What do these two terms mean? This type of trading allows gaining profit from intraday currency fluctuations on the market. As a rule, such trades are kept opened only for a couple of minutes. A single pipsing or scalping trade would not provide you with much profit, that is why the main principle of these two trading styles is having as many positions closed as possible.
The number of deals carried out by pipsers and scalpers runs to approximately 200 per day. It is, however, imprudent to expect that all the deals will prove to be profitable. The result to strive for is a positive balance by the end of a trading day.
Scalping is a unique approach to intraday trading. Using it, traders close deals right after they gain a small profit of several points (or pips, so the other name of this strategy is pipsing). Sometimes, it takes a few seconds. Experienced traders can make hundreds of such fast deals in one trading session. As a result, hundreds of small profits make up a hefty sum. For professional traders, scalping is one in an array of efficient tools while amateurs may use it as a self-sufficient method for earning money and getting an insight about trading. Moreover, scalping is a general-purpose strategy that can be applied in any market: forex, futures, stocks, and/or cryptocurrencies. However, brokers are not equally versatile in this regard. Some brokerage companies forbid scalping.
Otherwise, if a broker allows this trading strategy, then it should provide the following conditions for effective work:
Importantly, the scalping strategy requires total concentration and patience. Scalpers should monitor the price movements constantly as well as react to any changes and make decisions promptly. What is more, the stress level is high. It can be rather challenging to withstand several stop loss orders that are triggered in a row. In scalping, it is a common occurrence. Besides, pipsing has some drawbacks such as:
Despite these disadvantages, scalping is one of the most popular trading strategies. Mainly, it is so because scalpers can get the most out of every price movement. They always keep abreast of the market developments and control the situation. Other advantages are:
Now we know why the scalping strategy is so popular. However, keep it in mind that true scalpers should be scrupulous and stress-resistant.