Navigating 5 Hurdles in Scalping Trading Strategy

While scalping might offer thrills and a surge of adrenaline, it is accompanied by notable drawbacks that could negatively impact a trader’s overall career.

Table of Contents

1. Introduction

Scalping is arguably the most exciting trading discipline. Successful traders multiply their capital quickly, expanding one’s equity size and hitting several goals. However, it comes at some costs with potentially contrary consequences.

This article covers the setbacks of this trading strategy with a few tips on managing them. It also contains a highly rated indicator to solve most of these issues effortlessly.

2. Overview of Scalping and Its Inherent Challenges

Scalping is a popular short-term trading strategy of opening several small positions within a trading day. The goal is to quickly profit off ‘small’ price swings before significant retracements.

A scalper can make over 100 trades per day, and if successful, it yields quick profits, protects traders from macro events, and requires low capital, among other advantages

Scalping yields quick profits | Freepik

On the other hand, it poses significant drawbacks relative to other trading disciplines highlighted below:

2.1 Higher Trading Cost

As discussed, it’s pretty common among scalpers to open tens to hundreds of positions within a trading day. Each one typically lasts seconds to minutes, depending on several factors.

Unfortunately, such high trading frequencies incur more transaction costs in various ways.

For example, most brokers today charge spreads, which vary from market to market. Every trade taken with them will be subject to such fees. Others that don’t impose spreads demand a fixed or variable commission per trade.

They may appear insignificant when viewed singly, but they add up and can be critical over time.

2.2 Time-Consuming

Assume an active scalper successfully opens and closes 100 orders within a trading day, each demanding relatively detailed analysis. If spread equally throughout the period, such a trader took a new trade after every 14 minutes.

At this rate, there’s barely enough time for basic life demands, including personal hygiene, eating, and socializing, let alone proper rest (sleep).

Scalping is time-consuming | Freepik

Regrettably, almost every scalper deals with this to some extent.

One must react quickly to ‘little’ and sudden market moves to gain the most from the strategy. A moment of inactivity and a scalper may be too late to jump on profitable opportunities.

2.3 Increased Exposure to Volatility and Slippage

Scalping demands executions on low timeframes, such as M1, M3, or M5 charts. Observing any higher intervals is solely for better insights into the underlying trend.

As a result, scalpers have to deal with the increased market noise.

Some consider it an advantage as it facilitates the desire to take and abandon many opportunities quickly and profitably. However, one of the many notable drawbacks is blatant during slippages.

It occurs during fast-moving markets when the expected execution price differs from where the broker eventually fills the order. Slippages can lead to losses and reduced profits.

2.4 Increased Psychological Demand

Successful trading on any level requires a high concentration level, even with a systemized plan. While a swing trader will need a proper focusing session every other week, a scalper must tap into such mood multiple times daily.

Constant repetition over a short period can cause boredom and burnout, leading to decreased productivity. In severe cases, one’s physical, emotional, and mental health is at stake

There is an increased psychological demand as a scalper | Freepik

You can deal with the psychological demand by establishing trading hours, taking breaks, discussing with experienced scalpers, and setting daily targets.

2.5 Reliable Technology and Device Provision

Every minute is crucial as a scalper, and there is never room for delays. Each second can make or break one’s trading career. Hence, the technical components involved must be optimal.

The internet connection should be reliable throughout the trading period. Your computer trading platform must be highly responsive with a steady power supply for as long as needed.

It is far from the case for position traders, who can go weeks without looking at the charts.

Sadly, you may not always have control over some or all of the technical demands. Thus, you’ll always be open to the risks involved.

3. Scalping Like a Pro With the Scientific Scalper

Newbie traders are more inclined towards scalping because the frequency ensures quick results. Nonetheless, its drawbacks are significant enough to rethink such decisions.

To improve your numbers by mitigating the drawbacks effects of this trading discipline, the Scientific Scalper Indicator by Indicator Vault should be your go-to tool.

Scientific Scalper at work on TradingView

The TradingView system works on a ‘double confirmation’ algorithm that ensures near-flawless and effortless trading intraday. Concisely, below are a few of its advantages:

  • Knowledge of high-probability scalping setups with little to no effort
  • Flexibility to customize your strategy based on your goals and risk tolerance
  • Awareness of the best stop loss and take profit levels per trade
  • Freedom to trade in any market
  • Assurance of taking the best opportunities ASAP due to the alerts from within and outside the platform

Give it a shot here today and the results will amaze you!

4. Final Thoughts

A typical scalper deals with several challenges, including high trading costs, physiological demands, and increased exposure to volatility. Without mitigating their effects, trading is almost futile as it won’t yield desirable results.

Fortunately, the Scientific Scalper Indicator for TradingView can be of significant help. It reveals the best scalping opportunities, thanks to its complex programming, and extensive back- and forward-testing by Indicator Vault.

Please share this article among aspiring and experienced scalpers who may relate to these drawbacks, and remember to leave feedback in the Comment Section below.

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