The rise of the online FOREX trading has seen a huge rise in day trading and traders who want to scalp the market, with the aim of trading for small regular profits.

The aim is to keep risk low and aim to take small profits on a daily basis and earn a living by FOREX Scalping.

Let's look at it in more detail and the potential of this form of trading.

The Opportunity

Global currency markets are the biggest investment market in the world.

Every day trillions of dollars are traded, by countless millions of people.

The currency markets are traded by 4 broad groups of investors.

Central Banks

Their activity varies, but when they do trade its big numbers!

They will normally step in individually or as a group, to stabilize currency volatility.

Large Speculators

Well capitalized and can be rich individuals or funds.

Hedgers

Not looking to make money from currency speculation - they are simply in the market to hedge the value of their holdings.

Small Speculators

Everyone else, including the vast majority of FOREX day traders.

The challenge

FOREX Scalping involves deciding and predicting what all these groups together will do, with all their different investment aims and strategies, in under a few hours or less.

FOREX Scalping

Can it be done?

Of course it can't - it's ridiculous to think that you can predict in such a short time what will happen.

Day traders don't make money.

Sure, there are plenty of vendors telling you how great their systems are, but if they were that great they wouldn't be selling them!

If you really want proof that it doesn't work, simply ask for a real track record of profits from any vendor and you won't get one.

Trading the odds

The problem with FOREX scalping is the odds are against you.

You have no meaningful data to work with and if you trade technically without it you will lose.

All volatility in the short term is random, which is obvious to most traders.

This of course means that if you use any technical tool it won't work when traders try FOREX scalping.

Pivot points, support and resistance etc are great technical indicators in longer time frames, where you can trade the odds, but in short term trading they will fail miserably.

The illusion

In hindsight of course there appear to be normal technical formations, but this is in hindsight.

Day traders can prove everything in hindsight ( and they love producing hypothetical track records by looking at past data ) but ask them to do it in real time and they can't.

Volatility can and does take prices anywhere in short time frames and it doesn't take long for FOREX scalpers to wipe themselves out.

Don't fall for the hype!

A great theory, but FOREX scalping doesn't work in practice.

Vendors know this and never trade themselves.

They get great marketing copy together and a track record (done in hindsight of course) and sell it to novice or greedy investors.

They get the fee, while these investors go on to trade and get wiped out.

Don't day trade, pick a longer term method of trading where the odds are in your favor.