Introduction To Scalping And Why It Is The Most Rewarding Form Of Trading (for me)
Season 1 - Episode 1
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Fellow trader, maybe you’re a scalper, maybe you’re a day trader, or maybe you just lost yourself and randomly landed here. In the latter case, you still have time to escape!
I want to release a series of articles on scalping, as it has been my first love, and this is where the vast majority of my profits come from.
When I started trading, I heard a lot of bad things about scalping. Mostly because I was trading CFDs, which is a recipe for disaster when you scalp, due to the insane fees + commission.
Luckily, after 9 years, I finally started trading futures, and all of the sudden, my results started to look much better due to the commission being 4 to 5 times lower.
Before I get trolled, I know everyone has a different style of trading. In this article, I want to explain why I believe scalping is the most rewarding form of trading, at many different levels.
What is scalping?
My definition of scalping is pretty easy, get in and get out of your trade in seconds, sometimes a few minutes, but no more. I don’t do scaling, or leave runners. I like to go with my full size and take my win or my loss.
I’ve attached below a screenshot of two of my scalps from last week. Both lasted less than 2 minutes. I use a 4 ticks chart, even if there are many candles, it’s just a time-lapse of a few seconds.
To me, the beauty of scalping is that you get instant feedback from the market. You enter, and a few seconds after, you know if you were right or not.
This is crucial to me because it allows me to refine my strategy over and over whereas if I was a day trader or a swing trader, it would take me so much more time to gather enough trades history to see if what I’m doing is profitable or not.
The only inconvenience with scalping is that most people tend to overtrade. A year ago, I was doing more than 100 trades a day. I was exhausted by the end of the week and it was too many trades to review, so I wasn’t making any progress.
I list below my dos and don’t of scalping.
Dos
Extensively prepare your session, and identify areas that have a high probability of rejections. The worst thing you want is entering in a trade and missing the bigger picture, which will lead to your stop loss being hit in seconds.
Have a tight stop loss. You can have a positive risk-reward ratio scalping, and I highly recommend it.
Have a clear setup and trade it over and over.
Review your scalps at least on a weekly basis.
Don’t
Take too many trades. You’ll get lost and won’t even remember what your primary strategy is.
Have tons of indicators. Keep your chart clean, you’ll thank me later.
Go for home runs. Scalping is about compounding.
Have a sub 1 risk-reward ratio. I know we discussed it right above, but it’s essential to your survival.
In the next episode, I’ll go more in-depth about how I prepare my day, as a scalper.
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I am reading through this stuff for the third or 4th time. Your charts must rip with those range bars, you say it is a 4 tick chart, is each bar 1 poiny then? It alomst looks like they are 2 points?