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What Every Forex Scalper Must Know
What Every Forex Scalper Must Know
Scalping is one of the most entertaining forms of trading. You can make several hundred and eventhousand dollars in a few minutes but you can also lose that same amount of money within seconds.This seat of the pants roller coaster style of trading attracts many traders, mostly new traders.
It is easily to get sucked in, especially if you have some early success, but remember failure is rightaround the corner. Everyone who has had some immediate success with scalping has always hadseveral days where they have almost lost their shirt. It's inevitable that this happens and isextremely likely because new traders use too much leverage and don't use a money managementsystem.
Not only is scalping hard to be successful at over the long time because it's mostly discretionarytrading on the retail level, retail traders do not have the correct tools or brokers to scalp effectively.
Retail traders do not know this dirty littlesecret: Your broker wants you to fail! Butyou thought they only earned money on thespread! Most retail brokers also act as the
market maker for their customers, that means that your broker is on the opposite end of each one ofyour trades!
If that wasn't enough dirt, you also do not get to see the market as it actually is! The price feeds onyour retail account lags the major banks currency feeds, so you can't really scalp in real time.
Although the pip fees at most retail Forex brokers isn't too high, it's still too high to truly scalp. Iknow have had this thought: I would make a killing if I didn't have to pay so many pips on eachtrade. It's a valid thought and it's why professional scalpers don't use retail brokers. Imagine howmuch money you could make if your pip spread was under 1 pip? You could truly scalp the market allday long for micro pips.
Professional scalpers either use an ECN or they have account directly with the major banks. This ishow they are able to truly scalp the currency market and earn those little fractions of pips whichequate to big dollars when you use leverage.
So what should you do? Well you should probably look into trading with an ECN or if you can affordit get a direct account with a bank feed.
One last thing that you don't get on a retail account are an order flow book. An order flow book willallow you to know when trades are cz rifle magazines being made and for what amount. This willallow you to know when a bank is about to pump in a large amount of money to move the market.There are traders who scalp the order book without using any charts.
As you can see, there are a lot of secrets that your broker is keeping from you. You are missing outon so many opportunities to get an edge when you trade with a retail broker.