There are many styles of trading, one of which is day trading – buying and selling currencies within a day. To successfully day trade on the FX market, beginners and experienced traders use two common methods: scalping and pipsing.
These strategies require a watchful eye on the movements of prices within short periods during the day to make profits.
Scalping and pipsing aren’t as difficult as they may sound, but they require time and effort to become an expert. Read this article to learn more about pipsing and scalping and some tips you might find useful.
What is Scalping?
Traders who use scalping, commonly known as scalpers, try to profit from the currency rate fluctuations that occur during the day.
They hold a trade for a brief period before closing it with a modest profit of a few pips (5-10) when they have spotted a profitable movement. A scalper can execute several hundred trades daily because this strategy calls for brief holding periods.
Scalping vs. Pipsing
Though they may be similar, scalping and pipsing are not the same things. Scalping is short-term trading that can last between a few seconds and ten minutes.
Alternatively, pipsing is a more narrow version of scalping. The holding time is very short- a few seconds to 2 minutes, tremendous leverage (up to 1:1000), and a goal of a smaller amount of pip gain (0-5 pips).
The Best Scalping Tips
Pipsing and scalping are tense, high-octane types of trading. Engaging in them requires a particular personality, extensive experience, and mastery of fundamental analysis.
A stable internet connection and high speed are crucial for success because these trades happen within minutes or seconds.
While all those factors are important, there is nothing more vital than choosing the right broker and account for you. The simplest road to an informed decision is to compare forex brokers on Brokersview.
A few other basic tenets you should beware of are:
- Center your focus on one pair at a time;
- You can test and perfect your strategies by using MT4 testers;
- Your trading attention should be on currency pairs that show high liquidity and high volatility (USD/EU, USD/CAD, USD/JPU, AUD/USD);
- Your ECN account should have a speed of up to 100 ms and a 0.0 floating spread;
Forex Pipsing Strategies
You can’t become an expert at anything overnight, so it’s unrealistic to expect you to become a forex master after one strategy. To grasp the essence of this trading method, it is best to try it repeatedly.
There are many additional strategies at your disposal that you can combine with pipsing. Here are the top ones.
As the name suggests, trends inform these decisions. In the world of forex trading, trends occur when the price moves in a certain direction, regardless of whether it’s upwards or downwards. Trend traders use moving averages, trendlines, technical indicators, uptrends, and downtrends to determine where to position themselves.
Unlike trend traders, who base their strategies on the assumption that the trend will maintain its course, counter traders assume the opposite. Their strategies are based on predictions of whether a trend will reverse or the price momentum will stall.
This is not a common strategy amongst scalpers because it takes a lot more time. For this reason, holding on to a countertrend trade will usually last several days or weeks.
Statistical trading is essentially based on pattern and anomaly recognition. Traders base their choices on price, chart patterns, the time of day, the day of the week, and other factors. For example, you can decide the longevity of holding on to a trade based on the time of day.
This strategy will work best if you are a savvy and seasoned trader. While statistical trading is based on in-depth analysis, intuitive trading relies almost completely on intuition and past experiences.
Psychology of Pipsing
Forex scalping is not for everyone. Many traders disregard this style because of its high intensity and level of risk.
Its basic requirements are a keen eye for detail, constant vigilance, and quick intervention.
Should I Give Scalping and Pipsing a Chance?
In short, yes, you should give scalping and pipsing a chance. Although they involve a lot of risk and stress, they also have many benefits. The advantages are fast earnings, no swap fees, and a smaller initial deposit.
You can give a demo account a shot and perfect your strategies if you’re unsure of your scalping skills. The automated trading option is also available – select a strategy and let a bot do the rest.