Do you have an edge to make you consistently profitable in the long term, whether it is through scalping or through swing trading or whatever your trading style is?

Here is a chart that explains what scalpers do.
Beware you could lose the profit of 15 trades in 1 trade if you are not disciplined.

but why is it that some forex brokers do not allow scalping?

I am not sure why but I am guessing they dont want their network over-burdened with excessive in and out transactions