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Controversies Surrounding Scalping Strategy in Forex Trading

The scalping strategy is one of the trading methods widely used by forex traders. However, behind its popularity, there are controversies surrounding it. Some argue that this strategy is less sensible and potentially more challenging to profit from compared to day trading or swing trading. But, is it true? Let's delve deeper into it.

Characteristics of Scalping Strategy

Scalping strategy is executed with the aim of profiting from small price movements in forex currency pairs. Scalpers utilize very short timeframes, usually ranging from 1 minute to 15 minutes only. They open and close trading positions in a short time, even just a few minutes or hours after the position is opened.

Controversies Surrounding Scalping Strategy

  1. Unfounded Price Movements: Due to the use of very small timeframes, long-term fundamental or technical analysis is rarely relevant in scalping strategy. Some critics argue that analyzing price movements in scalping becomes less reasonable because it relies solely on indicator signals or the trader's intuition. This could be problematic when drastic price movements occur due to unexpected changes, which can lead to losses for scalpers.
  2. Profit Only Achievable After Many Trades: Profits obtained from scalping often amount to only a few pips. As a result, scalpers must make many trades in a day to achieve significant profit levels. This can be challenging, especially with the tendency for high risk and narrow risk/reward ratios.
  3. Not All Brokers Support Scalping: Although scalping is popular among traders, not all brokers or trading accounts allow the use of this strategy. Some brokers even openly prohibit scalping, while others may have trading conditions that do not support scalping activities, such as wide spreads or restrictions on the speed of closing trading positions.

Advantages and Potential Success of Scalping Strategy

Despite the controversies surrounding scalping strategy, there are also traders who have successfully succeeded using this method. There are several reasons why this may happen:

  • Limited Exposure to Significant Reversal Risks: Because trading positions are only held for a short time, the likelihood of experiencing significant reversals is lower, especially if scalpers can avoid situations where there are significant fundamental news releases.
  • Quick Position Closure: Scalpers do not need to wait too long to close positions, reducing the likelihood of making rushed or too slow decisions in response to market changes.
  • Ease of Analysis: By using very short timeframes, the number of technical indicators that need to be considered is also reduced, making the analysis process easier.

Although there are controversies surrounding the scalping strategy in forex trading, there are also traders who have successfully succeeded with this method. Success in scalping is not only determined by the chosen trading style but also by the trader's risk management and psychology abilities. Therefore, it is important for every trader to choose a strategy that suits their style and personality, as well as to develop strong risk management and psychological skills.
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