This article is another part of our beginner to advanced forex scalping guide, in which we would like to point out the most frequent and important questions for a scalper to know the answers. In time a lot of myths were created which made scalping look scary and hard to do.
In fact you should look at scalping like it is just another way of trading but with some specific characteristics. In our opinion scalping is great for both experienced and novice traders. If mastered correctly such a system could help a trader become more disciplined and understand better the movement of the market, in both volatile and calm periods.
If you will continue reading our article you will see that the questions we mention here are pretty familiar to you. If you haven’t asked yourself at least one of them for sure you have read them on trading blogs and forums. There are a lot of answers throughout the internet, but the ones you will find by reading this are from our experience in trading and coaching other traders, from our experience in working with brokerage houses and in brokerage houses.
How do I know I have found the right scalping system?
After reading about scalping on the internet, every trader will start looking for a trading system that will help him make money. In search for the Holy Grail each trader will have learned several trading strategies. These could be technical (you can test our trading strategies already posted on the website), fundamental or just hunch strategies but is it enough to find it.
A trader should test each scalping strategy he has found, on a demo account, in a series of trades. Do not forget that scalping is about making a profit from a series of trades and not only one trade. If this is the case then the strategy found should give you a good probability out of X trades to show you that the strategy is trustful to be put in live trading, with real money.
If a trader found a strategy that works and gives him good signals and overall a good probability of wining, he cannot say that he has found the right Scalping system. A system requires also a good money management strategy applied to the trading strategy (technical or fundamental) and also the trader should develop a mind setup which allows him to respect the path of his system. Only after he has checked these (Trading Strategy/Money Management/Mind Setup) he can say that he has found the right Scalping System.
What emotional pressures does a scalper encounter?
As any other trader a scalper will go through each possible emotion that trading trigger in a human being. From fear to greed from patience to anxiety, the scalper will feel them all. But he should not fear them from the beginning, even if some are stronger than others, because in time all of them can be controlled and trading will become easy and pleasant.
If a trader has already found a good scalping system, he shouldn’t fear the market. Because he is betting on very short term moves he will not risk losing his account in only one blow. Of course this doesn’t mean that it is impossible, that is why he should always have a backup plan or a stop loss to protect him.
A trader that wants to scalp should know that this type of trading requires patience. Sometime it is pretty hard for a good mind setup to be maintained since there are a lot of factors that could turn the odds and emotions against the trader. A scalper should take many trades during an hour or a trading day, trying to speculate the market movement on short term intervals like 1 minute or even ticks. In time this could trigger impatience and the trader could think that the money he gets doesn’t meet the effort he put in. These thoughts might get him to lose money and not respect his scalping system.
A well done scalping system will also have a point from where the scalper would know that he has traded enough. It doesn’t matter if the stop point is at an x% profit or y% loss per day, but it must be respected. Even though a scalper should make tens or hundreds of trades daily so that at the end of the day to have a profit there is still the overtrading danger. If a trader doesn’t know when to stop trading then he will be tempted to make mistakes.
Another negative emotion for a scalper that usually appears at the beginners, but not only, is revenge trading. If a trader makes some losing trades he would try to get back. He will do overtrading just to show the market that he can still win, but in most of these cases the trader never wins the emotional battle with the market.
How can a scalper become consistent?
Consistency should be the main objective for each trader. But for one to get to be consistent could be a long way. Most of the retail traders are entering this domain because they believe that they will get rich fast from trading. It is not impossible, but it is not quite true. If the risks are not understood correctly and trading is not looked at like a business then it would be pretty difficult for the trader to have consistency.
A scalper is also a trader so he will have to understand the risk of trading which includes other risks like the emotional risk and the risk of losing money. If he managed to understand this first part he will then be able to see it like a business and like an investment on long term and not a get rich fast scheme. Knowing this and adding a correct scalping system combined with handling emotions it will become consistent in his wins just like a full time employee.
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