Scalping irresistibly leads to bankruptcy!
Contrary to popular belief that scalping is good for beginners, this short-term trading has little good. This article discusses:
1) What is the scalping forex and how it differs from other methods of trade?
2) Why is it so popular scalping?
3) Why scalping – a path to bankruptcy?
– it is beyond
short-term trading, in which the goal (profit) of a few
points, and the transaction is held a short time (from several
seconds to a few minutes, sometimes a little longer).
Long-term traders trade, as a rule, on the daily (or even
weekly or monthly) time frames. Transactions can be retained by
a few weeks to several years. I’m not kidding.
For example, one of the richest people in the world – W. Buffett reported that holds the transaction, an average of 5 years …
Medium-term traders hold a transaction from one day to a week.
Intraday traders (intradeyschiki) hold the deal, the maximum until the end of the trading day.
Scalping involves scoring in FX huge number
transactions, each of which brings a small profit. overall
the number of transactions may be varied from a few tens to
several hundred for 1 trading day.
For example, take a look at scalping strategy based on breaking through the support and resistance levels:
attention to the acceleration of price movement at the time of the breakdown level. Such
situation – a great opportunity to take a quick profit!
Selected Indicators for Forex scalping is not needed. By and large Scalping – it is not the style of trading, this retention time of transactions.
It is possible to use any indicators: Moving Averages,
The CCI, Stochastic, support and resistance levels, candlesticks and
Why scalping is so popular?
There are several reasons:
1) new traders, more often, trying to use as a scalping
the shortest way to riches. The more transactions – the better they think. AND
2) Sellers trading robot (forex advisors) often try
“Provisional Government” gullible newcomers is scalpers. Sometimes even distribute them
3) Forex Brokers spend a lot of competitions aimed at a quick
result. Such a result can only be obtained by using short-term
trade. It turns brokers themselves cultivate “scalpers.”
Let’s understand why sometimes unscrupulous sellers go around scalpers?
It uses the following mechanism:
1) Novice say – here’s a cool Advisor FOREX that
It does + 100% deposit for a month (or week). What would it
get the need to open a real account on the ref-link agent.
2) Opening an account on the ref-link agent, it means that the newcomer came to the broker, on the recommendation of the agent itself.
3) For each completed transaction broker receives a commission in the form of
spread. A part of the spread of this gives the agent. The more transactions – the
greater will be the profit of the agent.
Gain agent depends on the size and number of transactions. From point of view
Profit agents – scalper adviser – an ideal option. he does
a lot of deals – gives a lot of agency fees!
Here’s a real state of affairs:
1 intraday trader opens a transaction, and earn 100 points. Broker takes Statement 2 as a spread. Total posted a net profit of 98 points.
Scalper opens 10 trades with a profit of 10 points each. Broker zaberat Statement 20 as a spread (2 * 10 = 20 transactions). Net income will be 80 points.
It turns out that a scalper is less profit than the intraday trader due to the fact that the Commission pays more.
Why scalping leads to bankruptcy?
Because of the three prerequisites:
1) The high cost of trading
2) High psychological stress (in manual trade)
3) The low predictability of time frames on small price movements
The last point requires special attention.
Imagine a sports contest by “A” involved 3 people, and in competition for
Sport “B” 300. The question, – in which the competition is easier to predict
the winner? It is obvious that – fewer people – the more accurate the forecast.
Over long time intervals are trading are serious people and hedge funds. Their actions are amenable to at least some logic and forecast.
On small time frames greater number of participants, therefore, predictability decreases.
On minute charts (where scalpers trying to sell) – the
a large number of people, plus a huge number of forex advisors.
Trying to predict the behavior of this raznosherstoy crowd – very
Thus, scalping Forex strategy is not victory, but defeat strategy!
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