I’m very new to forex but I’ve got the opportunity to focus on it full time. I think my style will be day trading. Just curious, how many trades per day, per week, per month would a day trader average in your opinion. What about a scalper?
Also, my main concern with this are the different time frames. I notice a lot of people trading on 1 hour or even 4 hour time frames. Personally I like 5 minute or 15 minutes time frames. To be honest I’d like to watch it tick by tick. What’s your opinion on the “noise” in these smaller time frames. Can you still use all the methods that are taught here at babypips with confidence on the shorter time frames? Or does it become too random?
Any insight you can add for a future scalper/day trader would be much appreciated. Thanks in advance!
Many people will probably say m5 is as low as you should go, personally I think you can trade m1 or even 30sec charts but it is difficult. You have to be able to tune out the noise and pay attention to the overall trend and just use the lower time frames for picking an entry. Certain indicators can help to filter out the noise on M1 and help with confirming what you’re seeing. M5 doesn’t really have any noise in my opinion.
Having said that you can scalp with M15 or even H1, you don’t have to be on a quick time frame to grab a few pips, you just have to know what to look for.
Not that I’m into self promotion, but you could check out my scalping log for a simple M1 or M5 scalping technique. Best of luck.
Personally I think that most people suggest that beginners start with that 1h or up chart due for a Lot of good reasons. Of which I won’t go into here. Now I personally trade all time frames 1min all the way up to weekly. Now as long as you have a solid system and know where you are in the larger picture and relative supply demand curve then yes all timeframes are profitable and viable. There is a caveat though, I personally believe that OTC forex due lack of central exchange and oversight the lower time frames are less reliable. The differences between brokers charts, spreads, slippage, order errors etc will be magnified at those levels. I have seen momentum traders use the 1 min and tick charts to make trades in regulated instruments for constant profit. I know of one who can produce over 100 tickets and hour. His trades can last only a few seconds. Now if you are going to constantly play 5min and below I would go to currency futures it’s much more regulated and everyone gets the same picture. I personally use 15 min levels as my lowest I will take on their own. But if I have higher time frame confluence then I have no problem entering on a 5 min level or 1 min level. I constantly use 5min and 1min for trade management. But refuse to use them alone for trade entry signals. So in summary is 1-5min TFs viable and profitable with a good trading plan, absolutely. Would you have an advantage playing futures instead of spot at those low time frames, yes.
I’m so glad you asked this question. In fact I think its rare that people ask the right questions before jumping in so I commend you on this. Let me give you my own opinion because before you start scalping I want you to know a few things.
The forex is very different then regulated markets like futures or stocks where price can only be one value as its traded on a central exchange.
Since brokers do have the freedom to move price, you have to take this into account. (Source below – NFA) Many brokers have been busted for using tools that identify scalpers like yourself and take the other side of the trade and force you out of the market by moving price in a direction that will 1) blow up your account because you’re not using stops or 2) always hit your stops. I’ve come across a lot of new people that start trading and there isn’t one that is profitable that is scalping. I’ve heard other traders say similar things like “Show me a professional scalper in forex that’s been doing it longer than a couple years” and nobody has come forward (not a surprise to me).
So why do people scalp? Personally I’ve been told they do it because it feels good and gives them instant adrenaline with a positive reward. They can get a few pips here and there building up some results until disaster strikes and they lose an account.
I’m not sure if I’ve answered your question (obviously I do not scalp), but perhaps you can answer your own question by answering this: If your broker is using tools that basically make you lose (and its very easy for the broker to do this with scalpers, in fact brokers love scalpers for this reason) why would you want too?
Before you go down the path, consider this: I’ve found people want to scalp because 1) The instant result 2) The high win ratio 3) Feeling of beating the market however, there are also reasons not too… 1) It’s very difficult considering your broker 2) it’s a heck of a lot more work and 3) As Marty puts it in the famous book “Pit Bull” – The real money is in OPM (other people’s money) and no hedge fund guy can move in and out of the market that quick with such big contracts, usually takes weeks.
Just something to consider. I know the FX world can be very exciting at the beginning, but after many, many years I can tell you the excitement dies down … at least if you’re not over leveraging yourself Take care, trade smart and let me know how it goes.
So your post has basically got me quite worried about scalping lol. I guess, I am wondering, how is it that a broker can target me specifically? Will they modify the data stream that is coming to my computer? Can they work on that individual level? Because if that’s true, then isn’t it basically a massive scam where I am guaranteed to lose over a long period? or even a short period?
My strategy to avoid that kind of a bucket shop was to go with a reputable bank like Citi or Deutsche bank. Both provide FX brokerages, Citi is regulated by NFA, and they both claim to be ECN’s, no dealing desk. I’m trialling Citi’s software now. I will be able to put in enough money to get an account there… are you saying that even these guys will target individual clients to scam them, based upon picking up that they are a certain kind of trader? That scares the **** out of me to be honest.
It actually makes me angry. I mean, is that for real? Are there any brokers out there who will give me the actual market prices without manipulation? Am I going to need several price feeds from different providers and record everything so that I can keep them accountable? I want to be a professional here, this is beginning to sound more like hustling…
Anyway… What I really want to achieve is to be pulling in 50-100% return on my trading account, year in, year out. That is my ultimate aim. It’s not my aim for tomorrow, or even the next few months. It is where I want be within a couple years. I thought that by working on shorter time frames I can execute more trades which ultimately means I can pull in more money in a given time. I mean this is not a hobby for me, if I were to make a single trade a day, what else would I do with my time??? How do I leverage the amount of hours I am willing to put towards this every day into an advantage rather than a signal to brokers that it’s okay for them to steal my money?
I still have a lot of reading to do. Marty’s book is on my list, but I’ve yet to complete Babypips school, so, one step at a time. Thanks for the heads up, and really looking forward to any further insight you could provide. One question is this… I realised that OPM was where its at… I’m 28 but I still don’t have a degree, I’ve been in business since 18… what can I do to begin making myself a better candidate for running a successful hedge fund? Do I need to get an economics degree+masters? Do I just need a profitable track record? any tips there would be appreciated as well. Thanks!
First ive heard of this, makes sense though. Anytime i scalp on a demo i do decent. I made around 1500 usd in a day last thurs. The second i get on my live account i hit my stop EVERY time. Literally. Doing exact same thing for both. So i can see this. What kind of trades would you need to make,length of time, etc… to not register on their “lets steal their money” list? I use etorousa.
This is very interesting… I’m quite concerned about what a broker could do if they wanted to. I do know someone who has been scalping for years, but he doesn’t ‘get greedy’ as he puts it. Perhaps to stay off the broker’s radar, maybe. Is there anyone here who has been scalping successfully for more than one or two years?
I think we should define scalping as it relates to the criteria brokers use. Is someone trading trends onthe15 min chart a scalper? 10 trades a day? 15? This way we may be able to stay under the radar
To be honest I think that the dealers get a bad rap on the stop runs more often than not. Sure they may put you on manual execution which if you are scalper will hurt you badly. Now if you stay to ECNs then you will be fine as you trade anonomysly. There is a list out there of brokers that allow you to scalp, i just remembered that Oanda allows it because thats who i use. I would consider a scalper someone who trades 5 min - tick charts. But true scalping doesnt techincally exist anymore, most people who care considered scalpers are actually momentum traders. Atleast from the classical definition. But thats besides the point, anyway scalping a legititmate trading strategy. Do some brokers have bad practices, sure. But with OTC forex regulation is low so sticking to large regulated companies will be good. Also banks like dukascopy, deutche citi or any true ECN broker will provide you those services with no fiddling.
If you have a system, backtest it on all timeframes for some years and then it will show you where it is most profitable.
If you have no system, I’d say forget about scalping or daytrading. You will likely add up to the loser stack out there.
The good thing with higher tfs is that you do not have to switch too much. If your home screen is on daily, you just have to look for weekly to get the big picture and that’s it. If your home screen is one of the minute charts, you have to check everything up to the weekly about the big picture imho.
Regarding number of trades per week I’d say less is more (profit).
I suggest you try using EAs first. As a beginner, I used Forex Trading Signals for me to learn much about the Forex industry, it thought me a lot of things like the chart patterns, different systems etc. I still use it today but with slight modifications of course, but I use it because it is automatic which means I don’t have to look at my computer every minute.
Take care, trade smart and let me know how it goes.