How to Limit Risk and Make Huge Profits

Forex scalpers aim to make small regular profits and in time build this up to a large income. Forex scalping is very popular and here we are going to look at how not to lose your money at it.

The best way not to lose money is not to even try it - it doesn't work, before we explain why you may wonder why you see so many courses and people claiming big gains so here is the answer - the gains are paper gains and not real money. Read the disclaimer below which you will always see or a similar one with any forex scalping system:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

As you can see if a trading system carries the above it's of no real use in terms of indicating profitability. We can all make money knowing closing prices and past data - it's easy. In the real hard world of forex trading, you don't have this luxury.

So why is forex scalping doomed to failure? The answer lies in the data is not reliable and you cannot (no matter how clever your trading system is) get the odds on your side.

In currencies prices in a few hours can and do go any where volatility is random and support and resistance levels within a day simply cannot be used to get the odds on your side.

As all volatility is random you are destined to lose long term. If you think about this it's obvious:

Huge numbers of traders make the final price and they all have different motivations, skills and levels of emotion that input into their trading and to say this huge mass can be predicted in short time frames is ridiculous.

Not only do you have the above to contend with but forex scalping breaks a fundamental rule of trading:

Run your profits to cover your inevitable losses.
All trading systems have losses and drawdown periods and you need to run your profits to cover them. Now scalpers do get profits (everyone is lucky some time) but what do they do - Do they run it? Not a chance they bank it!

Of course luck doesn't last for ever and if you are trading with the odds against you your on borrowed time and will lose eventually it's just a question of when.
So if you want to keep your equity intact don't forex scalp - trade longer term and get the odds on your side. Sure, short term trading sounds great but the odds don't stack up it's a wonder that sane intelligent people in other walks of life think they can win with a made up track record and a system costing a few hundred bucks.

You can make a lot of money trading but forex scalping is doomed to failure - trade longer term, get the odds on your side and win.
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Forex Scalping – Day Trading the Smaller Moves for Big Gains

The forex scalper who day traders does not look to make big profits per trade he seeks a lot of small profits over time that mount up and yield huge FX Profits overtime. Let’s look at forex scalping in more detail.

More novice traders try forex scalping than any other method and there is a huge industry on the net, which sells courses and forex day trading systems, to help them achieve their dreams.

Unfortunately, that’s all they are dreams - because Forex scalping simply has never worked and cannot work.

It simply guarantees you will get wiped out.

Why?

Its obvious and common sense. Millions of traders each day, trade trillions of dollars and to say that you can work out what this huge mass of traders will do in just a few hours, is laughable.

ALL Short term price moves are random.

Volatility can and does take prices anywhere in daily time frames and support and resistance levels are not valid - you can’t get the odds on your side and you will lose.

So Why Do So Many People Do it?

Well it’s a good story and the majority of forex scalping systems are sold with one aim in mind:

To make money the vendor is much to sensible to trade it himself – he makes his money appealing to greed and selling it to a naive buyer, who then losses.

The vendor pockets the profit and the buyer gets a hard lesson in the market he wont forget.

But I Have seen track records that make money!

Sure, you have – but check the disclaimer and you will see the words - "hypothetical" and "simulated".

Now this means that the track record was done in hindsight and simulated - KNOWING the closing prices!

How hard is that? A child, or anyone who can read and write can do that!

The problem with forex scalping comes when you have to trade it not knowing the closing prices, then the reality hits – a swift wipe-out of equity.

If you really want to prove this for yourself ask a vendor this simple question:

Can I please see YOUR track record of real time profits over 2 years or more?

Go ahead and try it and see what they say.

You won’t get one, or if you do, let me know - I have been asking this question for 25 years and never got one.

Forex day trading is a good story like little Harry Potter, the one the thing they have in common is their both made up.

So if you want to win and make money at forex trading, forget forex day trading and forex scalping and get the odds on your side.

This means, trading valid data and getting the odds on your side.

Try forex swing trading or long term trend following – both can work and you will be trading with the odds.

If you want to win at forex trading, then you need to do your homework and at least try methods that trade the odds, with forex scalping you could flip a coin and have as much chance of success.

Finally, maybe I am being a bit hard on scalpers and day traders if you find the elusive track record that makes money longer term, send it to me wonder what the odds are of that not happening?

Trading With ForexGen

The Foreign Exchange currency market is known as FX. It is the simultaneous buying of one currency and selling another, currencies are traded and exchanged in pairs. Traders are all unified on one goal, making profit. Profits are produced when the prices move in the trader direction.

In the past, Forex markets were accessed only by larger financial institutes, investment banks, large multinational companies, global money managers, international currency dealers, and liquidity providers. Lately, online trading is offering trading platforms for each individual who wants to trade currencies in order to gain profit.

Forex Scalping for Beginners - Learn This Simple Fact or Lose!

This article is all about forex scalping for beginners and a key fact you need to learn, if you are thinking of incorporating it in your forex trading strategy - If you don't understand this fact, you are 100% guaranteed to lose, so here it is...

Forex scalping is based on dumb logic and doesn't work. Before we look at why, lets dispel the myth that vendors selling scalping systems make money - they don't. You will always see this with any track record - read it carefully:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Personally I think the above should be banned and vendors should NOT be able to present track records that are not real, as they are totally meaningless.

Let's face it who couldn't make money knowing the closing prices?

My little Niece could beat George Soros (and she's only 9) if she knows the closing prices! The problem is we can all be multi millionaires quickly with this info - but trading forex is a little harder, we have to trade not knowing the prices in advance.

Check any forex scalping track record you like and you will see the above or a similar disclaimer. I did see one that printed the vendor's bank statements as proof the system made money but that profit was probably from selling systems not trading!

Of course there were no supporting broker statements.

So why is forex scalping destined to lose?

Think about how prices are determined:

Millions of traders all with different systems, motivations etc all as a mass group decide the price and you CANNOT Predict what this group will do in a matter of hours.

All short term volatility is random in nature, you cannot use short term levels of support and resistance, so you cannot get the odds in your favor and you therefore cannot win at forex scalping and that's a fact.

Forex scalping and day trading is an area where you won't make money, so don't bother trying. If you must trade short term use forex swing trading - its still short term but you can get the odds in your favor and that's what you need to win at forex trading.

Today there are many vendors who simply lie about the profit potential of forex scalping and hope the naïve or greedy trader falls for it - make sure you don't.

Forex scalping always reminds me of the old burger king ad where they claimed to have more beef in their burgers than McDonald's and in the ad the man picked the burger up and said:

"Where's the beef?"

In forex scalping terms translated means:

Where is the real audited track record?

To be fair it's not a fair comparison.

There was of course beef in the McDonalds burger - but you won't find any profits in the track record of a scalper, just a made up track record done without trading!

So our lesson is in terms of forex scalping for beginners - forget it, try a different way of making money in forex and if you want to trade short term - try swing trading.

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If you are an experienced ‘FOREX’ Trader or just a beginner looking for the opportunities offered in the ‘FOREX’ market, Forexgen has created ForexGen Academy to give you the chance to get a ‘FOREX’ education and improve your trading skills. No hard expressions, no buzz words, and no rocket science language are used throughout these lessons.

Forex Scalping And Day Trading Success

How To Win And Generate A Monthly Income

If you look online you will see numerous vendors selling promising you day trading and scalping success but what do you need to win? Let’s find out…

The industry that surrounds forex scalping and day trading that sells systems is huge and it sounds very appealing but if you strip away the gloss the logic doesn’t work. We will look at why in a moment for now lets see why the track records always make money that you see and the warning below will give you a clue…

“CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading.

Ah so they have never actually been traded and how much use are they? Well the conclusion of the disclaimer makes it very clear.

“Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

So you have someone who claims they can make you money but hasn’t actually done it themselves so why can’t they make money in real time?

Quite simply because forex day trading doesn’t work.

It sounds good trading small moves with tight stops for profits and it would be a good idea if the volatility that occurs in any daily trading session was not random but it is. So if you place a stop using daily levels the only way you can win is by luck and your luck won’t last forever!

You can apply the best systems, technical indicators and try as hard as you like but if you cannot use the daily ranges you’re going to lose sooner rather than later.

Lots of people tell you that human nature can be predicted with science in short time frames but if the markets moved to science and we could predict then there would be no market, as of course we would all know the price before hand.

So if you want to trade forex and win day trading and scalping wont help you. You need to trade longer time frames.

Swing trading is a good option. You are trading valid data, you can have stops quite close and you have plenty of action. It’s easy to learn fun to do and can be very profitable.

So leave day trading to the losers and don’t believe the hype it doesn’t work as the logic it is based on simply doesn’t add up.

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Forex Scalping: Good or Bad?

Forex investors and traders are more and more getting interested on Forex scalping. True forex scalping involves opening as well as closing of a position within few seconds or minutes at the most.

Scalping employs leverage and as higher leverage means higher risk, it is substantially decreased by the short duration for which the position is open in the market. So, if forex scalping is supported by proper strategies, it provides additional risk control features that are not present in any other trading methods including day trading.

But brokerage firms do not encourage forex scalpers, and they have valid reason for doing so. Many brokers make money by trading against clients through dealing desks. The reason is, as the broker needs time to use the dealing desk, they cannot use it in case of a trader having scalping which takes less than a minute and the broker does not have time to deal the money.

Although regular traders are not much affected by it when they stay in the trade for hours or even days, scalpers are different and not liked by the brokers at all. Scalpers as a result use automated trading platforms for making their trades.

MetaTrader 4 or MT4 is a platform that is used by the scalpers to a great extent. Using the platform without any restriction needs ECN-type feed. Many experienced traders customize forex robots according to their strategies and needs, which work partially automated and partially manual functions.

Forex Scalping involves taking profits on extremely small price changes, just after the trade has been entered and becomes profitable. As per this strategy, the trader looks for nothing more than a quick 5-15 pips profit. If you can maintain a strict exit strategy scalping is rather safe than other forex trading strategies.

The demarcation between scalping and short-term trading is thin and at times subjective. If you trade for less than a minute the broker would consider that to be scalping and may warn you. But if it is more than few minutes, it can be described as short-term trade. A scalper needs a broker having non-dealing desk. The minimum amount to open such an account may be higher, which is usually $2,000 and above.

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Forex Scalping- A Key Market Factor You Must Know

Forex scalping requires a completely different mindset to other forms of day trading. Those who engage in Forex scalping normally make a number of trades a day taking somewhere between 5 to 10 pips from the market each time in many cases. Of course, the more trades that are made, the higher probability the scalper will have losses.

Hence the need to exercise discipline and not shoot at everything that moves. Look for only high probability trades. This however is easier said than done. That is why the following piece of information is critical in understanding market behavior from a Forex scalping point of view.

A Crucial Piece Of Information

The crucial piece of information we are referring to is this:

Somewhere between 60 - 80% of the time, the market is in consolidation.

This means that most of the time, the market is not making significant moves. It tends to range in a consolidation channel for hours at times before another significant move takes price to another level.

This market behavior pattern is ideal for Forex scalping once the trader fully understands it.

Develop Recognition Skills

Whenever the trader opens a chart, key support and resistance levels need to be identified. Previous highs and lows should jump out at the trader and be quickly recognized and identified.

To this end it helps to draw horizontal lines on the charting software to mark the top of a channel and the bottom of a channel on whichever time frame the trader is using.

The Key Forex Scalping Principle

The main principle that governs Forex scalping is the same principle that applies to all forms of day trading:

Sell The Rallies - Buy The Dips

Hence, when Forex scalping, the trader will look for ranges or consolidation channels where price is obviously moving (often within a 20, 30 or 40 pip range) and set an entry order to go long when price hits the bottom of the range, or an entry order to go short when price hits the top of the range.

There is always the possibility price will breakout at that point in which case it will be a losing trade. That's why it is important to maintain tight stops, perhaps no more than around 15 pips to keep the profit/loss ratio within reason.

Be Selective

To make Forex scalping trades higher probability it is important to select trades that have a number of elements going for them.

It is often not enough to just jump in on any range you see and enter an order to go long or short at the top or bottom of the range.

You want to look for ranges where the top or bottom coincides with other indicators. For example, the 200 EMA (Exponential Moving Average) is a very powerful indicator on the 4 hour, 1 hour, and 15 minute time frames. Seeing it is one of the most popular indicators of all time used by traders in the global market place, it pays to take notice of where price is in relation to the 200 EMA.

So if you see a trading range where the top or bottom also coincides with the 200 EMA on one of the higher time frames, zero in using the 5 minute chart, draw your horizontal lines to mark the range or consolidation channel, and choose a suitable order entry point. The 200 EMA provides a strong level of support or resistance, depending on which direction you are trading.

Likewise, if the top or bottom of the range is also lining up with a pivot level, or a Fibonacci retracement or extension level, you have added reasons to believe price is going to respect that level, at least for a while. You can then enter an order at the price point with reasonable certainty that you can grab 5 to 10 pips from the market, depending on the height or depth of the trading range.

Why Forex Scalping Methods Should Be Part Of Your Overall Strategy

This characteristic of market behavior, the fact price spends most of its time in trading ranges, makes Forex scalping a very profitable method once the trader has acquired experience and developed understanding and recognition skills.

Rather than waiting for the occasional significant price move, the trader who also has a Forex scalping strategy in his toolkit can utilize those long periods in the trading day when price doesn't go anywhere.

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Forex Scalping - Scalpers Wanted

Forex scalping is in high demand nowadays. Many forex brokers frown upon scalpers, but not us. We are always looking for talented scalpers.

True scalping involves opening and closing a position in seconds or minutes at most. Even though scalping involves the use of leverage and higher leverage means higher risk, the short period of time a forex scalper is in a trade decreases the exposure risk that's inherent in trading or investing due to the holding of a position. If done correctly, scalping provides this additional degree of "risk control" that is not even present in day trading.

1 Why don't most brokerage firms like forex scalpers?

Because many brokers are making money trading against their clients through their dealing desks. Yes; this is still legal in the forex market. While this might not affect as much regular traders (even day traders) that stay in a trade for hours or days, scalpers are another breed of trader. The profitability of scalping currencies can be drastically reduced if the correct trading firm is not used. The small percentage of successful scalpers are usually "kicked out" by one forex broker after another.

If you have used a forex scalping strategy successfully in the past, you probably know the feeling


2 Forex Scalping Platforms - the Good, the Bad and the Ugly

Scalpers use all sorts of platforms to scalp currencies, but probably one of the most common is MetaTrader 4. MT4 is made by a Russian company and has become sort of the "de facto standard" among many forex day traders. The problem in using MT4 for scalping has nothing to do with the platform itself, but with the unscrupulous brokers that license the software and offer it to their clients (see the explanation earlier on brokers that trade against their customers).

For MT4 to be used in scalping the forex market without any limitations or restrictions, an ECN-type feed must be used or a multi-liquidity provider feed such as Currenex or HotSpotFxi. Currently, there are a few firms that are working on such a project to be able to accommodate extreme forex day trading or scalping.

3 Forex Scalping System Trading or Manual Execution?

While many forex scalpers trade manually, advancements in computing technology and powerful trading platforms like MT4 have given birth to another breed of scalper: the system trader or automated scalper. Many scalpers create forex robots or trading algorithms that are fully or partially automated, increasing execution efficiency and available trading opportunities. Whether you scalp currencies manually or let a robot do it for you.

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