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Scalping is one of the preferred trading strategies for many forex traders. However, this does not mean that this trading method is free from controversy. Many say that rather than Scalping Strategy, Day Trading or Swing Trading makes more sense and has the potential to gain profits in forex. Is that right?
Scalping strategies are carried out in order to profit from small movements on the prices of forex pairs. Therefore, scalpers usually use a super small timeframe, between 1M to 15M only. The opened trading position is only maintained open in a very short time, a few minutes or a maximum of a few hours after opening. Some even say, scalper should close a maximum position 30 minutes after the OP; if after 30 minutes it has not been closed, then the trade will fail.
The distinctive character of scalping also raises a number of critics.
Unsubstantiated Price Movements
In short, the timeframe makes a long-term fundamental or technical analysis, also about observing the impact of this or that event, it will rarely be relevant for Scalping Strategy users. This raises criticism # 1 in the scalping strategy, namely that the analysis of price movements becomes "baseless", solely because of the help of indicator signals or just a hunch of traders. For some circles, it is considered to be a "curse" when there is a drastic movement triggered by an unexpected change, whether it has been scheduled on the fundamental calendar or not.
If the other trading method is said to "ignore noise", then in Scalping Strategy it is as if the opposite is true: "trading noise".
Profit Can Only Be Obtained After Many Trading Times
Pip that can be harvested by scalping is often only "coins", about 5, 10, 15 pips, or even lower than that. Thus, generally scalper must do a lot of successful trading every day in order to be able to return on capital or achieve a fairly good profit level, even though this is clearly difficult to achieve.
In addition, the risk / reward ratio used by scalpers also tends to be "tight". Not infrequently encountered by forex traders applying a risk / reward of 1: 1. This allows a higher profit level than usual if the movement is in line with predictions, but with the "profit change" then loss once can cut off profit from several trades at once.
Not All Trading Brokers / Accounts Enable Scalping Strategy
Even though this scalping strategy is popular among traders, the attitude of brokers tends to be ambivalent. Some openly prohibit traders from scalping, some are allowed. But among brokers who allow it too, the trading conditions provided are not necessarily conducive to the scalper.
Because many factors can make it difficult for a trader to run a Scalping Strategy. For example wide spreads (or sudden widening), minimum distance between high SL-TP opening prices, and restrictions on how quickly a trading position may be closed. Even more adorable is the behavior of brokers who sometimes or sometimes lead to slippage, requotes, and the like. For scalpers whose profits rely on very sharp price accuracy, those factors are certainly disturbing.
With the shortcomings of the Scalping Strategy, some traders think that Day Trading or Swing Trading is more realistic to do. However, in reality, there are only traders who can succeed with scalping. How come?
First, the open position is maintained only for a short period of time, this means that the likelihood of a large reversal will be lower, especially if the scalper is keen enough to avoid situations where there is a critical impact news release. Second, the trader does not need to wait too long to close the position, thus reducing the possibility of blunder due to wavering or impatience due to changes in the situation, and the number of technical indicators that need to be cared for can be minimized. Moreover, the success or failure of trading is not only supported by the style of trading used, but also the stability of money management and trader psychology itself.
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