Hi traders. I've been receiving messages recently requesting for more educational content especially for people who are fairly new to trading. If there's only one emphasis to remind myself back then as a beginner trader, it'd definitely be risk management. So why is it so important to avoid scalping the news especially when you just got into the trading world?
1. Unusual spread & undefined risk - Regardless of how many winning streaks you had previously using certain news scalping strategy, there will be one time where the market catches you onto the wrong direction if you are unprepared. The typical news scalping strategy where majority of the new traders were introduced are the buy limit & sell stop (pending orders) strategy, it's basically setting both pending orders above and below the current market price, approximate 3-5 minutes before major events announcement betting the market to run aggressively into either side. Do not get me wrong, there are professionals who are successful using this system, but bare in mind that your capital is not protected due to the wide spread (up to 20 - 50 pips) and slippage, trust me there will be time where the market swings both ways aggressively triggering both orders sabotaging your account. Avoid the sense of urgency to notice a steep growth in your equity curve, begin focusing on long-term profitability instead. Protecting your capital should be your number one goal.
2. Lack of emotional control (greed & fear) - I've seen traders who had 10R of profits refusing to close out their scalp position due to greed, only to watch their profits run into red zone. In contrast, there are traders who refuse to cut their losses due to fear, only to watch half of their account being wiped out, or at worst, receive a margin call. Scalping is intense, it requires a high level of emotional detachment and patience, these traits are not often found in new traders due to the lack of experience. Successful traders are very patient with their winners and extremely impatient with their losers, always cut your losses without hesitation when things are not going according to your plan. Trading is a game of getting an edge out of uncertainty, to succeed in this game you MUST be very strict on yourself and extremely discipline.
3. Lack of knowledge - I've noticed majority of the traders choose to scalp because of the belief of 'fast money'. The more eager you want to make money quick, the higher tendency you will enforce your will into the market, the more risk you are involved, which is self-sabotaging. You do not need to put your hard earned capital at high risk in order to achieve high returns, treat trading like a marathon not a sprint. Spend more time on developing strategies/ systems that generate consistent returns, you only need a slight edge in the market to be consistently profitable. Be consistent with your action, profits will come.
Success is not far away from you if you're constantly putting in consistent actions.
Trade safe.
Do follow my profile for daily fx forecast & educational content.
1. Unusual spread & undefined risk - Regardless of how many winning streaks you had previously using certain news scalping strategy, there will be one time where the market catches you onto the wrong direction if you are unprepared. The typical news scalping strategy where majority of the new traders were introduced are the buy limit & sell stop (pending orders) strategy, it's basically setting both pending orders above and below the current market price, approximate 3-5 minutes before major events announcement betting the market to run aggressively into either side. Do not get me wrong, there are professionals who are successful using this system, but bare in mind that your capital is not protected due to the wide spread (up to 20 - 50 pips) and slippage, trust me there will be time where the market swings both ways aggressively triggering both orders sabotaging your account. Avoid the sense of urgency to notice a steep growth in your equity curve, begin focusing on long-term profitability instead. Protecting your capital should be your number one goal.
2. Lack of emotional control (greed & fear) - I've seen traders who had 10R of profits refusing to close out their scalp position due to greed, only to watch their profits run into red zone. In contrast, there are traders who refuse to cut their losses due to fear, only to watch half of their account being wiped out, or at worst, receive a margin call. Scalping is intense, it requires a high level of emotional detachment and patience, these traits are not often found in new traders due to the lack of experience. Successful traders are very patient with their winners and extremely impatient with their losers, always cut your losses without hesitation when things are not going according to your plan. Trading is a game of getting an edge out of uncertainty, to succeed in this game you MUST be very strict on yourself and extremely discipline.
3. Lack of knowledge - I've noticed majority of the traders choose to scalp because of the belief of 'fast money'. The more eager you want to make money quick, the higher tendency you will enforce your will into the market, the more risk you are involved, which is self-sabotaging. You do not need to put your hard earned capital at high risk in order to achieve high returns, treat trading like a marathon not a sprint. Spend more time on developing strategies/ systems that generate consistent returns, you only need a slight edge in the market to be consistently profitable. Be consistent with your action, profits will come.
Success is not far away from you if you're constantly putting in consistent actions.
Trade safe.
Do follow my profile for daily fx forecast & educational content.