PREMISES OF SCALPING

PREMISES OF SCALPING
There are a few main premises of scalping that are useful to keep in mind to
understand the logic behind these techniques.
Smaller moves are easier to gain – In my previous eBooks I mentioned that
the larger your target pip gain the higher the possibility that the target won’t
be reached. I have been known to say that it is easier to catch 20 pips than
200 simply because in the time that it would take to reach that goal the market
sentiment could change due to unforeseen circumstances. As a scalper it is
reasonably easy to determine a small movement in a particular direction and
to capitalize on a few pips before the market will likely reverse.
Smaller moves happen more frequently than larger ones – Even during
relatively quite market conditions there are numerous smaller movements that
can adequately be traded. Thus you can easily trade within what appears to be
a stagnant consolidation or range as seen on larger perspectives.
Limit risk due to limited exposure – An active scalp trade typically lasts for a
very brief duration. This reduces the likelihood that unforeseen news or a
Fundamental Announcement will negatively affect the trade.
Profit from trending sentiment – Currency pairs tend to trend or bounce
around in the absence of any news or relevant events. Currency virtually
never remains at a constant price but fluctuates and trends to market
sentiment. These small movements create opportunities to scalp trade.
Cumulative small gains equals large rewards – Scalpers often engage in
numerous trades in a single day. Most trades will only yield a small profit,
but cumulatively they add up to significant gains.