Scalping and pipsing are trading strategies used by traders to make profits from the fluctuations of the currency courses within the day. Such orders are conducted over several minutes, which is very short by Forex standards. When you use these trading strategies, your earnings from every order can be minimal, but the gross profit can be high enough because of the significant amount of orders.
Scalping and Pipsing
Pipsing is short term trading, which usually lasts up to 2 minutes. Scalping is not-as-short term trading, which lasts 4-10 minutes. The principle of both strategies is the same; they make profits from the fluctuations of the currency courses within the day.
While each trade does not bring you much profit, by the end of the day you end up with a hefty sum of money. Also, since you close orders fast and manage them closely, you can detect adverse market influence earlier and reduce the losses.
'It's not a secret, that Forex has high volatility. Within the day, prices increase and decrease with certain periodicity. The price may pass more than 100-150 pips within several minutes in case of the major news release. Exactly due to such market changing frequency, it's possible to increase profit. Such trading strategy is very popular among the traders.
Newbies without experience use this strategy and think that scalping doesn't require knowledge. But you have to understand that every trading strategy needs additional knowledge and practice.
Disadvantages of Scalping and Pipsing
The placing of Stop Loss takes some time, which is essential for the scalping strategy. This means that you can't rely on them in scalping and have to learn to go without.
It should never be forgotten that pipsing means executing of big amount of orders in a short time period – it requires from the trader maximum concentration on the charts and track of the market movements. If the trader doesn’t have required level of reaction, he may not be in time for the order opening at the desired price which will cause to not receiving the desired profit. The same situation is with closing the order.