Why scalping works?
# Why scalping works?
# It works, but why? Let's discuss this now.
Scalping is a kind of trading strategies to buy or sell very actively. It works, but why? Let's discuss this now.
In the beginning, when I just started trading in 2009, I didn't read any tutorials, almost didn't learn anything about how to trade, didn't go to a seminar or webinar. A beginner is always brave to do anything.
By monitoring the market movements for several days, I found out some rules to get profit in a high probability.
The first one is that going towards the opposite orientation when the markets suddenly speed up towards a certain orientation. For example, if the market moves up suddenly, the RSI indicator shows a value greater than 80, then you go short. And vice versa. You can win in 90% of these cases.
The second one is that when you see the height of the latest M1 candlestick is 5 times higher than the height of the average of the previous 5 candlesticks, then go towards the opposite orientation. You can win in 90% of these cases.
On Friday nights, I found the markets always surge very volatile. By aiming the two rules to find an entry of the market, this trading style worked almost 100%!
I investigated the trading style on the Internet and knew that it is called scalping.
# Why does scalping work?
The answer is that the profit is due to the efforts. Imagine there is a guy who is working hard in a factory and produces a lot of pieces of stuff, he must earn more salary than other employees. It's the same with scalping. Monitoring the market movements is a kind of job, the entries of the market are the products. The more entries you find, the more profit you get. Very fair.
# But scalping does harm to your health.
Why? You can't sit in front of the PC all along, 24x7 hours. We need to have rest, sleeping, getting energy back. Just like a worker needs to be off work. But the market movements don't have any rest. If you stop watching, you may miss all the entries. So we need some better trading strategies to help us.
Let's discuss the better strategies later, in my other posts. Thank you for reading.
By the way, we will use neural networks, genetic algorithms on our trading. Please feel free to track our trading records.
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