Should you scalp?  

Scalping is something that intrigues many system traders. The challenge of taking small, consistent trades from the market daily while risking very little is appealing.

With scalping, it’s generally expected you are trading from a small time frame, probably 5-minutes or less.

The idea is to open a position and capture only a few pips of profit.

The appeal is since we are trading from such a small timeframe, your risk is small, which means you can trade with a small account.

Often you will have setups that produce high win rates and occur more frequently than setups on a higher timeframe such as hourly or daily.

There tends to be a higher frequency of trading opportunities with scalping which can potentially lead to large accumulated profits versus your starting account balance.

Scalping for the retail trader is very difficult to do.

Almost all retail traders who try scalping will fail.

If you’re new to trading, we wouldn’t recommend it. Why?

High-Frequency Trading

When trading in these timeframes, you are competing with high-frequency trading (HFT) firms running automated trading programs (algos) built by a team of Ph.D. brainiacs.

It’s like a basketball newbie trying to play LeBron James.

Other significant barriers are the transaction cost in both the spread and slippage.

The difference between what a buyer will pay and what the seller will receive at a given point in time is referred to as the bid-ask spread.

Your broker buys from you at a lower “bid” price, while selling to you a higher “ask” price.

The bid and ask prices are your broker’s quoted prices or “quotes”.

The bid-ask spread is used as a proxy for transaction costs.

The quoted spread measures the cost of completing a “round trip” (buy and sell)order if trades are executed at the quoted prices.

Transaction Costs

Transaction costs for a single trade are often measured as half the spread.

If you’re paying a 2-pip spread to enter and exit a trade and make a 4-pip gain, half (50%) of your profits are going to paying the spreads!

Scalping means smaller profit per trade yet, as you drill down to smaller and smaller time frames, your costs remain fixed.

If you traded on a slower time frame like a daily chart and made a 400-pip gain, you’d pay 0.5% of profits to pay the spreads versus 50% in the previous example. That’s a big difference!

As the negative impact of transaction costs and slippages grows, this takes a more significant percentage of your profits.

A single pip of slippage is hardly noticed when you are holding a trade for several days with an average profit of $100 per trade.

However, on a scalping system, a single pip is the difference between life and death.

Then throw in latency, computer issues, internet issues and your margin for error is tiny.

Again, on larger timeframes, you can exit a trade now or in a few seconds, and it won’t matter that much.

Not so in the scalping world where everything is hypersensitive, and your margin for error is tiny.

In closing, if you’re new to building trading systems or don’t already have strategies trading live on the market that’s making money, focus on building systems on higher timeframes first.

Learn to Day Trade Forex with Pattern Alerts

If you’re looking to earn extra income trading in the Forex market, the right tools and training can make all the difference. With Forex Smart Trade, you get access to super-accurate proprietary trading indicators and best-in-the-business, one-on-one coaching to help you become a consistently profitable trader.

Want to see how powerful our tools are for yourself? Try our Trade Pattern Alert Trial for just $99/month, which includes:
✅ Real-time Trade Alerts sent directly to your phone and email
✅ Daily Overnight Trade Setup so you wake up ready to trade
✅ Full access to our simple, intuitive, and accurate indicators
✅ One-on-one coaching to help you learn faster and trade smarter
✅ 30-day money-back guarantee—no risk, just results

Check out our webinar to see our traders in action and discover just how easy and intuitive our system is. Start your journey today!

🔹 Learn more & subscribe at: alerts.ForexSmartTrade.com

Currency trading is very risky. My results are not typical. We provide a 30-day trial so you can assess the value of our indicators and tools for yourself.

www.ForexSmartTrade.com