Scalping - boon or bane?

Scalping - Blessing or curse?
Life Trading
Real Accounts

When I started to trade the forex market over 15 years ago, I thought that scalping was an easy way to make profit. Put on a trade, waiting for some pips, and collect the money. Sounds plausible right? Until I have lost a couple of times in a row and find that my losses are so much bigger than my wins that I could easily end up in a hole that I can't dig my way out of.

So, what is the answer if you really want to use scalping as one of your trading style?

After 15 years experience I can say that scalping is still a high risk trading style and invoicing will be accomplished after taking the measurements on site.

Scalping seems a 'back breaking' work & fickle due to the fact that the market changes easily its direction & it can happen in an instant and quite often with the focus of these lower timeframes without any discernible reason. As you could end up making bad decisions and the wrong choices. Scalping activities can cause you to become misguided and even lost in your thoughts with just the occasional bump to navigate around or deal with.

It's easy making money with scalping within short time here and there. You could double, quadriple the account easily within two or three weeks when the market is going stright away in your direction - then it's a doozy! - but could you say it also when comparing all your scalping orders over months?, ...& maybe over years?
You win some, you lose some.

Real Life Account
Swiss Scalping - Leverage 1:50, Deposits: +1'000.-$, Beginning Date: 2014 September 18, p.41, #814
2014 October 03: Equity: 1'106.47$, Profit: +106.47$ (+10.6%) (Beginning Date: 2014 September 18), p. 57, #1'132, #1'161; +10% within one month.
10'000.-$ should be the minimum when scalping in Life, 25'000.-$ is recommended, 50'000.-$ should be comfortable.
(further explenation: p.45, #890)

A part of my scalping style here is based on former strategies.
Sicko-Scalp-Machine, http://www.forexfactory.com/showthread.php?t=281532
Simple Scalp Machine, http://www.forexfactory.com/showthread.php?t=292842
Scalping 10sec., 30cec, M1, http://www.forexfactory.com/showthread.php?t=222387
TASAYC ("Trade As Simple As You Can"), http://www.forexfactory.com/showthread.php?t=325369
Scalping & Swinging, http://www.forexfactory.com/showthread.php?t=464172
M5-Two-Way-Confirmation-Strategy, http://www.forexfactory.com/showthread.php?t=297304
Time Cell Trading, http://www.forexfactory.com/showthread.php?t=249257
TraCop-1%, http://www.forexfactory.com/showthread.php?t=212160

Dear Scalping Trader & Non-Scalper!
Feel free to publish your scalping ideas or counter arguments at this board here!

Kindest regards
FXcube

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Further comments
p.9, #166, #168; p.25, #481 - p.26, #518 (FXcube); Cascading Trading, p.15, #248 - #286; Pareto-optimum or optimum?, p.16, #316; p.27, #530 (iDoubleStoch);
___

Indicators & Templates
p.10, #198, sicko-scalp-machine, m1.tpl, CCI, EMA50.tpl, (see also p.11, #214); p. 18, #346, sicko-scalp-machine.tpl, PivotsD_v5.mq4; p.47, #940, BB.CCI,EMA50.tpl, PivotsD_v5.mq4;

___

End
This thread was closed by FXcube at 2014 October 03, see p.58, #1'160.

Two Real Accounts:
Swiss Scalpng A - Leverage 1:50, Deposits: +300.-$
Swiss-Scalping-B - Leverage 1:50, Deposits: +300.-$
Due to security reasons there are two Real Accounts with 300.-$ Deposits.
10'000.-$ should be the minimum when scalping without publishing anything.
FXcube

http://en.wikipedia.org/wiki/Scalping_%28trading%29

Scalping (trading)
From Wikipedia, the free encyclopedia
This article is about trading in securities or commodities. For other uses, see Scalping (disambiguation).
http://upload.wikimedia.org/wikipedi...ok-new.svg.png
This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (August 2010)
Scalping, when used in reference to trading in securities, commodities and foreign exchange, may refer to

1. a legitimate method of arbitrage of small price gaps created by the bid-ask spread.
2. a fraudulent form of market manipulation
3. a legitimate method of trading based on quick momentum trades triggered by order flow reading setups.[citation needed]

Contents

1. 1 Arbitrage
   1. 1.1 How scalping works
   2. 1.2 Principles
   3. 1.3 Different parties and spreads
      1. 1.3.1 Who pays the spreads (costs)
      2. 1.3.2 Who receives the spreads (bonuses)

   4. 1.4 Factors affecting scalping

2. 2 Fraudulent use by adviser
3. 3 References
4. 4 External links

Arbitrage
How scalping works
http://upload.wikimedia.org/wikipedi...ok-new.svg.png
This section does not cite any references or sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. (March 2010)
Scalpers attempt to act like traditional market makers or specialists. To make the spread means to buy at the Bid price and sell at the Ask price, in order to gain the bid/ask difference. This procedure allows for profit even when the bid and ask don't move at all, as long as there are traders who are willing to take market prices. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds.
The role of a scalper is actually the role of market makers or specialists who are to maintain the liquidity and order flow of a product of a market.
Principles

1. Spreads are bonuses as well as costs - Most worldwide markets operate on a bid and ask based system. The numerical difference between the bid and ask prices is referred to as the spread between them. The ask prices are immediate execution (market) prices for quick buyers (ask takers); bid prices for quick sellers (bid takers). If a trade is executed at market prices, closing that trade immediately without queuing would not get you back the amount paid because of the bid/ask difference. The spread can be viewed as trading bonuses or costs according to different parties and different strategies. On one hand, traders who do NOT wish to queue their order, instead paying the market price, pay the spreads (costs). On the other hand, traders who wish to queue and wait for execution receive the spreads (bonuses). Some day trading strategies attempt to capture the spread as additional, or even the only, profits for successful trades.
2. Lower exposure, lower risks - Scalpers are only exposed in a relatively short period, as they do not hold positions overnight. As the period one holds decreases, the chances of running into extreme adverse movements, causing huge losses, decreases.
3. Smaller moves, easier to obtain - A change in price results from imbalance of buying and selling powers. Most of the time within a day, prices stay stable, moving within a small range. This means neither buying nor selling power control the situation. There are only a few times which price moves towards one direction, i.e. either buying or selling power controls the situation. It requires bigger imbalances for bigger price changes. It is what scalpers look for - capturing smaller moves which happen most of the time, as opposed to larger ones.
4. Large volume, adding profits up - Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for large-capital traders seeking to move large volumes at once, but for small-capital traders seeking to move smaller volumes more often.

Different parties and spreads
Whenever the spread is made one (or more) party must pay it (paying the cost to receive some value on completing the transaction quickly) and some party (or parties) will receive that money as profit.
Who pays the spreads (costs)
The following traders pay the spreads:

1. Momentum traders on technicals - These traders look for fast movements hinted from quotes, prices and volumes, charts. When a real breakout occurs, price becomes volatile. A sudden rise or fall may occur within any second. They need to get in quick before the price moves out of the base.
2. Momentum traders on news - When news breaks out, the price becomes very volatile as many people watching the news will react at more or less the same time. A trader needs to take the market prices immediately as the opportunity may vanish after a second or so.
3. Cut losses on market prices - The spread becomes a cost if the price moves against the expected direction and the trader wishes to cut losses immediately on market price.

Who receives the spreads (bonuses)
The following traders receive the spreads:

1. Individual scalpers - obviously they trade for spreads and can benefit from larger spreads.
2. Market makers and specialists - people who provide liquidity place their orders on their market books. Over the course of a single day, a market maker may fill orders for hundreds of thousands or millions of shares.
3. Spot foreign exchange (exchanges of foreign currencies) brokers - they do not charge any commissions because they make profits from the bid/ask spread quotes. On July 10, 2006, the exchange rate between Euro and United States dollar is 1.2733 at 15:45. The internal (inter-bank dealers) bid/ask price is 1.2732-5/1.2733-5. However the foreign exchange brokers or middlemen will not offer the same competitive prices to their clients. Instead they provide their own version of bid and ask quotes, say 1.2731/1.2734, of which their commissions are already "hidden" in it. More competitive brokers do not charge more than 2 pips spread on a currency where the interbank market has a 1 pip spread, and some offer better than this by quoting prices in fractional pips.

Factors affecting scalping

1. Liquidity - The liquidity of a market affects the performance of scalping. Each product within the market receives different spread, due to popularity differentials. The more liquid the markets and the products are, the tighter the spreads are. Some scalpers like to trade in a more liquid market since they can move in and out of large positions easily without adverse market impact. Other scalpers like to trade in less liquid markets, which typically have significantly larger bid-ask spreads. Whereas a scalper in a highly liquid market (for example, a market maintaining a one-penny spread) may take 10,000 shares to make a 3 cent gain ($300), a scalper in an illiquid market (for example, a market with a 25 cent spread) may take 500 shares for a 60 cent gain ($300). While there is theoretically more profit potential in a liquid market, it is also a "poker game" with many more professional players which can make it more difficult to anticipate future price action.
2. Volatility - Unlike momentum traders, scalpers like stable or silent products. Imagine if its price does not move all day, scalpers can profit all day simply by placing their orders on the same bid and ask, making hundreds or thousands of trades. They do not need to worry about sudden price changes.
3. Time frame - Scalpers operate on a very short time frame, looking to profit from market waves that are sometimes too small to be seen even on the one minute chart. This maximizes the number of moves during the day that the scalper can use to make a profit.
4. Risk management - Rather than looking for one big trade, the way a trend trader might, the scalper looks for hundreds of small profits throughout the day. In this process the scalper might also take hundreds of small losses during the same time period. For this reason a scalper must have very strict risk management never allowing a loss to accumulate.

Fraudulent use by adviser
Main article: Front running
Scalping in this sense, more commonly known as "front running", is the practice of purchasing a security for one's own account shortly before recommending that security for long-term investment and then immediately selling the security at a profit upon the rise in the market price following the recommendation.[1] The Supreme Court of the United States has ruled that scalping by an investment adviser operates as a fraud or deceit upon any client or prospective client and is a violation of the Investment Advisers Act of 1940.[2] The prohibition on scalping has been applied against persons who are not registered investment advisers, and it has been ruled that scalping is also a violation of Rule 10b-5 under the Securities Exchange Act of 1934 if the scalper has a relationship of trust and confidence with the persons to whom the recommendation is made.[3] The Securities and Exchange Commission has stated that it is committed to stamping out scalping schemes.[4] Scalping differs from pumping and dumping which does not involve a relationship of trust and confidence between the fraudster and his or her victims.
References

1. SEC v. Capital Gains Research Bureau, 375 U.S. 180, 181 (1963).; SEC Litigation Release No. 22240 (Jan. 26, 2012).
2. SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963).
3. SEC v. Yun Soo Oh Park, 99 F. Supp. 2d 889 (N.D. Ill. 2000).
4. SEC Charges Operator of Stock Picking Website with Secretly Profiting in Investment Scam (Aug. 1, 2006).

External links

1. Introduction To Types Of Trading: Scalpers at Investopedia

Sicko-Scalp-Machine
is a trading system constructed of parameters from different Scalping Systems. If you read these interesting instructions and manuals at "http://forex-strategies-revealed.com/scalping-systems" you could follow here at this thread.
see more here, please: http://www.forexfactory.com/showthread.php?t=281532

http://www.investopedia.com/articles...5/scalping.asp

Scalping: Small Quick Profits Can Add Up
By Vadym Graifer
Related Searches: What Is the Definition of Intraday Trading, Become Day Trader, Options Trading for Beginners, Yahoo Finance, Online Trading

Scalping is a trading style specializing in taking profits on small price changes, generally soon after a trade has been entered and has become profitable. It requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains that the trader has worked to obtain. Having the right tools, such as a live feed, a direct-access broker and the stamina to place many trades is required for this strategy to be successful.

SEE: Day Trading Strategies For Beginners

Scalping is based on an assumption that most stocks will complete the first stage of a movement (a stock will move in the desired direction for a brief time but where it goes from there is uncertain); some of the stocks will cease to advance and others will continue. A scalper intends to take as many small profits as possible, not allowing them to evaporate. Such an approach is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades while letting others reverse. Scalping achieves results by increasing the number of winners and sacrificing the size of the wins. It's not uncommon for a trader of a longer time frame to achieve positive results by winning only half or even less of his or her trades - it's just that the wins are much bigger than the losses. A successful scalper, however, will have a much higher ratio of winning trades versus losing while keeping profits roughly equal or slightly bigger than losses.

The main premises of scalping are:

 

1. Lessened exposure limits risk - A brief exposure to the market diminishes the probability of running into an adverse event.
2. Smaller moves are easier to obtain - A bigger imbalance of supply and demand is needed to warrant bigger price changes. It is easier for a stock to make a 10 cents move than it is to make a $1 move.
3. Smaller moves are more frequent than larger ones - Even during relatively quiet markets there are many small movements that a scalper can exploit.

Scalping can be adopted as a primary or supplementary style of trading.


Primary Style
A pure scalper will make a number of trades a day, between five and 10 to hundreds. A scalper will mostly utilize one-minute charts since the time frame is small and he or she needs to see the setups as they shape up as close to real time as possible. Quote systems Nasdaq Level II, TotalView and/or Times and Sales are essential tools for this type of trading. Automatic instant execution of orders is crucial to a scalper, so a direct-access broker is the preferred weapon of choice.

Supplementary Style
Traders of other time frames can use scalping as a supplementary approach in several ways. The most obvious way is to use it when the market is choppy or locked in a narrow range. When there are no trends in a longer time frame, going to a shorter time frame can reveal visible and exploitable trends, which can lead a trader to scalp.

Another way to add scalping to longer time-frame trades is through the so-called "umbrella" concept. This approach allows a trader to improve his or her cost basis and maximize a profit. Umbrella trades are done in the following way:

 

1. A trader initiates a position for a longer time-frame trade.
2. While the main trade develops, a trader identifies new setups in a shorter time frame in the direction of the main trade, entering and exiting them by the principles of scalping.

Practically any trading system, based on particular setups, can be used for the purposes of scalping. In this regard, scalping can be seen as a kind of method of risk management. Basically, any trade can be turned into a scalp by taking a profit near the 1:1 risk/reward ratio. This means that the size of the profit taken equals the size of a stop dictated by the setup. If, for instance, a trader enters his or her position for a scalp trade at $20 with an initial stop at $19.90, then the risk is 10 cents; this means a 1:1 risk/reward ratio will be reached at $20.10.


Scalp trades can be executed on both long and short sides. They can be done on breakouts or in range-bound trading. Many traditional chart formations, such as a cups and handles or triangles, can be used for scalping. The same can be said about technical indicators if a trader bases decisions on them.

SEE: Forex: How To Scalp Fundamentally

Real Account: "Swiss-Scalping-B"
Scalping Trades
2014 August 15
Profit: +1.05%

Scalping Trade
Profit: +1.01% (+3.05$)

EURUSD, M5, 2014 August 15

____

A - x9
B - x4
_____

Risk Tolerance
Calculation Examples
0.5 cents per pip = 0.16% per pip x 6 pips = 1% (3.-$) or 6 trades à 1 pip
0.2 cents per pip = 0.066% per pip x 15 pips = 1% (3.-$) or 15 trades à 1 pip
0.1 cent per pip = 0.033% per pip x 30 pips = 1% (3.-$) or 30 trades à 1 pip

Profit-Targets
Examples:
Target per day: +0.2% - 0.5% on one account if the other is +/-0
or
Target per year: ~50%

Hello ForexCube,

Anything involving scalping I am most certainly interested in. What I believe is the problem with scalpers is `scalping with bias`. Unlike investors or most of the people who trade on forums scalping leaves no room for bias. One of the things which surprise me is how while scalping and back testing you look at patterns, etc. Yet when your trading live you have scalpers who take positions based on OVERBOUGHT OVERSOLD, NEWS, ETC. Basically things which never appear on your chart when your back testing.
I like you have experienced the winning and losing side of scalping, but the wonderful thing about scalping is when you are correct, and I mean when you executed a very good scalp, you will notice that you never gave up more then 3 to 5 pips over your spread. That to me reveals something very special about scalping. Either your right or wrong almost right away.
If scalpers alike focused more on accuracy, and using certain money management strategies perhaps the 100 to 500% profit in a short period of time can be more constant over the long haul.

One thing does remain a fact. If you scalp or swing they both end up losing big at the end. Which is why I rather scalp, and withdraw once I make a certain amount of cash or % profit, and continue the process again.

Profit Today:
Swiss Scalpng A - (x9) - Leverage 1:50, Deposits: +300.-$ (Beginnig Date: 2014 August 15); actual: 306.15$, +2.05%
Swiss-Scalping-B - (x4) - Leverage 1:50, Deposits: +300.-$ (Beginnig Date: 2014 August 15); actual: 306.70$, +2.23%

Hi CholiPop
Nice ideas!
When my account has a Profit around 50% - 100% I make money transfer every time and put all this profit out of this scalping account or start with one more account which could be then a "Swinging Account" or a "Long(er) Term Account" or a "Commodity Account" (trading silver, gold, oil, DAX, SMI..) or buy some stocks with it.
Often I hedge also orders in the expectation that the price movements could go in any direction. In this case some of these "scalping orders" could then change his status in "swinging orders" sometimes.
When doubling an account the trick seems to be "Keep breathing. That''s the key! (The Lord of the rings), that is to say in my doing of scalping, redouble or triple your account and put then the 100% or 200% pofit out of it before it plunge into ruin.
I like also accounts where no orders are still more open when I am in reading mood. Scalping Accounts are giving me this pleasurable feeling.
FXcube

You are 100% correct. I`m glad to have met someone like minded as myself. You are now my friend.

EURUSD H1, 2014 August 15
Trading some overlapping candles coulde be a great deal here & there.
FXcube

Thank you for your attention!
Thank you very much indeed!
FXcube

Scalping Trade
EURUSD, M1, 2014 August 15
EURUSD, M5, 2014 August 15
Profit: +0.51% (+1.55$)

...and a couple of minutes later the market price is elsewhere again.

Scalping means also:" fast in, fast out", ...here & there.