The Foreign Exchange market is sometimes referred to as the Forex market. A Forex trade consists of buying one currency while simultaneously selling another currency. Currencies trade in pairs; example is Euro / US Dollar or EUR / USD. The first currency is called the base currency and the second is called the quote currency.
Forex market is open 24 hours a day from Sunday 5 PM ET to Friday 5 PM ET and it provides a great opportunity for traders to trade any time of the day or at night. The best time to trade is when the market is the most active and therefore has the biggest volume of trades.
The most traded currencies are called the Majors and they include the EUR/USD, JPY/USD, GBP/USD, USD/CAD, USD /CHF, USD/AUD. Theres no centralized exchange market for Forex so all transactions occur through an electronic network or either by phone.
Now you might be asking who trades Forex. Well banks from around the world, Insurance companies, Businesses that operate in other countries, hedge funds and more. The Forex is the WORLDS LARGEST MARKET it trades 24 hours a day and has a daily turnover of $3.2 TRILLION.
The difference between the stock market and the Forex market is the vast trading volume that occurs in the Forex market. There is millions and millions that are traded daily on the Forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The Forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries.
What is traded, bought and sold on the Forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the Forex market is something that can happen fast for any investor from any country.
Scalping especially in the FOREX market requires mental discipline! Greed can tempt you to stay in a winning trade to long or enter a position early before the signal is confirmed and fear can cause you to hold a losing position to long. To become a profitable Scalper you must keep your emotions under control.
Scalping usually involves entering and exiting a position in seconds or maybe minutes for a few pips of profit. One of the most common trading platforms is the Metatrader or MT 4 platform.
Scalpers use technical analysis (chart patterns) to find setups. Some good scalping set ups are from forming of tight consolidation patterns. Consolidate at or near the days high or move sideways in a tight fashion. Several candlesticks close on their highs in an uptrend or several candlesticks close on their lows in a down trend.
When your Scalping the time and risk-reward ratios are compressed. What do we mean by that? Well your reward is small so you your risk or loss even smaller. To make money scalping you will need a high percentage of winning trades.
There are a lot of Forex scalpers trading manually using chart patterns, Indicators, candlesticks charts and etc, but due to the advancements in technology your trading platform can automate your trades for you. These automated programs are called Robots or Expert Advisors (EA) and they make trading decisions based on a set of rules, therefore removing all emotions. They can enter or exit a position in milliseconds and capturing greater profit targets.
There are several styles of trading and you may want to do your own research to find the style that fits you best. Try using trading Forums. These Forums are a good place to ask questions and get ideas.Money Making ForumMost forums ask you to sign up for a FREE account and then you will have access to all there resources.
Long Term Trading or Investing may use daily charts. (Hold for Days to Weeks)
Swing Trading or position traders may use a 60- minute chart. (Hold for Hours to days)
Day Traders may use a 5 minute chart. (Hold for minutes to Hours)
Scalpers may use a 1 minute chart. (Hold for Seconds to minutes)