An Introduction to Scalping

Technical analysis is very important in trading currencies. It helps in telling the right entry and exit points. However technical help is not enough to help a trader create a complete trading plan. The sentiment of the foreign exchange market is initially driven by the political, geographical and economic issues of the trading day.

It is popular knowledge in the forex market participants that traders who wish to start their trading fundamentally must opt for a longer period of time. This means making daily and weekly charts but the traders who likes trading for a shorter period of time need to concentrate on making charts per hour focusing on the technical analysis.

This article will explain scalping in the foreign exchange market as used for a short period of time frame which is how traders scalp fundamentally in the FX market.

News that Move the Market The best thing about the market of currencies is that it can offer transparent news on its macroeconomics easily available to the traders or investors. It is quite difficult to just make up one.

The major news that can drive a direction for the forex market is the government's economic status like recent employment stats, growth in terms of GDP, inflation, the reports of trade balance and interest rates. These kinds of reports are usually released each month. These reports are often readily available in popular publications.

Retail Traders Quick Reactions FX market has the highest liquidity among all the financial market. It trades with an estimate of two trillion U.S. dollars in volume daily.

Many brokers for retails forex offers up to an estimated twenty million dollars of liquidity. This means that they can permit the trader to purchase up to twenty million US dollars amount of currency pairs.

The size of the trades can even accommodate almost a hundred percent of all the orders in retail FX. This helps the traders open positions easily and quickly and still the market is unaffected.

The large investments however that are worth billions or hundreds of million can definitely move the market. Thus, if the FX retail traders react immediately they can have the opportunity to benefit from the order flow's momentum first before the large and major players.

Any news that can affect the trading may take quite a while before it can affect the market so the retail traders can afford to scalp for profits.