The Great Debate: Scalp vs. Swing

 Trading Debate
Nathan Tucci is a young trader . His trading techniques are based on Mathematics above all else. Though he understands technical analysis and fundamentals; his personal belief is that all trading success comes down to the Mathematical principles integrated into all trading. He loves to develop and improve strategies, and is constantly looking for ways to take advantage of the Forex Markets. Trained by Casey Stubbs, Nathan shares Casey’s belief that price is the truest of indicators, and a firm understanding of Price-action is vital to trading success. Nathan loves to share his lastest ideas, successes, failures and thoughts so that other people can benefit from his scientific approach to the market. Follow his latest thoughts on Twitter.

 Today, I want to talk about one of the biggest topics among traders: whether it is more profitable (or perhaps logical) to scalp or to swing trade. In case you are unfamiliar with these two terms, let me give you a very generic definition of each:

 Scalping: Trading that tends to target small moves in the market using short time-frame analysis such as 1, 5 and 15 minute time frames. Scalping puts an emphasis on being in the trade a short amount of time and winning a high percentage of the trades taken. Scalping, in most circumstances, requires a trader to allow his position to move into a farther negative position than what he is targeting on the positive side.

 Swing Trading: Trading that attempts to capture large market moves. This trading is most often in the direction of large trends in the market. This type of trading usually requires traders to hold their positions for long amounts of time. Using the trend, most swing traders are attempting to risk far less than the total movement they are targeting.

 Hopefully, that gives you a bit of an idea of what I mean when I say scalping and Swing Trading.

 In this article, I just want to show you a short video I made to explain how I feel about it (assessing it mathematically, of course) and hopefully get a lot of feedback so that I can follow up with another article soon based one what you all have said.

 Just a quick note to understand before you watch the video: I do fully understand that traders can be very successful using many different methods of trading and I know many that are using both swing trading and scalping. I also believe that traders can use both of these methods to attain success in Forex trading (and any other market), but I wanted to make a video that would point out which one I believe is a technically more sound way to approach the markets, especially for people who are newer to trading.

 With that said, please enjoy the video, and make sure you leave a comment with your thoughts! Feel free to disagree!

 

Hope you enjoyed this little video. Make sure you leave a comment with your thoughts and opinion.

 Thanks again for reading and watching, and make sure you are following me on twitter for my latest thoughts.

 

Nathan

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  • Jerck

    In binary trading there are high level of risk which you must be willing to accept in order to be able to invest and trade to make winnings,today I thank God that I am an expert in binary trading who has taught others the strategies on binary and forex trade in order to win trade and am still willing to teach with prooves whosoever is interested to know how I made it big in binary and forex trading . you can contact me via [email protected]

  • Dave Hanna

    Nathan,

    I completely agree with the math principles, but the numbers you use disagree with my experience, and I don’t think it warrants your opening remark that “Scalping is stupid.”

    On the scalping side: If you choose your trades carefully, the wider stop loss increases the possibility of winning the scalp. Since March, I have been applying this rigorously to an experimental account, using a 50 pip stop loss and a 10 pip target. (I’ve recently reduced it to a 40 pip stop loss after seeing that virtually none of my winners came anywhere near being down 50 pips.) Using this technique, by your math, I need to have about ant 85% win rate to break even. But my track record (https://www.myfxbook.com/members/daveh551/scalping/879912) is actually 45/5 or 90%, and it is a profitable strategy. Now, granted, it is stressful, knowing the impact of each losing trade. And also granted that it is a very slow way to grow an account.

    But contrast it with the swing trade approach, as embodied in the DTT, which I have been attempting to trade since joining the trading room almost a year ago. The fallacy in your argument is that setting a take profit target for a Reward:risk ratio of significantly greater than 1 doesn’t guarantee that that target will be hit. In my experience with the DTT only a very small percentage of my trades even reach 1:1 actual (achieved) R:r, let alone reaching the 1.5:1, 2:1, or 3:1 that we are targeting. And because we are targeting a much higher reward, we leave the trade on past the peak and often see it turn in to a loser (although with a trailing stop loss, it may be a smaller loser – but we don’t enter the trade with the objective of making our losses small!), or see a significant part of the gain given back before reaching our trailing stop. The result is that my DTT account was down over 20% when ILQ shut it down – like death by 1000 paper cuts!. In short, my experience is actual R:r of about .75:1 (less than unity), and a win/loss ratio of less that 50/50. That equals a losing strategy, given my skill level and trading psychology.

    I would like to improve my trading skills to the point where I could achieve the big winners and grow my account. But so far, it’s not happening.

  • Phoebe Ejimbe

    Great video though over simplified. I agree entirely with Nathan that swing-trading is much more profitable than scalping in the long run. On the other hand when the market becomes very choppy I turn to scalping.

  • Paul

    Great article. Scalping is not quite for me, but seems to work for some.

  • Fabrice Goeyvaerts

    Hey Nathan,

    Great funny video!
    I watched it 2 years ago but I didn’t catch it completely.

    Before knowing you I was only using negative R/R ratio and scalping. As a newbie results were not good at all. Now following your advices and being a little bit more experienced, I trade only with positive R/R ratio and swinging. Not only are results completely different but this type of trading suits my personality a lot more.
    I hate to lose but I don’t have any other choice to accept it as I’m now losing a lot more than before. So I’ve learned to accept it.
    By going for positive R/R ratio (not less than 1:2) I very much like the fact that one winning trade can “erase” 2 or 3 consecutive losing trades. This allows to come back much quicker from DD.

    What you didn’t mention here is that spread makes a huge difference on long term.
    A scalper must have a damn good spread or he could lose 15 to 20% before even entering the trade (2 pips spread with 10 pips target = 20% for the broker!).

    Now, 2 years later, there’s still one thing I don’t get. Why a scalper = negative R/R ratio?
    One could go for a 10-15 pips target with a 5-10 pips SL and so use a positive R/R and could have a low winning ratio in order to be profitable.

    Same with a swing trader. One could go for 200 pips target with a 400 pips SL. Using a negative R/R ratio this swing trader would need a high winning ratio to be profitable.

    So to me the issue is not scalping vs swinging but negative R/R vs positive R/R.

    Any thoughts?

    Thanks a lot!
    Fabrice

  • Actionwise

    Interesting ! It does seem that the drawdowns are always so much more when scalping. The ratio seems to be wrong.

  • Anonymous

    Hey Frank, thanks for reading and leaving a comment! That is great that you’ll be investing seriously soon. The best of luck to you!!

  • Anonymous

    Hey Tom, great comment. Thank you for stopping by and leaving your thoughts! You are certainly correct that having a solid plan and model is vital to success. I am glad that you are able to achieve it and I wish you luck in the continuation of that process.

  • I have been reading the above comments with interest. I particularly relate to Hassan’s  point of view in that one’s trading style should depend on who you are as a person. That incorporates your personality, your habits, your weaknesses, strengths, and above all, what feels most natural to you. Trading should be fun, and whatever trading style comes easiest to you is what, in my opinion you should be doing. Otherwise forcing yourself to use a strategy which does not suit you could be like trying to roll a giant boulder uphill….not impossible, but difficult and tiresome.

  • Anonymous

    Joe, thanks for reading and all of your time. As you mentioned, I think we actually agree on most things here; but what I do want to clarify is that, at no point, did I say scalping was a bad strategy or that it was not profitable. As a matter of fact, one of the first things I said was “”Just a quick note to understand before you watch the video: I do fully understand that traders can be very successful using many different methods of trading and I know many that are using both swing trading and scalping. I also believe that traders can use both of these methods to attain success in the Forex (and any other market), but I wanted to make a video that would point out which one I believe is a technically more sound way to approach the markets, especially for people who are newer to trading.”” So, obviously I am not of the mindset that scalping is a bad thing.. My only point was about the mathematics involved when you use an uneven risk to reward like many scalpers are required to do… but as you said, that does not always have to be the case.. I am going to follow up this article with another one talking about scalping and how one could trade it with a one to one ratio.. so hopefully you can take a look at it and give me some clarification on some of the questions I am asking.

    Thanks
    Nathan

  • Anonymous

    Very interesting; sounds like a cool strategy. Thanks for reading and sharing your thoughts with me.

    Nathan

  • Anonymous

    Without going into to much detail Nathan. I use small timeframes (150 tick charts) and go with the most recent direction (SMA) for a 1 tick scalp with a 6 tick stop. It is fully automated so I don’t have to do any fast calculations… scalping requires speed. Fast computers wired to a 50Mps internet connection…. Obviously there is a little more to it than that but that is the general idea…. I just personally can not bear holding positions… that is just me….. I used to be more long term but it just drove me insane….. holding overnight forgetaboutit … That’s just me though.

    Arpeggien

  • Anonymous

    Great comment! Thanks for sharing… Could you tell me more about the strategy you use?

  • Anonymous

    Ah, Joe, thanks!… let me explain why my two articles are exactly opposite of what you are saying if I may 🙂 . . . My point about scalping is that is not an extremely fundamental way of trading (however, notice that I am not rubbishing it as I said several times in my article that it can be VERY profitable for the right trader). Scalping, the way I showed in this article is not very mathematically sound because of this issue of letting it go against you. The way to resolve this unprofitable predicament is to employ a strategy to make it profitable such as a Martingaling strategy 🙂 .. Now, in my other article, I do mention to use a wide grid when martingaling, but Martingaling is very effective in a scalping strategy as well. I do not recommend it in most circumstances because it is VERY dangerous in a small grid, but it can turn a decent scalping strategy into an extremely profitable system. You see, my articles are actually quite in tandem. You mentioned the connection of logic and language and I could not agree more, so let me explain the logic: One of my points in that martingaling is a strategy that can be very profitable when traders allow their positions to go against them. Another point was that Scalping is not a mathematically sound strategy because traders will have to let the position go against them with no recourse to turn it back into profit. Please notice the huge difference in those two things. One–the second one–is saying there is a big problem when you can let a trade go against you and just take that hit and try to make up for it with a whole bunch of wins, the other–the first one–is giving you a solution to that problem…

    In conclusion, I believe in scalping and swing trading.. but I use a martingale system to give me an edge in the one that is less mathematically sound.

    Does that make sense?

    thanks
    Nathan

  • Joe Zolin

    Hey Nathan 🙂

    ‘Kay the martingale comment was in response to your comment/definition of scalping “Scalping, in most circumstances, requires a trader to allow his position
    to move into a farther negative position than what he is targeting on
    the positive side”  which is pretty much what you describe as being the CORE of your Martingale strategy… now I know you said that treated wrongly the Martingale startegy can blow up your account… but.. you presented this as a positive way to trade…
    Here you are defining “scalping (incorrectlyy in my opinion) as having the same core “expectation” Yet You present it as a negative way to trade…

    Language can broken down into logic, like mathematics it can be treated in a logical way. the two recent blog posts you have made in their core are at logical odds.

     I am suggesting that the reason you dont like scalping is because you dont have a personality or mindset to be able to do it well… this is not a reflection on you… as traders we need to find those strategies which work well with who they/we are.. Robin Hood made some brilliant observations about his own personality and WHY scalping works for who he is.

    BUT he did NOT rubbish swing trading when he did it.. he just said that it was not for him.

    I am suggesting here that “rubbishing” a form of trading that you personally are unable to do is counter productive… UNLESS you put the underlying caveat that it is rubbish for YOU but may work for different people personalities…

    THis is not a fight about who is best, it is a way to learn what is best for each of us.

    Joe

  • Anonymous

    Thanks for the comments, Joe.. I figured you may have meant Michael–no problem.

    I lost you a little bit on tying in the martingale strat.. Could you further explain what you mean?

    Thanks
    Nathan

  • Anonymous

    Hi Max, thank you for reading and sharing your thoughts! … I actually like to make entries based on what I believe the weekly trends are doing, but it is great to zoom in and take a 4hr trade… I actually don’t use many indicators to trade, so I can’t hel you with the software unfortunately 🙁

  • Anonymous

    I am inclined to agree with you, Brian. I think that is is a more fundamentally sound way to trade. Thanks for the comment!

  • Anonymous

    Emanuel, thanks for the comment. I appreciate you reading along and leaving your thoughts… I get what you are saying about being more involved in the markets, but I think I differ because I think the only real goal in the long term of a strategy is to be profitable. In my opinion, it is much easier to achieve profitability using a swing trade strategy due to the less amount of wins you need to become profitable… The reason I don’t trade the same strategy on just smaller time frames is because the smaller time frames can be too easily manipulated in a short period of time. For instance, a reversal in the market on a 5 minute chart is a big deal to someone trading the 15 minute chart, but when I am trading weekly signals, I could care less about a reversal on those small time frames.

  • Anonymous

    Jay, I understand what you are saying, but you have to understand that the key element to a scalping strategy is the winning percentage, so in order to have a very good winning percentage you have to have a disproportionate risk/reward ratio. 

  • Anonymous

    That looks great, Maria, but I don’t quite understand your point.. I mean, I don’t know where you are putting a stop or anything like that…

  • Anonymous

    Michael! I am not surprised that you disagreed with the main point here lol . And, I agree with pretty much everything you said–you noted a lot of the U.S. rules; in my opinion, every one of those rules is more of a hindrance to a scalper than to a swing trader, so I think that it adds to my point about the simplicity and logic to a swing trading approach.. One thing you said was that it is much easier to find a 10 pip move than a one-hundred pip move. Of course, you are right because the market can’t even move 100 pips without going ten first; however, it seems that you may underestimate how much the markets flow on a weekly basis. Let us look at the current movements now. EUR/USD has moved over 300 pips in the past two weeks in one direction, GBP/USD has moved around 200 since the 1st, a short on USD/CAD at the beginning of THIS week would be up about 100 pips, AUD/USD has moved pretty much straight up 400 pips in the past month, NZD has mirrored that, GBP/JPY is in a 13 thousand pip down trend over the past few years that any short could yield a few hundred pips over a few weeks… I think these moves are easier to identify, capture, and profit from for a beginning trader than the types of small movement you are looking at… You mentioned your personality having a part to do with the way you trade which is a very valid point. Not to mention, you are an EXTREMELY experienced trader who knows more about these markets than 99.9% of people trading–and with all that knowledge and experience, I am sure you still have very difficult times digging out of your scalps because of large trendy market moves. Is that a fair assessment? … Thanks for the comment and great points, look forward to hearing back from you, Robin Hood.

  • robin hood

    Wow, I really hate to say that I disagree with this but I do. I find it very hard to enter swing trades and target a thousand pips. I also find it very hard to handle losses of 200. I personally cannot bear the time frames involved. I (as most know) am a scalper. by heart and nature. Looking for “high probability” pockets of movement is just awesome in my book. I totally can understand why someone would want to be a swinger rather than a scalper. I even can see why you made your video the way you did. But simply put if we are after a 20 pip gain, we simply cannot let it go 50 pips against us and stop us out.  Also, have been having discussions with several folks over the past few days about how the U.S. rules practically guarantee a higher percentage of losing traders. Its like tying your hands behind your back and saying: “there you go!  Now get out there and fight Bruce lee and his likes and go kick their @$$!”  Its NOT happening.  As U.S. traders being bound to small margin while the rest of the world can enjoy anywhere from 100 to one to as high as 500 to one is a great hinderance. Throw on FIFO rules and make sure no hedging can be taken and you stack the deck tremendously against U.S. traders in a global arena. These “tools” are in my book…. absolutely necessary to me, to be able to defend myself in this war. You yourself wrote about Martingale, and How it can be so useful. Now, I may not DO that….. but when I take a 5 min sell bar at a price I determine is fairly good, but price goes above and has NO follow through to the downside,  I am a very happy man to take it long, when I see other traders are equally trapped on the false move. So in effect, YES,  I am fully hedged. Now when price goes to the next cool looking resistance or fib or moving average or whatever and starts to put in a good looking sell bar, I can take OFF, my hedge and get PAID. Then double the short and now I don’t have to move so far, to hit break even or better. U. S. accounts cannot do this.  Anyway, back to our subject. Its a heck of a lot easier to find a 10 pip move or even a 20 pip move, than it is to find 100.  It is WAY harder for me to target a 500 pip move or even a thousand pip move. I know that I could never bear the wiggles and jiggles of the market for days on end watching myself go in and out of profits as it worked its way to a one thousand point move. Scalping may not be for everyone. but swing trading in your method is also very much not for everyone.  Not sure if this is going to post as ME. So I will state who I am. Michael Storm aka. Robinhood.  And I am very happy earning a half a percent a day to sometimes as high as 6-10% in a day (the really great days).  I personally need cash flow and trading an awful lot gives me more chances. Now to risk 50 pips just to make 10, I do see your point. its just not a great idea. so quite simply people should NOT do so but a 10 pip move is a lot more probable than those one hundred pip runs or larger. 

  • Test

  • Anonymous

    Thanks for the comment, Aubrey. make the good choices! 🙂

  • Anonymous

    Very true, Hassan. I agree and completely understand these things. My goal in this article was to give a very base understanding of these mathematical principles, but as you have said, there is a lot more than that to the story.

  • Anonymous

    Very true, Hassan. I agree and completely understand these things. My goal in this article was to give a very base understanding of these mathematical principles, but as you have said, there is a lot more than that to the story.

  • Anonymous

    Phil, thank you so much for reading and leaving thoughts.. I agree with you 100%.

  • Anonymous

    Yes, Jake, you are somewhat correct… but it all depends on size. You could handle losing a thousand pips with no problem on a 1k account if you are using small size (like micro or nano lots).. But the ratio of 5:1 is many times needed to achieve high winning results for scalpers. I would say that you can easily trade a swing strategy with a small account as easily as a scalping strategy though.

  • Anonymous

    Thanks for reading!

  • Anonymous

    There is definitely truth to what you are saying, and I agree that for many people, being in the trade for short amounts of time and having control over the position is the best way to succeed. Thanks again for reading!

  • Anonymous

    Hey, thanks for reading! .. Yes, that is a tough place to be in. Many traders are in similar situations that you are. They are good traders, but their style does not promote profitability to its fullest extent. I would encourage you to take a look at some longer term trades… I am in a weekly by on NZD/USD and up 90 pips. I think it could go as far as 800 pips to the North. Thanks again for reading.

  • Anonymous

    Thanks for reading and leaving a comment!

  • Anonymous

    Hi Zaly, thanks for the comments… I also choose to use a grid if I am making short-term entries, plus it is very smart to follow the longer-term trends with your scalping. Thanks again for reading.

  • Anonymous

    I do agree that if you can keep the risk to reward in check, than scalping can be VERY profitable.. once again, I would never suggest that scalpers cannot or do not make money, but I think it requires a very good trader to do so. For beginning traders, I recommend taking a longer-term high reward to low risk approach.

  • Anonymous

    Hi Brian, thanks for reading and leaving a comment! I agree with you entirely about this, by the way.. In my long swings, I always trail behind price. Idealy, you may catch a 5k pip run if you are patient, and that is how I trade. The only reason I put fixed numbers in the video was for demonstration purposes. But you are very right…. The only place I differ, is that I don’t use many indicators. Being a mathematical trader, I like to have a set number where I will move the stop according to. For instance, when I am 250 pips up, move to break-even. When I am 500 up, move to 250 ect…. but still, overall, I agree with you entirely. Thanks for the comment!

  • Anonymous

    Yuri, you mean trading with the trend I assume? .. That is always a good technique, but the issue with scalping is that price can easily bounce back and forth 40 or 50 pips and still be going in the direction of the trend.

  • Anonymous

    Thanks very much for reading along and leaving a comment! And you have perfectly spelled out the issue that most traders have.. I thank you for following me on twitter as well 🙂 

  • I agree Scott, thanks for the comment and the support, we are big fan’s of http://www.proacttraders.com  as well! You guys rock.

  • Anonymous

    Yes, of course, Jamie. That is why I believe both methods are valid. But I do think, as a general rule, that swing trading is the overall more sound way to approach the market.

  • Anonymous

    Yes, I understand.. This is another reason I think that swing trading is an overall more sound way to trade.. In swing trading, the little bounces back and forth, do not affect your trading at all.

  • Anonymous

    Scalping: Trading that tends to target small moves in the market using short time-frame analysis such as 1, 5 and 15 minute time frames. Scalping puts an emphasis on being in the trade a short amount of time and winning a high percentage of the trades taken. Scalping, in most circumstances, requires a trader to allow his position to move into a farther negative position than what he is targeting on the positive side.

  • Anonymous

    Your welcome, John! Thanks for then comment.

  • Anonymous

    Thanks for the comment, Ben. Money Management is Master!

  • Anonymous

    Robert, that is fine by me! And I know many scalpers that are very successful as scalpers, but it is about which method is technically more sound for beginning traders.. The answer, I believe, is still swinging.

  • Anonymous

    Thanks for reading.. And most scalpers I know are in the ballpark of 5:1. Scalpers, in most cases, are pretty much forced to take a higher risk on to hit those large targets.

  • Anonymous

    Hey, thanks Scott! Appreciate the comment. And as we know, not everyone can be a high percentage winner when they are just beginning to trade these markets. It is key to take the mathematically sound approach to the markets.

  • Anonymous

    Hi Roy, I agree with you. It is crucial to understand what type of trader you should be. I also agree that money management and good system are vital to being successful.. However, I do think that for novice traders, it is important to take a sound approach to which type of trading is easier to make profits with.

  • Anonymous

    I agree… and even with a 50:10 ratio scalping can work, but you have to be a very good trader. This was geared toward novice traders who would most likely not understand everything necessary to scalp successfully. But yes, bringing the risk/reward ratio back closer to a 1/1 is very important; however, I know very few traders who can scalp with that low of a ratio.

  • Anonymous

    Jay, that is good that you are profitable in both.. However, it is very common among scalpers that they must allow their risk to be greater than their reward. Many many scalpers will take hits of one hundred or more pips when they are targeting 20 or less.. Even professional scalpers do this.

  • Anonymous

    Wow! Very impressive. Please not that I was clear in the article about this: ”
    I do fully understand that traders can be very successful using many different methods of trading and I know many that are using both swing trading and scalping.”… with that said, your strategy seems awesome. I have met very few, if any, scalpers that can maintain a small 1:1 ratio in their trading and still hit a high percentage… Could you tell me more about your strategy?

  • Anonymous

    Hi there, The reason for a larger stop loss than target in scalping is to increase your odds of winning. Most scalpers that I know are willing to let trades run against them quite a bit in order to achieve their smaller targets. This is common among scalpers because of several things like the spread starting them out a disadvantage. In scalping, if you are targeting 10 pips and wish to put a stop loss at ten pips as well; you will already be be 30 percent or so to your stop loss just from the spread… This is why Most scalpers have smaller targets than what they are willing to risk.

  • Anonymous

    Thanks, Bob, Great comment! I agree with virtually everything you have said and do believe that scalping can be VERY profitable.. as you said, I have definitely over-simplified it for the sake of this video. My goal was to show beginning traders which style would be mathematically more sound for them to attempt.. As far as your risk/reward ratio, I am very impressed that you could maintain close to a 1:1. I have met very few scalpers who are able to do this, and I would like to know more about how you go about it… Once again, please do not take this article as an anit-scalping article, because that is not what I believe or how I trade, I just wanted to outline a very simple idea for novice traders to understand. Thanks again for reading!

  • Aubrey

    You are right every time i try to scalp i loose money and i curse my self for making the
    wrong choice.

  • Hassan

    Scalp or Swing….actually depends a lot upon individual life style,
    psychology, aptitude and edge. Its a whole different energy level/ game.
    Like a difference between playing Basketball and Chess. Swing is my choice.You identify your edge and then execute without hesitation. If you miss a
    trade that you were anticipating ……. then “Patience” is the key.
    Move on to the next one when it appears; without any reservations!
    Learn and adapt.

  • Hassan

    Scalp or Swing….actually depends a lot upon individual life style,
    psychology, aptitude and edge. Its a whole different energy level/ game.
    Like a difference between playing football and chess!

    You identify your edge and the execute without hesitation. If you miss a
    trade that you were anticipating ……. then “Patience” is the key!
    Move on to the next when it appears without any reservations!

  • phil p

    Hi Nathan
                    When I first started trading, I downloaded an E-book on the Secrets of Millionaire Traders. Within the information –  I read that MANY Millionaire Traders, still make a Fortune by ONLY getting 30% of their trades right. At first I couldn’t understand the concept. I was ALWAYS WRONGLY TOLD by traders (many of whom I suspect have never traded in their lives) you had to be right most of the time, to be profitable.
    Millionaire Traders, get out of losing trades EARLY, and RIDE THE BIG MOVES FOR AS LONG AS THEY CAN – OFTEN ADDING TO THEIR WINNING POSITIONS!!!!
    Brokers want traders to overtrade because of the commissions. I’ve done BOTH Scalping and Trend trading Bigger time frames. Bigger is by far better because of Risk/Reward potential. This simple concept is overlooked by too many Losing traders

                                                                   Kind Regards Phil P

  • Trader Jake

    I think all of the comments hits the mark, one more thing.  If you swing trade according to the videos parameters, you would need a very large account, something the novice trader doesn’t usually enjoy.  You are talking about 1000 pip loses then a few trades in a row against you and “poof” you are out of the game.  For scalpers to accept a 1:5 win/loss ratio is obviously unacceptable and the science or mathematics behind that would be learned in junior high school.

  • Eileen

    great work..

  • Yasir

    According to my opinion. intra-day trades are the best. And maximum duration for that could be second day and not more. Since u can predict a little better and have a total control to move ur stop loss up to break even and rake in profits if the market goes to your favour eventually

  • Vinomaker

    This was very informative and has me really thinking. I have more than a 80% win rate but my account is where it was 6 months ago. I need to get serious about money management and possibly swing trading instead of scalping.

  • Jdundas

    Thanks Nathan, food for thought. Will look into it.

    best..
    JD

  • Zaly Ghani

    Nice! I use both strategies, but I don’t use stop losses because I turn to Martingale or Grid technics when things not going my way. One more thing is that I’m scalping following the trend of bigger time frame i.e. daily/weekly/monthly. 

  • Redbikeski

    Not sure I agree. Surely risk to reward plays a part. If I only take trades with a 3:1 reward:risk, then the shorter higher probability scalping strategy should provide a greater return, particularly if risking the same 1% account size per trade.

  • Arpeggien

    Unless you calculate a 94.5% win rate and a 1 to 6 Risk to Reward…. then the conversation changes a bit.

    Arpeggien

  • J.Brian Fehr

    Nathan, 100% correct advice for anyone wanting to be a successful trader  and to potentially make obscene amounts of $ . I would like to add though that swing tradng targets should never be “fixed” or pre-determined..  ..what i mean to say is, price “swings” come in a variety of lenghts, some far greater than others..and some shorter than desired, in order to  get maximum profits on the entirety of your trades over a given period of time,   it is best to let profits run before a reversal is detected and your open position is closed and a trade in the opposite direction is then opened…..,proper placement of   a diagonal trend line(virtual support/residance line)  if drawn accurately is one  so method of exiting trades near  the full exhaustion of the current swing,…, using an accurate  histogram zero line cross  refelcting the reversal or using both together  is another  .IIMO   (your  comments  or elaborations are appreciated)

  • Rzarney

    Good video, thank you

  • Yuri

    What if you placing short trades in same direction of
    market? (Never opposite)

  • Accurate Forex Trader

    Cool video Nathan.  Like a lot of traders, I have tried scalping, thinking it would be easy.  Starts of that way but then normally one big loser wipes out all your gains.  Or you start the day with a loser and straight away you are behind the 8 ball.  It is a tough gig that requires constant chart monitoring.  Not for me, but it took me a while to realise this.  I now look at nothing under 4hr charts and it is unbelievable how much more relaxed trading has become.  Sometimes it gets a little boring because you think you should be doing something.  Good time to go do something other than trading.  Like you, I like price action over tech indicators.  Now just a matter of working out a decent method around that concept.  No lack of trying on my part there.  I will now follow you on Twitter and see what you come up with.  Cheers from Accurate Forex Trader…

  • Arpeggien

    Sure but change the scalping numbers to 94.5% accurate with a  1 to 6 Risk to Reward and the conversation goes quite differently.

    Jamie Hendrix

  • Linjoeva

    Hi Nathan,
    Thank you for the video and I can really agree with the outcome as I have tried both in a small way.
    I didn’t have a great deal of success in scalping as in this day the markets are far to choppy and you really have to set larger stops than your wins.
    Sometimes I think its the Brokers that are working against you because as soon as you put a trade on the price immediately switches no matter what your indicators say. I have had occasions where I have had 3 indicators which I can fairly trust all telling me one thing and the price goes in the opposite dirction. I realise that most indicators lag to a certain degree and that they only tell you in most cases what has already happened but it certainly gets annoying when it happens time after time.

  • joe “pizza boy” Australia

    Heya Nathan, Tho I like your approach, And tho PERSONALLY I beleive that BOTH scalping  and swing trading are valid methods… I am somewhat concerned with the video in that the “Scalping” method you present seems to be pretty poor trade and money management to enable multiple small wins and a few great losses.  If you define scalping as running on this trading method then sure it as plain as day that scalping is a losing strategy.

    I do not beleive it is so (scalping is a losing strategy).  I think Tim Black would agree, as many of his techniques involve “scalping” and the man is a pro.

    Could you please give a “tight” definition of what you mean by scalping as it seems to me that your definition involves punting without stop losses.

  • John

    Thanks for the education on scalping verses swing trading.

  • ben

    yes very accurate from my own life trading experiences-risk/reward, money management is the key to success

  • Robertt

    Scalper I will be 🙂

  • Grn_side_up

    Very entertaining Nathan. But, I don’t know of any scalper who would set a 50 pip stop on a 10 pip reward. So I think you fed the wrong numbers in your equation. BTW, I’m a swing trader.

  • Scott Barkley

    Great video – and I absolutely agree.  If you scalp, you must be right one average 90% of the time – in other words you will have to be the best trader on the planet – not possible for the average trader.  Yes, some people can be successful short term scalping, but doing it long term IMHO is a recipe for failure

    Scott Barkley
    President
    ProAct Traders – a fan of Casy Stubbs and Winner Edge

  • Royo1

    Nathan,
    Math, probability etc is all well and good, but the 4 most important parts of trading are:
    1-reliable systems( i use 4)
    2-money management
    3-understanding price action/swing structure
    4-your personality

    when i started trading i thought daytraders were nuts, swing was the way to go then i blew up 2 accounts of 10k ea.

    as soon as i started daytrading i was successful, less stressed and slept way better and now make a really good living doing it.

    your personality dictates the type of trader you should be more than anything else.
     

  • Sparxx

    If the risk-reward ratio is better than scalping can work. A thousand pip (or so) drawdown on a swing trade is too much.

  • Jay

    The premise of the video is deeply flawed since proper scalping does not allow for winning 10
    pips and giving a 50 pip stop loss. I do both types of trading swing and
    scalp and a hybrid of both and am successful

  • Dghent

    As a professional scalper, I have an average win ratio of 70%, I target 12 pips and use a stoploss of 12 pips including spreads, I usually make 30 trades a week. I use 1 standard lot with the occasional 2 lots but in general 1 lot.. I make a living out of it.

  • AAG

    if targeting 10pts why hold losses up to 50pts?

  • Bob Glover

    I love the video but think you have over simplified. First of all, I do not know any scalpers that are willing to accept a greater loss than profit by many pips. Say you set a take profit of 10 pips and a stop loss of 15. I prefer a one to one ratio but that is just me. Next, if you can be profitable more often than not, say 70% wins to 30% losses at 10 pips per trade even at the 10 TP and 15SL settings you are looking to make 700 positive pips of trade for every 100 trades and only 450 pips of loss for a net 250 pips positive. Next, the ability to compound your trades means those trades most likely will contribute to a greater bottom line than the inability to compound on trades held for the longer period. I rely more on compounding to grow my accounts than I do larger or more frequent trades. Of course, I do have to babysit my computers much more than a swing trader and if that was a concern, than swing trading might be my choice. For me, it is not.