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Scalping FOREX has become one of the preferred trading methods of successful traders in recent years due to the virtually unlimited amount of trading opportunities.

The foreign exchange market (also known as FOREX, FX, or the currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors while trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.

The purpose of the foreign exchange market, or FOREX, is to assist international trade and investment. The foreign exchange market allows businesses to convert one currency to another foreign currency. For example, it permits a U.S. business to import European goods and pay Euros, even though the business’ income is in U.S. dollars.

In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. FOREX began in the 1970’s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

Scalping was originally referred to as ‘spread trading’. Scalping is a trading style where small price gaps, which are created by the bid-ask spread, are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds.

Scalping highly liquid instruments, such as FOREX, for electronic day traders involves taking quick profits while minimizing risk (loss exposure). Many traders apply technical analysis concepts such as over/under-bought, support and resistance zones, trendline and trading channels to enter the market at key points and take quick profits from small moves. The basic idea of scalping is to exploit the inefficiency of the market when volatility increases and the trading range expands.

One of the most important elements to remember when implementing a strategy such as scalping is the risk-to-reward ratio. For a scalping strategy to be successful, you must have a 70 percent or better win ratio, and a risk-to-reward ratio of one to one or better.

Trading in the Foreign Exchange or Futures markets involves a significant and substantial risk of loss and may not be suitable for everyone. You should carefully consider whether trading is suitable for you in light of your age, income, personal circumstances, trading knowledge, and financial resources. You should only trade with money you can afford to lose. There is no guarantee that you will profit from your trading activity and it is possible that you may lose all or some of your investment. Past performance is not indicative of future results.

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