Edward Culchenko
Most successful traders make their winning trades basing on solid knowledge and skills, using both technical and fundamental analysis. Those professionals know when to buy and sell. They are not in a hurry to open a trade. They always take a “timeout” to make a comprehensive analysis of the situation and to evaluate the chances.
However, there is another way to trade Forex and other liquid markets. It is more tempting for beginners and those who want big and fast profits. They like adrenaline. Such traders chose scalping. What is so attractive about it?
Scalping: The essence
Is it really possible to make money with the help of scalping? The experts of say it is possible! These days many traders use scalping techniques but not all of them show outstanding performance. To be a successful scalper means to be rational and to observe certain rules. Some of them use trading robots to eliminate the human factor.
In order to get a more comprehensive picture we interviewed Polina Poljakova (Magister), the head of the Department of Scalping and Short-Term Trading of , The interview will be a helpful guide to scalping for those who want to try this method, especially for beginners.
Market Leader: What is the essence of scalping and how can Forex traders benefit from it?
Polina Poljakova: Well. On the surface everything looks fairly simple and promising, especially in terms of profits. Scalping implies intraday trading, i.e. a trader opens and closes a trade within the same day without leaving it overnight. Sometimes a trade lasts for a couple of hours or even minutes. Why?
First of all, scalpers are satisfied with what they can get - a couple of pips per trade. That is why scalping is sometimes referred to as “pipsing”. Any trade is based on certain rules and tactics. That is why when it’s time to open or close a trade there is no hesitation and doubt.
Once again, successful scalping is based on a predefined algorithm. Moreover, scalping is done in both ways regardless of the trend direction. There is no pondering on the entrance/exit during the very trading time. The tactics is chosen in advance. Everything a successful scalper does during his trading session is strictly observe the chosen tactics, certainly with +EV.
A scalper is a trader who tends to calculate the lowest risk possible and tries to prove it to himself/herself. By analogy, a scalper is like a good diver. He/she dives only as deep as his/her equipment allows to dive.
Successful scalping strategies: gamble or near-perfect calculation?
Let’s consider the most relevant conditions of scalping:
1. The strategy. It implies efficient money management irrespective of the size of the capital (even $1000 needs efficient management). This is impossible to achieve with the help of only one tactic. Successful scalping requires multiple tactics and consequently multiple accounts.
2. The tactics (trading systems). They should be formalized and turned into an algorithm. Before using a new trading system it should be back-tested (at least 6 months of data). Then it is necessary to perform real-time testing for at least 3 months, while observing the chosen money management rules.
3. The currency pair. The asset (currency pair) you are going to trade should be tested for +EV and low exposure.
4. The broker. Your broker should offer tight (or even no) spreads and commissions (see ’s rating of FX brokers ). Don’t forget to study the client agreement for “pitfalls”: for example, some brokers do not allow scalping/intensive trading. So, they can cancel all your profitable trades., Of course, it is necessary to check the quality of broking services on a mini-real trading account. Very often the quality of services, including execution of orders, is much poorer than stated on the broker’s website. If there are some troubles, abandon such a broker without hesitation.
5. Time. Scalping requires time. It means you should devote a certain amount of time to monitor your open trades. You cannot just “set it and forget it”. You should also repeatedly check your hardware and software to avoid any kind of instability or interruption.
6. Discipline, consistency and psychological stability. These are probably the major factors when it comes to scalping because lack of any of these traits may result in a complete loss of your trading capital. You can develop them through continuous trading practice by focusing on following the exact rules.
The bottom line: professional scalping has nothing to do with gambling. It is all about being consistent, psychologically stable and disciplined and having a solid trading system and efficient money-management.
Trading wisely
BL: Tell us, please, should novice traders try the scalping you have just described?
PP: Of course, they should! Intraday trading, and scalping in particular, allows you to understand your strengths and weaknesses within a relatively short period of time. Scalping is the trading style that cannot coexist with elusions in any aspect. It helps to reveal the weak spots so that you could work on them to improve your trading performance.
However, novice traders often fall prey to their desire to get rich as fast as they can, thus gambling instead of trading. They lose the ability to be objective, to analyze and to make efficient decisions. Eventually they lose and treat scalping techniques as gambling. However, they usually do not understand that it is them who should be blamed for their losses.
In my opinion, no real-money scalping should be done without knowledge, skills and experience. Train on demo account first. If you are satisfied with your performance, then you can consider switching to real-money trading, which should be done gradually, wisely and carefully. The terms may very form person to person. As a trainer, I have seen people achieving the same result over completely different periods of time, say, a month and a year.
BL: Is it right to say that scalping is the fastest way of gaining profits from trading Forex?
PP: Once again, it depends on the trader, his/her skills, ambitions, trading system, experience and other factors.It’s about how comfortable you are when scalping. If for some reason you feel better when doing mid-term trading, then do it. You need no extra pressure! Less pressure - fewer losses. Fewer losses – more comfort and more profits, if you know what I’m saying.However, the “comfort” zone has to be expanded or degradation is inevitable.
If you are disciplined and eager to learn and improve your skills, sooner or later you’ll achieve success, both in trading and life.
Market Leader and would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following questions:
What is your attitude towards scalping? Do you think this scalping can be profitable?
Edward Culchenko
