There are a host of common, erroneous ideas about forex scalping that are available to the trader who simply has not done the proper research. Most of these ideas are perpetuated by marketers who attempt to steer a trader to a trading process that may not suit his personality and, more importantly, his risk tolerance, and that may also draw temptations of large profits with minimal capital outlay.
Emotions often override sound judgment when a trader is looking for a way to generate large profits instantly. When reviewing various forex trading processes, a trader must overcome his preconceived notions and approach the selection process with a spirit of detachment.
Here are three of the most common myths about trading the forex with a scalping technique:
1. Forex scalping means that you are only able to take a small profit.
Not true. Market conditions are what determines the size of the profit one can take. The solid forex scalper understands this. A forex scalper can take a 100-pip profit when trading a fundamental announcement or a 10-pip profit when trading a currency pair with small average-size moves.
A scalper is simply a trader who has a predetermined profit target based on the anticipated trading conditions. A scalp trade has zero limits regarding profit taking. The market conditions create the limits.
2. Forex scalping is riskier than trend following.
First the trader needs to understand that the amount of available trading capital determines the amount of risk you can take. The smaller the trading account, the less risk one can take.
The forex trader with limited capital needs to trade with a very tight stop.
When comparing scalping to trend following, trend following requires the trader to trade with a very large stop; scalping techniques allow one to trade with a very small stop. Trading with a tight stop means the trader is trading with less risk. You simply can not trade a trend following technique with a tight stop.
3. Forex scalping requires you to be glued to your computer for hours at a time.
If you are using a solid scalping process, you should be in a trade for less than 30 minutes in most cases. Scalping is actually less time intensive. Trend follows requires the trader to be in a trade for extended periods of time.
Because the forex is the world's most volatile market, the trend follower is always checking on his trade. The trend follower never wants to be far away from access to the market. A common practice for a trend follower is to get up in the middle of the night to check on his trade.
The scalp trader can achieve the exact same profit in a fraction of the time simply by trading multiple lots. Get in, take profit, get out. Turn off your computer and go enjoy yourself.
As is often the case, myths and misconceptions are created from erroneous ideas.
Typically when a trader is tempted by the idea of fast and easy profits, these erroneous ideas become the driving force.
Forex trading is an excellent way to generate additional income. Forex trading is not a unique endeavor that does not require proper training to realize consistent positive results. The bottom line is, getting properly trained is mandatory if one wants to realize success.