In forex trading, the trading is always done in pair as one currency has to be used for comparison with the other. For JPY/USD pair, it has to be seen as to how much the Japanese Yemen is worth one US dollar. The trader on selling JPY will also have to buy USD and that’s how the forex trade works. The pip value is considered while trading as explained above. It is thus, if the JPY/USD rose to 1.6033 from 1.6028, then it is said that there has been a rise of 5 pips, as the last decimal point is considered. The lot size is referred to in many ways such as mini, micro and standard. Mini increments of 10,000 are what is regarded as the common lot size prevalent. If you take the pairing of EUR/USD as an example, for this size, the charge is $1 for each lot. That means if you have 3 lots, the lot size is 30,000 and the pip value is $3. The pip value for different currency pairs is different. There are no commissions involved in online forex trading.
The currency in which you trade does not make much difference. It all depends on what you have bought. If the value of the currency you have made goes up, you make a profit. That’s all. Let us consider the JPY/USD example again. If you are selling JPY, then you are buying the US dollar at the same time. If the value of USD increases as compared to the JPY, you make a profit. But remember, the value of pip is what you need to consider.
Currency rates do fluctuate but to a very minimal. May be, there can be just 1% change in the value of the currencies, because of which online forex market is one of least unpredictable fiscal markets in the world. Since the liquidity and leverage factors are high, the online forex trade has been growing at a rapid growth and thus making it much popular with traders. One can either keep the position for few minutes or keep it for even months. Even large players such as big banks or other financial institutions cannot manipulate forex market, because the market is very huge and the currency prices depend on supply and demand on which no one has any control.
What is One Minute Scalping
Scalping 1 minuto is a method of trading for a small profit basis technical analysis available on a real-time basis. This buying and selling of currencies happens in a very short period of time and the trader makes an immediate profit on holding or exchanging positions. Scalpers make a big profit by making hundreds of trades in a day and holding the position only for a few seconds or minutes.
How to use this strategy
It’s important to have a broader understanding of the market you are playing with. Understand and deploy strategies to see how they work in different situations of the market, make a thorough note of their placement, positions and profits or losses booked using the strategies. This works as a foolproof guide to understand the market dynamics.
Even if the Scalping 1 minuto strategy doesn’t work the risk is not detrimental, it’s a nominal amount of loss a trader suffers. This strategy when works doesn’t create exponential gains, its best used to book small profits.
What is crucial for this strategy to work is the perfect exit strategy. The scalper needs to set up an exit mechanism, if that’s not done, then the small profits booked will be wiped off by the big loss which comes up.
Requirements for the strategy
Having access to the accurate live feed, a direct access stock broker and the stamina to place many trades are the key mantras of success in this strategy. Scalping achieves results by sacrificing the size of wins and by increasing the number of wins, this is a long-term game when played correctly the gains outplay the losses.
Styles of scalping: Scalping can be a primary, supplementary or umbrella style of trading.
For example: A scalper may look at the time and sales volume and accordingly may buy and sell. A trader might notice blocks of stock being purchased on a specific time every day, then may buy ahead of time and sell these stocks to make a marginal profit. A small delay may dump him or her into big losses, so a direct-access broker is the rock-solidweapon of choice.
Advantages of Scalping:
Neutral: Scalpers need not wait for an upward or a downward market to buy and sell. They can scalp in a neutral market also to make a profit, because this strategy is not about volumes of big profit, it’s about making smaller profits over numerous trades. Therefore, traders can profit in almost any market environment.
Risk limit: Buying and Selling happens in the same day. Technically a trader buys and sells away to make a profit in the same day and this stops and saves his trade from meeting any unfortunate events that happen overnight. The idea of day trading is to start the day with investing money and end the day with packing profit. As long as this strategy is scrupulously implemented loss is out of limits.
Consistency: Traders must be disciplined to observe the market and move accordingly. As the market trend need not be high or low, it’s important to target small price movements that occur with a greater frequency and move the stocks accordingly.
Objective: Scalping runs on some specific rules and formulae. This removes a lot of discretionary decisions and subjective thinking. The simplicity of this methodology wins over a lot of other strategies. One must follow the entry and exit strategies clearly to make profits from the game.
Risks and Contingencies: Scalping is a great strategy for a short-term trader. However, markets are capable to playing adverse and eliminating any profits booked in a fraction of second. There are certain considerations for a profitable play. Key risks of scalping include but not limited to the following.
Slippage: A scalper needs to have access to accurate quoted prices, high-speed broker and laser sharp connectivity. If any of these slips, the trade takes a southbound trend, profits eliminated and losses booked.
Discipline: Scalping needs speed of entry and exit and a lot of observation and study of the market forces, there is no room for complacency and delay in decision making. If discipline and consistency is not the forte of the trader, he or she might end up making huge losses which will wipe out profits made over a period of time.
The bottom line is: Scalping is a great strategy for pure scalpers and for regular traders who use scalping as a strategy. This strategy needs a lot of practice, discipline and market knowledge to lead the game and book profits.