Trading using the scalping technique can be quite risky and will present some difficulty if attempted it without the assistance of signals. If you learn how to trade CFDs, you will put yourself at the top of your game. Trades carried out using the scalping technique are often based on either a 1-minute, 2-minute or 5-minute chart. The market changes at such a rapid pace in some instances that each of these charts may present a completely different picture, leading to confusion and uncertainty on the part of the trader. Making use of signals eradicates the possibility that the market may not act according to what you expect – at least in most instances. Third parties that provide signals make use of analysis and technical methodology to reach a conclusion; it is by no means a guessing game.
Technical analysis, a shorter-term outlook
It is a known fact that the fundamental outlook and events are what set the market in any direction for the long term. However, on a shorter term, technical indicators are in the driving seat. Technical analysts make use of trend lines, resistance levels, moving averages and RSI indicators, giving no thought to fundamental events or current affairs that could affect the direction or flow of movement. These kinds of signals, if matched with the fundamental analysis, will provide confirmation of the direction and movement within the market.
Non-existent fundamental events
There are periods when fundamental events are not present to direct or drive the market. Those who trade based on fundamental analysis will be stumped during this time and will likely be unable to make any trades. It is important to keep in mind that even with the lack of fundamental events, the market continues to move and opportunities are lost for those who base their trading on fundamental events alone. Without fundamental events to interfere or sway the results of technical analysis, technical traders thrive in this situation.
Direction and fundamentals at loggerheads
The market is unpredictable and there are times when prices and movement don’t follow the fundamentals. In situations like this, traders who base their trades on fundamentals would be on the losing side regardless of what the fundamentals say should be happening. In these cases, a fundamental trader could benefit from seeking forex advice from a technical trader or making use of technical trade signals. As a fundamental trader, it is wise to keep abreast of the technical aspects to ensure that they are in line as a confirmation of the market direction.
Trading in a stagnant market
At times when the market is moving very slowly or in the event that fundamental and technical analysis present no clear trade opportunities, scalping signals could benefit you and allow you to continue to make small profits quickly. Signals that are intended as extremely short-term trades of literally minutes at a time can provide profit-making opportunities – profits may be small, but they are profits nonetheless. Scalping signals are not intended to be used in the long term in any instance.
The big picture
Fundamental traders base their trades on and apply their trade strategies according to current events in both politics and economics. Events that hold market-altering significance are few and far between, reducing trading opportunities considerably for fundamental traders.
Opening yourself up to both technical and scalping signals will increase your profit-making opportunities considerably. The same applies to technical traders. Fundamental events could send the technical analysis results into disarray. Thorough knowledge in all areas is essential to successful trading. The more information you have at hand, the better it will be for your invested money. Risk is part of trading, but making decisions with no information available is irresponsible and could leave you struggling to hold onto your funds.