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Mathematical reasons why MOST DayTraders & scalpers fail?

  • #181
  • Aug 20, 2007 1:13pm Aug 20, 2007 1:13pm
Quoting Firedowser
Wow when you break it down like that it makes alot of sense, and that is why I will stick with my long term trades.Or consider becoming a broker.
There Got you...

you hate paying your broker
  • #182
  • Oct 17, 2007 11:40am Oct 17, 2007 11:40am
Bottom line, Stick to what works .......... but we must realize there are several ways to make money in Forex, especially for those with less Capital. IMO scalping and longer term holds can both be very profitable. And if you have lots of Capital [to throw around] and want your time and freedom all to yourself, just hold'em for as long as you can. IMO ut2DaMax
  • #183
  • Oct 17, 2007 1:38pm Oct 17, 2007 1:38pm
Quoting tonyj
Sociologists claim that 85% of all
the people on planet earth do not think.

Since the thread's been bumped anyway I just wanted to say this is not only false, but also rather pointless to state without providing definition, proof and sources.
Trust price. Know yourself.
  • #184
  • Oct 17, 2007 3:49pm Oct 17, 2007 3:49pm
The mathematical "proof" at the beginning is interesting in two senses.

1. It is correct that if you take smaller trades your wins are not covering your commission (pips) and slippage as easily.
2. Since that post the commissions in forex have dropped dramatically.

The first point just means that you need to realistically take commission in slippage (= x pips) into account when calculating the expectancy of your trading.

Personally, as a 5-20 trade a day guy, I don't believe that maths is the reason that scalping is harder than longer timeframe, longer term, trading. The reason is the psychological difficulty of making decisions quickly. The quicker one makes decisions the more the emotional part of the brain is likely to override the rational forebrain. And the more the emotions rule the trade the more likely it is to be a loser.

So a scalper needs to train much more than a longer term trader. She's like an elite soldier. Her reactions need to be finally honed and she needs to react correctly almost without thought. But most traders don't do the training (Steenbarger, 2nd book) so they are likely to fail even when their method is sound.
  • #185
  • Edited 1:50pm May 9, 2009 3:37am | Edited 1:50pm
As a conclusion, You can GAIN with both Scalping and Long term trade. It just needs a good system including "not to be greedy", "patience", "tecnical analysis". I think 40 pip for me is ok with 1 lot. Only 2 hours a day.
  • #186
  • May 9, 2009 5:38am May 9, 2009 5:38am
Scalping is FINE you've got alot more control over your account than buying and waiting and riding out various market swings to hopefully get to a profit level your happy with, before your magical by meaningless SL figure is hit, which the market will likely reverse off cause it's just bouncing around anyway.

The problem is, all the EASY trades from the perspective at the time of entry are all bottom or top fishers and all indicators are geared at that to, which is the hardest game you can play, looking at 20%-30%success rate, small profits and bigger losses, why because 70-80% of them are counter trend, but enough win to make you keep trying as they all look obvious after the effect.

This is the trap I fell for for ages, got my head around started to make good $$$'s, then fell back into, but re worked my system and plan not to fall for it again.

Read my new method in the KISS thread, or find your own way of doing it.

The market Fib lines and all the rest of the CRAP are setup to make us all bottom / top fishers, the 'correct way' to trade forces everyone down that path. Purely so they can take our money!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #187
  • May 9, 2009 5:42am May 9, 2009 5:42am
Kiwi Trader is also correct, scalping is likely similar effect on the brain to taking fire in combat, where you do obviously stupid things, you know it at the time to but your still do it with no control.

All my rushed trades fail, I have to really fight my urges to just jump in, it got easier before I slipped and stopped fighting Gives really bad stress headaches doing it though, IS STRANGE!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #188
  • May 15, 2009 10:03am May 15, 2009 10:03am
What i said is a good system.....

If you have a good system you can gain 50 pips with 5 scalping trade (each 10 pips). Isnt it enough? You have many many many chances in forex to gain 10 pips in minutes...The problem is "a good system" , Some people have this kinda systems but they dont share.. You should create your own system by searching

Quoting Qqe
As a conclusion, You can GAIN with both Scalping and Long term trade. It just needs a good system including "not to be greedy", "patience", "tecnical analysis". I think 40 pip for me is ok with 1 lot. Only 2 hours a day.
  • #189
  • May 16, 2009 10:36pm May 16, 2009 10:36pm
Interesting.
  • #190
  • Edited 10:58pm May 16, 2009 10:58pm | Edited 10:58pm
What about this attachment?
Attached File(s)
File Type: pdf 1st%20place_aug%202008[1].pdf   32 KB | 729 downloads
The Thief of Wall Street
  • #191
  • Nov 29, 2010 5:30pm Nov 29, 2010 5:30pm
Scalping is harder because you have to be able to tell what kind of market you are in from a fast chart, which requires a pretty rich mental map, which requires a lot of experience seeing different market conditions...
  • #192
  • Aug 1, 2017 4:20pm Aug 1, 2017 4:20pm
Quoting Fanat
Hello all. For a long while I have been thinking about many things trading related and ways to improve my trading... I am sure that all of you have heard the phrase that "Day trading and Scalping is not profitable and most day traders lose." So I've decided to do the math and see if it shows anything... I was surprised badly... Lets check few things out: Scalpers/Daytraders on average trade 5 trades per day (or 1 trade using 5 lots). I've heard some scalpers may do as many as 30 trades. Lets say that we opened a first account that is 10,000$ (we...
Sure.....Get a pro account with a broker.
cheaper commission fees.
With LMFX pro. I have no commissions. Just a slightly bigger spread.
  • #193
  • Aug 1, 2017 4:45pm Aug 1, 2017 4:45pm
Quoting Bigpipin13
{quote} Sure.....Get a pro account with a broker. cheaper commission fees. With LMFX pro. I have no commissions. Just a slightly bigger spread.
then you have commission, you can convert them from one to another
Only my scepticism keep me from being an atheist. Be sceptic ever.
  • #194
  • Aug 1, 2017 4:50pm Aug 1, 2017 4:50pm
Quoting sinusgamma
{quote} then you have commission, you can convert them from one to another
The spreads are not exceeding (commission based brokers) to the degree you are losing money....unless you are literally scalping with big lots and only looking for small amounts of pips.
  • #195
  • Aug 2, 2017 12:50am Aug 2, 2017 12:50am
Quoting Bigpipin13
{quote} The spreads are not exceeding (commission based brokers) to the degree you are losing money....unless you are literally scalping with big lots and only looking for small amounts of pips.
Can be good. I saw the account types.
At Premium they write:
Spread from 1,
But pip or point. If pip it is too much, if point very very good, if there is no commission.
Only my scepticism keep me from being an atheist. Be sceptic ever.
  • #196
  • Aug 2, 2017 5:02am Aug 2, 2017 5:02am
I see this argument has been going for some years now. I'll add my 2 cents. As a former unsuccessful day trader, I can definitely speak on some of the challenges of intraday trading. First, like most mentioned there is the commissions and spread, which over the course of my many more trades add up to quite a bit of money. This creates a huge break even barrier. The more opportunity, the higher the barrier. Also, lower time frames offer very low risk to reward ratios compared to higher time frames. Any experienced trader knows that RR and win rate or highly correlated. With higher time frames you can trade very inaccurately and still be quite profitable because you have time working on your side providing you with 5, 10 or more RR. With lower time frames, since these opportunities are rare to non-existent, you have to be so much more accurate with your trades and thus must require a pretty high win rate (over 50% or more) to be profitable. This is very difficult on noisy lower time frames and the temptation to over trade and revenge is much more prevalent. Furthermore, what is over trading? It's hard to really know when you have so many signals all the time. There are so many reasons why this is the most difficult way to trade and for me the risk to reward of day trading was not high enough for me to continue to pursue it. I lost thousands trying to do it. I tip my hat to successful day traders, but it is very stressful and I was not profitable until I gave up this futile endeavor.
  • #197
  • Edited 5:48am Aug 2, 2017 5:37am | Edited 5:48am
Quoting Madinvestor
First, like most mentioned there is the commissions and spread, which over the course of my many more trades add up to quite a bit of money.
I agree with this sentence, but after that, the differences pop up

Scalping was very difficult for me. It was hard to keep track of the general direction. Stair step patterns and consolidation areas hurt me badly. However, while it sucked, it was a double-edged sword. If I had not made so many mistakes, and then tried to figure out how to correct them, I would not have learned how to trade.

I guess, essentially, I trade higher time frames too now, however, I trade them on lower time frame charts. This lets me take advantage of better entries/exits and reversals. I enjoy trading, so I don't have an investor mentality. I am very hands on, trading intraday swings, and closing all trades when I end my day.

This type of trading inherently involves break-even trading because I am following the market equilibrium. If price is ranging too tightly around it, then of course, I cannot profit. Neither can anyone else. Big deal. My profit is made from an accumulation of trades over the course of two market periods. It works for me.

My math has improved over the past few months because I have decided to overlay probability on my equilibrium. It is even more child's play now. Good Luck.
You cannot be extraordinary by being normal
  • #198
  • Last Post: Aug 2, 2017 11:08am Aug 2, 2017 11:08am
Quoting sinusgamma
{quote} Can be good. I saw the account types. At Premium they write: Spread from 1, But pip or point. If pip it is too much, if point very very good, if there is no commission.
I Believe it's points.
I've compared my 2 brokers spreads. ( One commission based, one not). And, the spreads are very close to the same points
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