Scalping is one of the trading techniques that is frequently used. Generally, this technique is used by traders who have the precision and patience to monitor price charts for hours on end in a single day. Scalping trading is quite promising, although it certainly has its own risks.
Before discussing more about the taboos in scalping trading, it's better if you first understand what is meant by scalping trading itself.
What is Scalping?
Scalping is a trading activity that uses a strategy with a very short time period. This trading strategy can be carried out within seconds to minutes. This strategy is quite aggressive, with a trader's high concentration to read asset price movements in the market.
There are several advantages that a trader can gain by doing scalping trading. One of them is getting a profit in a fairly short time. As previously explained, trading using this technique is done within minutes, even seconds in a single day. Therefore, profit calculations can be obtained very quickly. Traders do not need to wait for days to get profit with this trading technique.
In addition, scalping is also done quickly. The process of buying and selling assets is done very quickly. So traders don't have to wait for trading processes that take too long. The analysis technique required by traders in this trading strategy is also not too complicated. Traders who transact with this strategy usually only need to analyze small market patterns and technical analysis.
Scalping trading does indeed sound very promising. The profits that can be obtained in a short time look very tempting. Unfortunately, this technique also has weaknesses that you need to pay attention to. One of them is that it is quite difficult and requires very high precision. Generally, scalping trading is done by experienced traders who have a high understanding of market movements, the instruments used, and so on.
Although it is carried out in a very short period of time, the profits from this trading must be accumulated thoroughly to feel the results. Because it is done hundreds of times a day, traders must have enough time to view charts and open and close positions. Basically, this technique spends quite a lot of time in a single day to get big profits.
Pay attention to these things when scalping
There are several things that traders should pay attention to when using scalping trading techniques. In addition, there are also several prohibitions that are forbidden to be done in this technique. Here are some scalping trading prohibitions that you should avoid.
Avoid Assets with Low Liquidity
The first thing that traders should avoid when using scalping techniques is assets or instruments that have low liquidity. Because this technique is done in a very short period of time, assets with low liquidity will hinder the trading process. Instruments such as minor forex pairs or crypto coins with low market valuations can cause losses due to the usually flat price charts. So make sure to choose assets with high liquidity, such as major forex or crypto with a high enough market valuation.
Slippage and Gap
In addition to low liquidity, slippage and gaps are also the biggest enemies of scalping techniques. These two aspects can cause a trader's position to suddenly experience a floating minus from the opening position.
Slippage and gaps usually occur due to low liquidity of assets or instruments. Traders should also pay attention to trading time zones. Avoid trading during the Tokyo, Sydney sessions, and holidays. These trading sessions have relatively low liquidity and often experience sideways movements.
Overtrading
One of the biggest mistakes of scalping traders is to trade out of control in excessive amounts. Although the profit from this technique is determined by trading intensity, aggressive position opening without calculating risks will cause traders to suffer losses. Overtrading generally occurs because traders subjectively open and close positions based solely on emotions.
Over-Leverage
High leverage from brokers is indeed something that needs to be considered when trading. Brokers that offer high leverage are usually recommended for traders, especially beginners. However, leverage that is too high is not profitable for scalpers. If scalpers choose leverage that is too high, it will increase the risk of a margin call.
Fake Signals
Fake signals can usually be one of the factors that trap novice traders who use scalping techniques. Fake signals usually occur due to misinterpretation of too many indicators. Using too many indicators does not always produce accurate predictions. This can actually create noise that causes confusion and panic.
Conclusion
After reading the advantages, disadvantages, and prohibitions to be avoided, are you ready to try this technique? Make sure to continue honing your skills by consistently trading, compiling a detailed journal, practicing risk management, and most importantly, controlling your emotions while trading with this scalping technique.
