The difference between a market maker and a scalper, though, is very important to understand.In the investment world, scalping is a term used to denote the skimming of small profits on a regular basis, by going in and out of positions several times per day.Scalping in the forex market involves trading currencies based on a set of real-time analysis.
The purpose of scalping is to make a profit by buying or selling currencies and holding the position for a very short time and closing it for a small profit. Many trades are placed throughout the trading day using a system that is usually based on a set of signals derived from technical analysis charting tools. The charting is made up of a multitude of signals, that create a buy or sell decision when they point in the same direction. A forex scalper looks for a large number of trades for a small profit each time. Scalping is not unlike day trading in which a trader will open a position and then close it again during the current trading session, never carrying a position into another trading period or holding a position overnight. However, while a day trader may look to take a position once or twice, or even a few times a day, scalping is much more frenetic and will trade multiple times during a session. Whereas a day trader may trade off five- and 30-minute charts, scalpers often trade off of tick charts and one-minute charts. In particular, some scalpers like to try to catch the high-velocity moves that happen around the time of the release of economic data and news. Such news includes the announcement of the employment statistics or GDP figureswhatever is high on the traders economic agenda. Scalpers like to try and scalp between five and 10 pips from each trade they make and to repeat this process over and over throughout the day. Pip is short for percentage in point and is the smallest exchange price movement a currency pair can take. ![]() Scalpers get the best results if their trades are profitable and can be repeated many times over the course of the day. Remember, with one standard lot, the average value of a pip is about 10. ![]() Scalpers need to love sitting in front of their computers for the entire session, and they need to enjoy the intense concentration that it takes. You cannot take your eye off the ball when you are trying to scalp a small move, such as five pips at a time. Even if you think you have the temperament to sit in front of the computer all dayor all night if you are an insomniacyou must be the kind of person who can react very quickly without analyzing your every move. Being able to pull the trigger is a necessary key quality for a scalper. This is especially true in order to cut a position if it should move against you by even two or three pips. When a market maker buys a position they are immediately seeking to offset that position and capture the spread. This form of market-making is not referring to those bank traders who take proprietary positions for the bank.
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