Forex scalping and pipsing are styles of day trading. They require traders to follow short-time price movements during the day and focus on making multiple small-profit trades.
Scalping and pipsing are unique, but nobody can master them in a few days. In this article, you can learn more about these trading styles, along with some tips and strategies, so keep reading.
What is Scalping?
During the day, currency rates fluctuate and make micro-movements. What scalpers essentially do is try to make a profit out of these variations.
When they find a profitable movement, they hold the trade for a brief timeframe and close it after making a small profit of a few pips (usually 5-10). Since these styles involve short holding times, a scalper can make several hundred daily trades.
Scalping vs. Pipsing
Pipsing and scalping are not the same. Scalping is broader short-term trading meaning it can last from a few seconds to 10 minutes.
Pipsing, however, can be seen as a form of scalping. It’s done on the M1 interval, has shorter holding times (from a few seconds to 2 minutes), a lot of leverage (up to 1:1000), and strives for smaller pip profit (usually 0-5 pips).
The Best Scalping Tips
Pipsing and scalping are stressful moments. You need FX experience, knowledge of fundamental analysis, and a particular type of temperament.
Even though it might sound trivial, good internet speed is another crucial factor for succeeding, considering that these trades are very short.
Moreover, pay close attention to the brokers and the FX account type you choose. You can compare forex brokers on Brokersview to find the proper account for starting your scalping journey.
Other fundamental “rules” for succeeding at scalping are:
- Trade high-liquidity and high-volatility currency pairs (USD/EU, USD/CAD, USD/JPU, AUD/USD);
- Trade with an ECN account with up to 100ms speed and 0.0 floating spread;
- Use MT4 testers to test and perfect your strategies;
- Focus on one currency pair at a time.
Pipsing FX Strategies
Practice makes perfect. Don’t expect to become a forex master after trying out one strategy. It is best to practice and experiment as much as possible to excel at this trading style.
You can use many strategies; however, most fall into 4 categories. Following is something about each.
Trends traders make decisions based on trends. In FX trading, a trend is when the price is moving in one specific direction, either upwards or down. To decide where to position themselves, trend traders follow uptrends and downtrends, moving averages, trendlines, and technical indicators.
While trend traders base their strategy on the assumption that the trend will continue to move in the same direction, countertrend traders do the opposite. They predict whether a trend will reverse or the pricing movement will pause.
Scalpers don’t use this strategy often since it requires more time to predict a trend reversal. That’s why holds on a countertrend trade typically last from a few days to a few weeks.
The core of statistical trading lies in recognizing patterns and anomalies. Traders make decisions based on chart patterns, time of the day, day of the week, price, etc. For instance, you can decide how long to hold a trade based on a specific time of the day.
This scalping strategy works best with experienced and knowledgeable traders. It’s the complete opposite of statistical trading. No time is wasted on technical analysis, and you leave most of the work to your previous experiences and intuition.
Pipsing & Psychology
Not everyone is made for FX scalping. In fact, many traders avoid or look down upon this trading style. Why? Well, it’s not only high-risk but also psychologically intense.
It requires an eye for detail, constant alertness, and taking quick action. To nurture your mental health while scalping, put these tips into practice:
- Don’t check results during a trade because they constantly fluctuate. Focus on accuracy instead.
- Set a risk management threshold. Take a break if you start losing more trades in a row.
- Analyze your trades after each day. Write down your mistakes and consider how to avoid them in future trades.
Should I Try Scalping or Pipsing?
There’s no reason why you shouldn’t start pipsing or scalping. They’re both high-risk and stressful trading styles, but there are many advantages too. The earnings are fast, there are no swap fees, and a smaller deposit is required.
If unsure of your scalping abilities, you can always start with a demo account and perfect your strategies with an MT4 tester. In addition, you can opt for automated trading. In this case, you only need to choose a strategy, and a bot will do the work for you.