Is Scalping as a Trading Strategy Suited for Everyone?? - Page 4
Page 4 of 714 FirstFirst 123456781454104504 ... LastLast
Results 31 to 40 of 7140

Thread: Is Scalping as a Trading Strategy Suited for Everyone??

  1. #1
    Trader
    Join Date
    Feb 2013
    Posts
    5
    Thumbs Up
    Received: 3
    Given: 0

    Is Scalping as a Trading Strategy Suited for Everyone??

    Is Scalping as a Trading Strategy Suited for Everyone??

    There is a great deal of confusion when it comes to the topic of scalping. The allure of fast paced trades, and even faster money is a great pull to new and experienced Forex traders alike. To determine whether we should be scalping or not we must first define what scalping really means. Scalping is the action of taking many short term intra-day trades with the intention of only holding the trade for a few minutes. Those who scalp the forex market may only look for a very small take profit, capitalizing on moves smaller than 20 pips more often than not. While this forex trading strategy may present many viable trading opportunities, is it really in our best interest to scalp the forex market?

    The Stress Of Forex Scalping Strategies

    Often a traders mental ability is the determination between a successful forex trader and one that ends up never mastering the art of forex trading. With this in mind it is important to eradicate as much stress from your trading as possible. One very simple way to do this is to take less trades by using slightly longer time frames. Taking fewer trades will allow you more time to process fully your reason for entering the trade, your trade management and finally your exit strategy.

    Forex scalping strategies at their very core rely on executing many trades per day. This fast paced trading style increases the level of stress a trader will experience exponentially. Not only are you forced to enter many trades per day, you are also in a position where these trades need to be closed quickly as well. For someone new to the forex market this is a recipe for disaster. This fast paced style leads to chasing markets, missing signals, and more often than not revenge trading.

    The Effect Of Spread On The Forex Scalper

    There is always a difference between the price you can buy a currency pair and the price at which you can sell it…this is called the spread. More often than not spread is never even a thought in the mind of aspiring forex traders. I use the word “aspiring”, as already profitable forex traders always take into account the effect spread has on their overall profit or loss. Let’s use an example to better illustrate the effect of spread.

    5 Trades Per Day X 3 Pip Spread = 15 Pips Paid In Spread Per Day!

    15 Pips Per Day X 5 Trading Days = 75 Pips Paid In Spread Per Week!

    75 Pips Per Week X 50 Trading Weeks = 3,750 Pips Paid In Spread Per Year!

    If we use 20 pip stops and risk 1% per trade that means every 20 pips we make or lose we will have gained or lost 1%.

    3,750/20 = 187.5% Paid In Spread!!!

    Is spread starting to become a little more important in your eyes? If you simply cut the amount of trades you take in half you will save yourself +93.75% or 1,875 pips! Now this is a very broad example of how spread can accumulate and cut into your overall profit but it illustrates a clear point of how spread can accumulate over the course of time. Spread is the cost of doing business as a forex trader, but like any other business we can cut costs and become a more streamlined business. Some companies use energy efficient light bulbs, as traders we “cut the light bill” by becoming more selective with the trades we take.

    Controlling Your Risk

    Our single job as a forex trader is to control risk. If you think about anything and everything we do it is done to control risk and eliminate it to the best of our ability. With that being said lets examine spread in relation to scalping. As an example lets say we bought the GBP/USD from 1.6000 with a 10 pip stop loss and a 7 pip take profit. If we are trading the Pound that means there is usually a 3 pip spread. Therefore in order for us to get filled at 1.6000 we would have had to have bought when the price (the bid) was at 1.5997 As a result the market would have had to only move 7 more pips down to hit our 10 pip stop loss. On the other side of the trade the market would have to move a full 10 pips to hit our 7 pip take profit!

    This is a very important point to think about. With the example above we are risking 10 pips to make 7. Not only that but the market only has to move 7 pips to hit our stop loss, while it has to move a full 10 pips to hit our take profit! The spread works against you all the time, but as you can see the smaller your take profit and stop loss the more of an effect a pairs spread will tend to have. Another way to look at that is the spread is actually 30% of the entire profit target. That’s like running a business with a flat 30% fee on top of every sale! No one in their right mind would open a business that operated like this, but yet many jump into scalping without giving it a second thought.

    One of the most simplistic ways of controlling risk is with a positive risk to reward ratio. Plain and simple, if you risk more than you look to receive on your trades you will eventually wipe out your account. There is no exception to this rule, it always comes true! A positive Risk/Reward ratio is something that is very difficult to achieve when scalping in the forex market because of spread.

    Breaking Your Scalping Addiction

    If you love to trade short term how can you still fill that desire but yet avoid the main pitfalls of scalping. First you need to understand that the satisfaction of turning a consistent profit far out weighs any rush you will ever experience from scalping. Our goal is to turn a profit and if the trading strategy we put to use is failing us, then its time to put it aside. I urge you to step back away from the charts and stop trading for a few days or a week. Give some consideration to the points brought forth here especially if you scalping is resulting in consistent loses.

    Not allowed!

  2. #31
    Banned
    Join Date
    Mar 2015
    Posts
    8,444
    Thumbs Up
    Received: 55
    Given: 33
    I will not recommend that any one should make use of scalping strategy while trading, I think it is not a good trading strategy that should be used. That way, it is mostly used by newbies that wants to make fast money from forex trading, but you know, it does not work that way, we will be needing to be patient and avoid too small time frames.

    Not allowed!

  3. #32
    Trader lawners1791's Avatar
    Join Date
    Dec 2013
    Location
    Lawners Makesup
    Posts
    11,924
    Thumbs Up
    Received: 79
    Given: 19
    the decision as working of the short terms target with the trading those had with the basics on commons as trader to enter with system as match of best on delivering returns of the numbers with the projection. as shown by the past terms on records with the notification on helping of supports to complete projects with the shifts on difference to gives good profit on exchange with the submission of order.

    Not allowed!

  4. #33
    Banned
    Join Date
    Sep 2013
    Posts
    26,777
    Thumbs Up
    Received: 289
    Given: 50
    Quote Originally Posted by sharegistFX View Post
    I will not recommend that any one should make use of scalping strategy while trading, I think it is not a good trading strategy that should be used. That way, it is mostly used by newbies that wants to make fast money from forex trading, but you know, it does not work that way, we will be needing to be patient and avoid too small time frames.
    Well, I can never condemn any trading strategies in the market, so far the trader is getting nice return from it. There are many scalping trading systems that are very good, but lots of so called scalpers do not know it. Many forex traders are not designed for scalping, but they would want to scalp by all means, this is why they lose money.

    Not allowed!

  5. #34
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,867
    Thumbs Up
    Received: 28
    Given: 12
    No,scalping is not suitable for everyone.They must have knowledge if the market then start trending they better follow the trend and if the market changes the trend they can trade reversal too.So trading with that way i think best for traders if they have intention of making profit from scalping they can do with many differences.I think scalping must have the range markit and low liquidity because it is market ranging time for traders to make trading.

    Not allowed!

  6. #35
    Trader lawners1791's Avatar
    Join Date
    Dec 2013
    Location
    Lawners Makesup
    Posts
    11,924
    Thumbs Up
    Received: 79
    Given: 19
    Quote Originally Posted by ericnyamu View Post
    If you love to trade short term how can you still fill that desire but yet avoid the main pitfalls of scalping. First you need to understand that the satisfaction of turning a consistent profit far out weighs any rush you will ever experience from scalping.
    yes those as trader works with the customs on occupying choice with the selection of system and strategy as referring ones with the profiles to work with the focus on managing use with the evaluation of signals.
    as defining of ones with the decision to expends of limit with the risks level on exchanging requests with the order creation.

    Not allowed!

  7. #36
    Banned
    Join Date
    Sep 2013
    Posts
    26,777
    Thumbs Up
    Received: 289
    Given: 50
    Quote Originally Posted by Quid View Post
    No,scalping is not suitable for everyone.They must have knowledge if the market then start trending they better follow the trend and if the market changes the trend they can trade reversal too.
    Well said sir, I believe that scalping is not for everyone as well. The rudiments around scalping is too risk and all traders can not settle for such trading system, except for the traders that loves aggressive trading with good caution and talent of doing it. The scalping is the most risky trading approach you can find in the forex market and it is not suitable for most traders.

    Not allowed!

  8. #37
    Trader lawners1791's Avatar
    Join Date
    Dec 2013
    Location
    Lawners Makesup
    Posts
    11,924
    Thumbs Up
    Received: 79
    Given: 19
    entering by the good moments as having of returns with the works of analytics, to helps on closing of the secure target to avoid the worse on risks to stay on managing complete of plan with the length of the trading terms.

    Not allowed!

  9. #38
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,867
    Thumbs Up
    Received: 28
    Given: 12
    Scalping the strategy which is suitable for the market traders with the low target.The traders can trade the scalping with the low liquidity or they can follow the market with the trend i can see the scalping is suitable and good for traders.They are more profitable trading with scalping.If they can get the successful trading from scalping they should understand about the good concept too for their market planning too.

    Not allowed!

  10. #39
    Banned
    Join Date
    Mar 2015
    Posts
    9,523
    Thumbs Up
    Received: 127
    Given: 20
    No, from my experience, I really don't think that the scalping trading method is what any one should even think of making use of. SO far so good I am yet to see that scalper that is consistently profitable.

    The way scalpers trade is just not it, they might make 100 pips this week and the next week they loss 200 pips. But it is good to take trade slowly and steady.

    Not allowed!

  11. #40
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,867
    Thumbs Up
    Received: 28
    Given: 12
    Trading with scalping is not good for traders in forex market.They can make the trades which are profitable and manage well.I think long term trading is the best way the traders can make the profit.Traders can be successful only if they have knowledge and can make the good result from the trades.They can manage the market to be profitable and get good result too.Traders make their trading decision like that and win too from that.

    Not allowed!

Page 4 of 714 FirstFirst 123456781454104504 ... LastLast

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •