Do you want to embrace the scalping strategy to earn money in the online trading market? First, you will need a brief "summary" of how this technique works, and then, thanks to our advice, you will learn more about the most interesting maneuvers that over the years have allowed many successful traders to earn quickly.
Taking the battle techniques of the American Indians as a model, those who do scalping must put in place rapid and effective investment strategies to get their prize, in this case the scalp. We don't know if the term comes from this technique, but we like to think yes!
As we said, this way of doing business is characterized by having to operate in very short margins of time, even in a few seconds during which the trader must open and close positions.
The person who uses scalping techniques as a strategy is called a scalper: he must therefore try to take advantage of the moments of volatility to go and place a series of operations that can generate as much profit as possible during the 24 hours of trading. It doesn't matter if every profit can be considered of short amount, since it will be the total sum that will make the scalper smile at the end of the trading day.
Precisely because of these characteristics, among the trading strategies is the one with the highest percentage of loss risk on the market.
If the management of the money invested is not monitored, there is a risk that an excessive number of losses will accumulate throughout the day on which the transactions were carried out.
If we compare scalping techniques with position trading strategy, we can draw several interesting conclusions. First, those who use the second, less risky technique considers not only the indicators relating to fundamental market analysis, but also those relating to technical analysis.
With this data, it can effectively establish the right strategies for the various investments. Unlike this, those who use this mode is not interested in fundamental analysis but goes to the heart of the matter, focusing on simple short-term technical analysis.
Another technique to be used is the analysis of the trading system: thanks to a series of specific software that automate the analysis phase, they can have a precise knowledge of the market price trend. At this point it becomes faster to place orders to buy or sell after assigning specific instructions on the conditions to follow to the software.
That's why those who use this type of online trading tool prefer to use computers better, so they can operate more easily on tight timeframes that human logic can hardly follow carefully. These are transactions that last only a few fractions of a second, unlike daily trading techniques.
The scalper must therefore have a profile: it is a strategy suitable only for those who have a character able to withstand stress and have a high tolerance of risk and loss management.
You also need a lot of concentration and determination to work carefully with specific software, to have the right coolness of not intervening during the automated operations that are leading to losses and are "apparently" draining the account of those who trade.
When we start to exploit the strategy we are talking about, we want to achieve many small profits that still manage to cover the costs of operations: and this represents one of the most "cumbersome" obstacles to overcome. In the jargon, we speak of tight stop losses for take profit.
When we go to trade on Forex, for example, the spread of those who exploit the technique in question goes to move between 2 and 4 PIPs and you must rely on brokers that do not cost too much from the point of view of commissions.
The most used technique is to enter a countertrend. This means that the most optimal rebound phase is used, i.e. that which takes place under short-term resistances or on supports. By developing the operational lines of reference, we go to buy when we are on the supports, and to sell in case we are close to the resistances.
The profit of those who do scalping is based on identifying these points where the price tends to issue PIPs in countertrend.
Another strategy is to exploit the Bollinger bands.
This type of strategy, or rather speculative technique, has been developed since 2003, when the exponential development of trading platforms allowed the use of very rapid price movements, even if of a more contained size. Currently also in Italy dynamic scalping is one of the most used techniques.
This is also since traders can lower the risk level of the trades, thanks to a very close stop system.
Let us start immediately by clarifying what they represent. In practice, they represent a "graphic hole" between the minimum and maximum of the period being analysed. It is therefore obvious that these are very important indicators in the medium and long term. This is of little importance to investors working with scalping as it can often occur in the time graph.
Let's say that with the passage of time the gaps tend to close (in practice, sooner or later prices always return to their original values); quite another story is instead to determine when this will happen.
They are very important in the field of technical analysis, therefore, precisely because they have the possibility of becoming supports or resistances. Gaps can occur for example after news of high financial impact is released or after a new product is released; they can obviously affect previously planned stop losses and take profits.
The quotas at which stop loss and take profit quotas are blocked are very important to bring up as much as possible the profits deriving from the operations that are intended to be carried out.
We are talking about two very important inversion figures that we may encounter during phases of oversold or overbought market.
Let's give a definition of oversold and overbought. These two concepts are linked to the so-called oscillator indicators, which we have already discussed here.
We notice this technical figure when these elements occur on the graph we analyze:
This concept is represented by a set of graphs whose study attempts to anticipate the reversal of the trend of a financial instrument. We will have a situation that can be categorised into this type of mechanism when:
Obviously only practice and study will help you recognize early head and shoulder training during phases characterized by oversold or overbought. The advice that we feel to give is, however, to discuss properly even on the forums dedicated before diving into investments of this kind.
Let's now talk about two price patterns, called continuations, since they are represented as phenomena of market consolidation. In practice, they set moments when buyers and sellers lighten their activities slightly. It is therefore quite easy to identify the formation of triangles and flags that follows a fairly accelerated phase.
As far as bullish flags are concerned, they illustrate decreasing maximums and minimums with an inverse inclination with respect to that of the trend (vice versa, for bearish flags, we would have increasing maximums and minimums).
The pennants instead have a triangle shape: the maxima and the minima are directed towards a specific point; from this point the trend that had previously suffered a setback will start again.
It should be remembered that both the figures we talked about show a discreet decline in volatility compared to the original interrupted trend.
The forex market continues to be one of the new places where you can earn money online through services open to all. Given the possible high earnings, the financial market has become the golden egg hen. But be careful because not all that glitters is gold. On the web and beyond, we have begun to talk about this new way of operating on the financial markets in order to make very high profits. This is only true if you have knowledge of the market itself. Nobody gives money, either elsewhere or on the internet. So be careful about the losses that can be around the corner and huge.
That said, we now come to one of the best ways to trade online. Scalping in forex is a strategy that we warn you is best used if you are already practicing this world. This is not a technique for beginners.
Traders use the scalping technique when they expect upward or downward trend signals, opening and closing several trades very quickly throughout the day, and they trade on Forex markets with a lot of liquidity, and with a low risk factor. This technique is purely speculative, which in the past was more widespread, while today few traders use it.
Buy and sell in a period that can be as little as a few seconds and up to a maximum of 15 minutes a copy of currencies. By using leverage, you can have limited gains but with little risk, by focusing on the smallest change in currency prices. Practically the Scalping technique can be carried out in this way: make small profits every day, to obtain a profit that satisfies us, without resorting to financial leverage.
The technique of scalping is made especially for people with a mental lucidity out of the ordinary, because they focus on imperceptible price movements, and open many hundreds of operations a day. The scalper, as a goal must gain little on each operation.
In Forex the currency pairs with the lowest number of transactions are: euro-dollar, dollar-yen, euro-yen, pound-dollar, during the European session, from 9 to 18 where the volume of trading represents 50% of the total of the whole day.
In forex there are no commissions, the costs of buying and selling are low. It is possible to operate with reduced capital by using the financial levers offered by the various intermediaries.
Scalping is a technique based on speed. Those who use this technique are speculating very quickly on the currency market. Many people talk enthusiastically about it, because if you are good it really allows you to earn a lot of money in a very short time, others hate it and consider it the cross of trading.
Let's start with the name. It comes from "a sensation": to bring home a big trophy in a short time. Scalping means operating very quickly on the market, with a controlled risk margin and generally very low. Trends and market trends are not interesting for scalpers: technical analysis is not required. Scalping is pure speculation: entering the market, placing orders and coming out lightning fast. The main tool used by this technique is the book, which is a list with the buyers and sellers of currency. This book is the basis through which the scalpers decide to make their own investments. Analysts also use the book, but or do to try to predict upward or downward trends in currencies.
The advantages of this technique are many: you can certainly have daily income: the scalper can operate hundreds of runs per day entering and exiting the market many times, because each operation as mentioned lasts very little. Through the scalping then you have the real perception of what you are gaining or losing in real time. The practice is the one that will play in your favor, if you are good you can earn hundreds of euros per day, while the average gains for non-experts are around 50 and 100 € per day adopting good strategies of scalping in Forex.
The risks are rather low, and this is one of the strong points of the system, of all types of trading in fact, scalping is the one that offers good margins of risk management. With this technique your capital is safe because all you risk are a few pips at a time, then you go out and you stay to see what happens.
Operation is always guaranteed: there is no need for a well-defined trend, but you can enter the market at any time.
There are some data that it is important to know to become a good scalper: that is, the opening and closing times of the major financial centers; the overlapping of open markets in different financial centers, the differences in time zones and the times applied on the platform with which you operate. In short, we need to identify when the markets are most active so that we can seize the moment. For example, the Italian 22, when the American markets are about to close: these are times when your actions can be fast and very profitable.
If you are fascinated by the world of scalping and speed of thought is one of your characteristics, you have found your mecca! In short, it will be the practice that will make you understand if you are ready or not to do the scalp to classical traders or if you are more types from technical analysis. The only way to find out is through practice.
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The Relative Strength Index (RSI) is widely used by analysts who want to invest in trading, especially those who trade in Forex, the futures market and stock markets. Please note that this article can be converted into PDF and used as a practical eBook. After having carefully verified its application with Bollinger Bands, we see its functioning in other contexts as well.
Parabolic Stop and Reversal (Sar) refers to a trading system based on price and time. In the graphic aspect, it is represented by a succession of points above or below the prices, takes its name from the parabolic form that outlines in the graph. The succession of points of the Sar in the chart if it is built below prices means that it is in bullish trend, on the contrary if it is built above it is in bearish trend.
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