MONEY MANAGEMENT FOR SCALPING????

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MONEY MANAGEMENT FOR SCALPING????

Postby Grant » Tue Apr 06, 2010 5:02 pm

I have a good question that has been bugging me for some time. I am familiar with risk/reward and money mgmt for longer timeframes but where does it go for scalping? I see risks between 1 and 4% per trade in most guidelines but this is longer term trading.

Firstly, I use Walter’s VMA scalping system as linked here: http://forex-strategies-revealed.com/sc ... end-trades

I subscribe to his theory of 10 pts per day as I have long ago found out that the smaller trades have a much higher probability. And that 10 pts doesn't mean in one trade either.

Let me give some numbers. Firstly I get about 75% hit rate, R:R of 1:1 with a 5 pt SL and PT. I set my daily risk to 3% and weekly to 10%.

Here is the problem. If I get 75% hit rate, then 4 trades gives me my 10 pts. (3 wins 1 loss, SL and PT of 5 pts, so it’s 10 pts.). It means that I am making 2% per day. This is on high probability trades, not flyers. Non-compounded, this means 40% per month. If I compound daily or even weekly, it looks more like 50%. I am no Market Wizard, (maybe for the next edition) so I think that appears a little too much.

What it means to me is that for an account of $5000 I can take home $2000 + per month. I do this in about an hour per morning.

The difference between scalping and position or swing trading is that time is compressed. I get higher probability with a smaller RR ratio but more trades per week. Using the same risk of 1%, I have to use much smaller lots for long term trading due to the larger SL needed.

I guess what I want to know, I think it was Alex that was the scalping expert, but I am asking anyone, is this in line? And I am referring to the risk. It may seem to be too good to be true but I want to know from a real scalper what they are doing.

All comments welcome.

Grant
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby Rom » Wed Apr 14, 2010 6:48 pm

Here is the problem. If I get 75% hit rate, then 4 trades gives me my 10 pts. (3 wins 1 loss, SL and PT of 5 pts, so it’s 10 pts.). It means that I am making 2% per day. This is on high probability trades, not flyers. Non-compounded, this means 40% per month. If I compound daily or even weekly, it looks more like 50%. I am no Market Wizard, (maybe for the next edition) so I think that appears a little too much.


You are mostly right on theory. But probably you will experience as much problems as Obama in Afganistan. There are tiny details you are missing, that will cause return to be closer to 5% than 50%. Spooky. You have absolutely no verification of live results.

In scalping 4 pip per trade is a straight road to heaven. 3% risk is high, but okey till your account is doubled, assuming you can afford to blow your account, being young.

kjell
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby Moreno » Sat Dec 20, 2014 10:23 pm

Scalping is a trading strategy where we open and close trades quickly, as we do the scalping then we can make a profit. but because it is difficult to predict the forex risk well then we need to have good money management, do not trading full lot when scalping if you do not have enough experience
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby darklot » Sun Dec 21, 2014 5:13 pm

Scalping is my favorite system. But be sure you are using broker that allowed you to do scalp. I am using armada markets. They are currently the top forex broker for tick scalping EA's. Perfect trading conditions for scalpers because of the low spreads. Initially I also tried several brokers before choosing Armada, this is caused by a lot of positive reviews from friends who have used this broker.
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby kaha » Fri Jan 02, 2015 2:35 am

scalping is good always check with your broker what is their definition of scalping some brokers will allow to scalp but end up in a tight spot accusing or arbitrage. be cautious
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby darklot » Wed Jan 07, 2015 11:03 am

i would make sure the brokers would allow my trading strategies, as provide a suitable trading condition based on my needs. i tried several brokers service just to find a perfect trading condition for my trading strategies, before i choose to open a ECN account with Tickmill (formerly armada markets), which fit and suit my trading system, for commision based brokers i've got only 0.8 pips fee transaction on EURUSD, execution rate are fast for entry process, low price stop level which means i can modify target level as near as possible to the current market.
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby nanypurwanti » Wed Jan 14, 2015 11:08 am

Trade using scalping strategy is more better if we trade directly to interbank. This chance only on STP account in MAYZUS broker. This STP account make you possible to Direct Trade to Interbank. All your orders and execution will executed fastest and no delay there. Its very suitable for scalping.
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby Moreno » Thu Jan 15, 2015 11:06 am

money management is very necessary in forex trading. with have money management so we will to trade with maximal and our account will be survive in forex. we can train trading MM with trading using small capital. or we can also utilize of demo account to train trade MM well
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby darklot » Wed Jan 21, 2015 2:38 am

tight spread and overall trading cost, traders should put those into important feature before decide on scalping strategy, some brokers offer 0 spread, but in reality the charge much more commision per transaction, be pay attention upon their trading condition. and surely overall trade consist overall cost, some traders often underestimate their own transaction cost. for example my monthly total order at average 150 transaction on EURUSD, at first I use non ecn broker service, 2 pips spread on eurusd which means, 150 x 2 pips, 300 pips monthly cost in total, as comparison with my current account at Tickmill, 0.3 spread charged on eurusd, overall fee mark up cost are 0.8 pips x 150 trades equal to 120 pips monthly cost. have anyone ever consider how spread cost your trade. now I have additional 180 pips profit while use ECN brokerage service. before start and pick up your desired trading style, better consider how much it cost, what benefit and what the risk. spread mean you transaction cost, which means spread does matter with any trading system, especially scalping.
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Re: MONEY MANAGEMENT FOR SCALPING????

Postby Moreno » Wed Jan 21, 2015 10:46 am

money management is very important for traders especially when we want to scalping. we need to manage our money properly so that maximum benefit can we get and risks can be minimized with good happens. we should be able to set how many lots will we trading so margin our account still awake
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