This article was first published on Winners Edge Trading.
Scalping is one of those controversial words in trading, isn’t it?
And while there are many ways to do scalping wrong, there are actually some HUGE benefits to scalping forex.
1. Market Conditions Won’t Kill Your Strategy
To me, this is the biggest reason to consider scalping. When you are trading on the longer time frames and the market is ranging or just sloppy, it is extremely difficult to find high probability trades that offer an appealing Risk to Reward ratio.
But while the market may be sloppy on the daily chart, it’s still moving hundreds of pips which creates huge opportunities for a scalper.
There is virtually never a time where several pairs don’t have enough movement for a scalper to find trades with great profit potential.
2. Your Equity Curve is Prettier
This reason could get a little complex, but I will keep it simple for this article’s sake. It’s actually the biggest reason to consider scalping when you think in terms of compounding wealth.
In short, the more trades you take the less variance you will have.
Think about it this way: If you take 100 trades over the course of the year, you are bound to have streaks within that period. And by averaging around 8 trades per month, if you have a losing period where you lose 14 out of 16 trades, for instance, you would create several month drawdowns on your account.
However, if you are taking 100 trades per month and experience the same kind of streak (14 out of 16) that losing streak would only represent a few days of drawdown which makes for a much more consistent equity curve trading over the long term.
3. A Single Trade Won’t Sink your Boat
As a scalper, you typically trade a much higher frequency than the average trader. One benefit of this is that no single trade should carry a lot of size or risk. Even if the market spikes or does something unexpected, you are not likely to face a massive hit when scalping.
4. You Don’t Need to be (THAT) Patient
When it comes to scalping, you don’t need quite the self-control as you do with other methods. Most methods put a huge emphasis on patience, but with the majority of trades not being open for long, scalping requires much less patience and self-control.
5. You get to Avoid Some Annoying Parts of Trading
As a scalper, you typically don’t have to worry about rollover/swap that can negatively affect your earnings. It’s also not likely that you will be holding a lot of trades that could gap on you and cause unnecessary losses.
6. Some other Reasons it can Make Sense
There are several other reasons that scalping can make a lot of sense, but I hope this article sheds some light on why we have been thinking more and more about scalping (especially with some of the tricky market conditions).
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