There are many avenues that a trader can pursue when trading currencies and many markets, in addition to the spot market, where one can ply his trade.  Futures and options have gained appeal due to their low capital requirements, but tried-and-true traders tend to gravitate back to the industry stereotype of a day-trading scalping expert extraordinaire.  Scalping strategies lie at the core of short-term position holding, preferring minutes to the days or months of position or swing traders.  However, not everyone is cut out for this “sport”, but if you think you are, here are a few considerations to contemplate if scalping truly looks tempting to you.

To begin with, your personality type must be a fit for the ordeal of daily scalping.  Consider making one hundred trades in five hours, planning each position, securing stop-loss and take-profit orders, monitoring levels of support and resistance, and closing positions quickly enough to avoid adverse swings in the market.  If you do the math, the average holding period is three minutes.  Are you comfortable with this hyper-activity? 

The objective of scalping for a forex trader is to compound many small gains over a period of time in order to accumulate significant profits.  Volatility becomes your friend as major pricing movements offer the best opportunities for this art.  The trader must be able to act quickly, have consummate knowledge and ability with trade execution and technical analysis, and be very disciplined in his approach.  Fundamental analysis is not at the forefront, but awareness of major data releases can guide one to strong trend development.  As for leverage, there is a constant debate on its use, but newcomers should avoid its use early on as increased leverage means higher risk.  Once again, experience is key.

A beginner may also purchase a forex scalping system from numerous offerings, but accepted wisdom is that these products over complicate and distract a would-be scalper from learning the proper skills to survive.  It’s “best practice” to develop your own trading plan with the aid of a professional, hopefully, a mentor that you have trained under during your initial training regimen.

After accepting these brief introductory constraints, the major decision facing a potential “scalping artist” is to find a forex broker that is aligned to support your needs.  As with “strokes”, there are different brokers for different folks.  The broker decision is more paramount to your success as a scalper trader than with any other trader type.  Not all brokers support scalping or they deliberately slow down your order execution to discourage the practice, so a search is required.  Since you will be trading in volume with gains and losses in the 3 to 5-pip range, you must find a broker with tight spreads for your selected currency pairs and a compensation schedule that is acceptable.

Since technical tools are an imperative, the broker must support a trading platform that can perform as you desire.  In theory, quotes and order execution must not be subject to “slippage” or your ability to get in and out quickly will be impaired.  Even if there are brokers that claim to fit these requirements; they will most likely be of the “NDD” (No Dealing Desk) or “ECN” (Electronic Communication Network) variety, there are no fully guaranteed order execution system out there.  Check broker review sites and seek guidance from your mentor or other traders that engage in scalping.  You require a modern and competent broker or success will always be illusive, no matter what your “win/loss” record may be.

There are additional considerations regarding the best pairs to trade, when to trade, and what strategies to employ, but these issues follow after proper broker selection.