Scalping is a trading technique that involves the opening of a position and its closure within a short period of time, with the intention to speculate that the price will move slightly in favor of your position, in order to have a small profit.
Typically, the scalper is able to open a large number of positions and it is not uncommon even come to take over 100 transactions a week.
Most traders who try to make scalping the forex market, however, can not succeed. This happens because to do when you are not scalping the currency market experts, leads to losing money. Assume that one wants to earn 10 pips scalpers speculating on the movement of the exchange rate GBP / USD. Usually, with most of the brokers, the spread of this currency pair is 3 or 4 pips. Also, set a stop loss at 10 pips, as is the take profit at 10 pips.
If the scalper opens properly position is correct and the price hits the take profit, you will earn 6 pips in total, ie 10 pips of movement less than the spread, which we assumed to be 4 pips. However, if you hit the stop loss, the loss will be 14 pips. So, in this case, the winning trade pips of 6 is lower than the potential loss of 14 pips.
With this example, the trader would need to close in positive 70% of its positions just to get even. The spread, in this case, it makes a big difference in the success or otherwise of a scalping strategy.
There are many brokers available on the market, but not all are suitable for scalping. Some brokers simply do not like the fact that their customers can do scalping, while others have the spreads are too wide.
There are many techniques to make scalping. Some are based on indicators, while others rely on the support and resistance.