These two terms are often heard on the Forex
market. Scalping and pipsing are kinds of trading strategies which are
used by traders in order to make profits from the fluctuations of the
currency courses within the day. Such orders are conducted in a very
short period of time, sometimes even in several minutes. When you use
this trading strategy your earnings from every order can be very small,
but the whole profit can be high enough because of the big amount of the
orders.
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So, What is the Difference Between Scalping and Pipsing?
Pipsing is considered to be very short term trading, which usually lasts
up to 2 minutes. Scalping – short term trading, which lasts 4-10
minute. But the principle of these strategies is the same.
Forex traders can execute such kind of orders within all day and by the
end of the day the level of 200 points may be reached. By fast order
closing in case of negative market influence, scalpers (pipsers) try to
reduce the losses, to have positive trading results. Wherein, the risk
of losses losses risk is minimized.
It’s not a secret, that Forex has a big volatility. Within the day
prices increase and decrease with the certain periodicity. The price may
pass more than 100-150 points within several minutes in case of the
important 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 certain knowledge. But trader has to understand, that
every trading strategy needs additional knowledge and practice.
Disadvantages of Scalping and Pipsing
If you use Stop Loss,
the placing of it takes some time, which is essential for the scalping
strategy, this may lead that each delay may reduce possible profit.
Some traders see the solution in refusing to place Stop Loss, but such
method holds the risk of loosing profit, for example, in case the price
changes in the unfavorable direction for the trader. In case this
happens, the price correction to the previous level may take long term.
It should never be forgotten that the 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 the order
closing.