A trading strategy called scalping is in great demand among novice traders and experienced professionals. It is a very dynamic type of trading and the best teaching method for investors. Scalping involves the execution of many short-term trades with little profit.
Who suits
Scalping can be done by both beginners and professional traders. This strategy requires a lot of daily effort, since all actions are carried out simultaneously on multiple monitors. It is important to have patience and the ability to control your emotions. You need to correctly assess the degree of risk for each transaction and properly manage your capital. It is almost impossible to achieve this without trial and error.
Advantages and disadvantages of the strategy
Trading on small timeframes attracts traders' attention due to the following advantages:
- Fast results. It doesn't take long waiting to make a profit. One day is enough to close a lot of deals.
- Good income. A high level of income is achieved through the use of large leverage, as well as many low-profit transactions.
- Low risks. Even if there are unprofitable orders, there is no risk of losing all funds at once.
- Earnings on any asset. You can increase profits on almost any asset, but it is recommended to give preference to more liquid options.
- Ability to experiment. It is scalping that is considered a good field for experimentation by novice traders.
But not everything is as perfect as it seems at first glance. There are also disadvantages in scalping that can cause financial losses. These include:
- Time. Large costs in time, since there is a need for a constant presence in the market.
- Brokerage commissions. For all transactions, the broker receives his percentage, and their number is huge.
- Maintenance. Scalping requires additional software, which in most cases is paid.
- Emotional factor. You need to be able to stay cool and deal with heightened emotionality as quickly as possible.
There is a wide variety of scalping software that is free or paid. Despite the visible differences in the interface, they are all characterized by similar functionality.
