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Avoiding the Initial Traders Mistake: Applying a Simple Scalp Strategy For a Start

  • The usual trader mistake.
  • What is worth risking for.
  • How to lower the risk on your initial investment.
  • A successful trading strategy.

I would like to start this introduction based on my experience, coming to the conclusion that our problems are virtually the same. The number of solutions is endless. 

Is it worthy to risk your money or even career to reach another successful field?

How will you justify the money, time and energy placed in your investment?

These are questions solved many times through successful investments in Forex. Still, we doubt ourselves when coming across them. I understand that “doubt” will rise, due to losses during a trader’s work.

At an initial investment in Forex, our first doubt will rise coming from an initial mistake. Which is very normal when you have started on the business. The most frequent mistake is insufficient capital in trading operations. 

Nowadays it is common to provide a trader with the initial margin not above 2 to 4 % the size of the contract for the daily trade. The oscillation of the currency with 1 to 1.5 % daily the loss of the entire account within days it’s possible. 

When you think about it, logically the easiest ways to lower risk would be the minimum amount per trade. This decision though is very harmful.

Can you learn how to dive jumping inside an empty pool?

Similar happens to our thinking patterns surpassing the risk of a trade by minimizing it. A small trading account increases the risk of losses. Decreasing the initial investment will make it impossible to lower the risk. 

Let’s take an example to understand and learn from this initial mistake: We have got tow capitals. The first one we invested 5,000$ and to the second one, 50,000$. With all equal and the initial margin 4%, during one trade only we operate with the minimum contract. 

After some unsuccessful transactions, we each have a loss in our accounts of 1000$. Now our smaller account will be non-operable. The larger account, on the other hand, remains enough for further operations.

This is an example of showing how harmful it is to try to avoid your risk in trade placing the lowest minimum per trade while having a low capital that doesn’t support you back. 

But with scalp trading, you and I got a solution. We build our risk rate and control our actions by having a live opportunity to scalp a small profit from the market. Especially when you are looking for a job, learning to scalp trade can be the key.

Always keep in mind my favorite strategy adapted to it. Simply you fade the highs and buy the lows.

You need the following two items:

-Low volatility. The low volatility because it reduces the risk of things going against you when you are first learning to the scalp. 

-A trading range. The trading scale presents you with an easy method to place your entries, stops, and exits.

Let's practice the S&P Futures E-mini contract to recognize scalping moments.

Why the E-mini? Well, its low volatility, reduces the risk of ruining your account if you apply smaller leverage. E-mini offers multiple trading range changes during the day.