Advantages and Disadvantages of Scalping Strategies

Advantages of scalping strategies:

1) Profits can be anywhere between 10% - 30% from a daily deposit for successful trades The profit levels will be influenced by the amount of risk. 2) There is no need to study technical and fundamental analysis. It is only necessary to use the rules of opening and closing positions for scalping 3) Absence of barriers for entering the market (free market entry). You can trade at any time of day and on any type of trend so you don't need to wait for a trend

The disadvantages of scalping strategies

1) Not knowing how trends will behave increase the stress involved in an already tense activity that is real account trading 2) Randomly opening a position when using a large leverage only needs a dramatic market reversal to destroy a deposit 3) Manual trading needs opened positions to be constantly monitored meaning you have little free time. 4) Spread. The price needs to increase by the amount of the spread if the level of profit is to exceed zero, i.e. there will be a 1-2 point drawback at the initial stage of the trade. You should get more specific information about spread sizes from your broker 5) Commission charges. Instead of using the spread, some brokers take a specific percentage from opened transactions. Or to put it another way, they charge commission. In these circumstances, commission charges should be covered. 6) Low profit levels carry a high risk. All your deposit is on the line yet each transaction will only yield $1 - $2. One trading day can bring profits of 10% - 30% after a lot of profitable trades. The volume of trades and the amount on deposit will affect the level of profit. That said, any small movement may 'kill' your deposit 7) Many brokers overrate the values of orders such as take-profit and stop-loss. Most brokers will not allow stop orders to be placed closer than 5 points from the price. There is no time to place stop orders if you trade manually. For those traders who use scalping strategies that are founded within the mechanical trading systems this is important.

We should first of all review the rules of the strategy before we can make a decision about whether or not to use scalping for trading on real accounts.

1) The level of profit should cover the level of spread. With a 2 point spread, the orders should only be closed at the rate of 3-5 points increase. The final choice is up to a trader. As a rule, scalpers use 5 points 2) Optimize minute charts (M1). As the fastest illustrator of rate fluctuations than any other chart, minute charts are perfect for scalping. 3) You should use the maximum leverage. A trader can improve their opportunities if using a large leverage for a small deposit. For instance a position can be opened with a 0.1 lot volume using $20 and a 1:500 leverage.

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