#342: Should You be a Forex Scalper?

 Podcast: Should You be a Forex Scalper? In this video: 00:27 – Is scalping a good idea? 01:22 – The reality is different 02:22 – Having small stops is not important 03:09 – Can be affected by news and emotions 03:26 – Sustainable and enjoyable trading 04:26 – Don’t get glued to the charts 05:30 – Don’t forget the US clocks change this weekend 06:13 – Email me your questions Should you consider being a Forex scalper? Let's talk about that and more right now. Hey traders, Andrew Mitchem here at the Forex Trading Coach with video and podcast number 342. Is scalping a good idea? I want to talk all about scalping. You see, I've received an email this week from somebody that said, "Look Andrew I'm new to trading but I've heard about scalping. It looks really, really good. Should I be a scalper?" They said the advantage is that they saw is that your stop/loss needs to be smaller, it's quicker to make profits, to make your pips. You can actually be in and out of a trade really, really quickly. They thought it was just a fantastic way of trading. Now, the part to take from that is the person who wrote the email hadn't really traded yet. But it just sounds good in theory, doesn't it? The difference is that in reality, to me in my opinion, scalping is not the way to go. Now, I'm not saying it doesn't work and of course it can work. It's like anything. It can work if you want it to and if it suits you as a trader with your personality. However, I would strongly suggest that for most people you don't look at scalping. The reality is different You see the thing is your stop/loss being smaller, that doesn't matter if you control your risk properly. Making more pips and making pips quickly, well you're making pips it doesn't matter really to you if you're making a trade in like sort of two minutes or whether it's two hours or 12 hours. It shouldn't really matter. The aim is to actually make the profit, not how quickly you can do it. Also the thought process of scalping of being in and out of the market really, really quickly, the problem is is that reality is that you have things called spreads. Every time you take a trade, the spread or the commission is paid to your broker and if you imagine you're taking, let's say for example a 10 pip profit target, but your spread is two or three pips, that really cuts into the trade. Of course, to make 10 pips you've really got to make 12 or 13 because of your bid and ask differences. So it becomes a real issue. Having small stops is not a great thing. Having small stops is not important It might sound good because you think you're losing less, but the thing is that if you actually use correct money management, your position size is what effects the outcome of the trade. It shouldn't really matter whether the stop is 10 pips or 100 pips. It doesn't matter. So the other hard thing I've always found in the past is that reward to risk out of scalping trades is very, very difficult. If you think you're going to have a small stop/loss of let's say call it 10 pips, and reality is therefore you're only sort of seven or eight pips away from being stopped out as soon as you place the trade, because again the spread, you've got to get yourself like 20 to 30 pips out of that trade to get yourself a two or a three to one reward to risk trade. Now that's all the technical trading side of it. Can be affected by news and emotions You get news and events, you get spikes in the spreads, et cetera. All those type of things that really if you have a smal...