【Column】Why scalping makes it easy for an ultra-wealthy trader to be born
Thank you for your hard work! This is Tomizaki from the Trading Office.
We have started募集 on Gogojang here.
“Ultra-short-term trading skills” using tick charts
● “1-minute Scalping Club”
Regarding
This time, I would like to talk a little about the theme of “Why Billionaire Traders Are Born Through Scalping”.
■□https://www.gogojungle.co.jp/tools/ebooks/54826
In trading methods, there are various approaches based on time frames, including scalping, day trading, and swing trading.
Of course, if you can earn profits, there is no right time frame.
However, for individual traders with limited funds to achieve reasonably large results in a relatively short period, I think short time-frame scalping is the best.
The traders around me who produce results, and the so-called billionaire traders, most use scalping as their time frame, with position holding times usually only about 1–2 hours at most for day trading.
As far as I know, I haven’t heard of individual traders achieving large results with so-called swing trades where positions are held for several days.
For example, randomly
A “Enter trades with 10,000 units and take profit 100 pips, stop loss 30 pips” versus
B “Enter trades with 100,000 units and take profit 10 pips, stop loss 3 pips”.
Theoretically, the expected value is the same.
What differs between A and B is the time it takes for the trade to complete, either taking profit or hitting stop loss.
In A, it takes at least a few tens of minutes, and depending on the case, hours or even days to complete the trade.
In contrast, in B, the trade completes in minutes or even seconds.
With shorter time frames like B, i.e., scalping, time efficiency is dramatically higher than A, and increasing the number of trades raises capital turnover.
During the time A trade is completing, in B you can complete many trades with the same expected value.
This is what increases capital turnover.
In fact, for individual traders with limited funds, increasing capital turnover is key to achieving significant results in a relatively short period.
That’s why scalping, which increases capital turnover, is the reason billionaires are more likely to emerge.
For reference, our simple view on capital is that trading with funds equivalent to 1.5 times the required margin for opening a position uses about 65% of available capital for trading.
Approximately 65% of capital used doesn’t mean full leverage, but this 65% figure provides a good balance of capacity and risk, helping to increase capital turnover.
Of course, this level of risk-taking applies only to scalping where stops are limited to a few pips, as it goes without saying.
Meanwhile, the average stop loss for the aforementioned is about 3 pips.“Ultra-short-term trading skills”
If you can acquire a scalping method with positive expected value, aim first for monthly positive performance.
As mentioned earlier, scalping reduces the time to complete a trade, increasing the number of trades. Therefore, with a method that has positive expected value, you can almost achieve the expected results on a monthly basis.
If you can operate positively on a monthly basis, the next goal is to increase capital and raise the trade lot size, reaching a stage where you can operate with 1 million units in a single shot.
Regardless of the trade size, the trades you do are the same.
Of course, as the single-trade size increases, the mental burden grows, but that serves as a guide to achieving somewhat larger results.
If you can operate at 1 million units in a single shot, I think you’ve reached a trader’s goal (a level where you can earn a living from trading).
For individual traders with limited funds, I think the only option is short-term trading. It’s not about rare 100 pips; it’s about consistently earning 10 pips per day.
Hitting a home run with a small lot for 100 pips still doesn’t change the situation. By consistently earning 10 pips per day with a reasonable lot size, you can benefit from compounding.
Of course, in the case of this “Ultra-short-term trading skills,” if market conditions are favorable, you can take 30 pips or 40 pips, but the truth is that 10 pips per day is sufficient.
Finally... why aim for 1 million units in a single shot? Because once you go beyond that trading volume, things change a bit.
Generally, most brokers allow holding positions up to 1 million units with a single click.
To hold higher volumes, you either wait a few seconds and click again, or use multiple brokers with multiple mice and click with both hands.
This then significantly raises the difficulty.
There are traders who are adept at using multiple mice, but for ordinary people like me, it feels safer to be able to open and close positions with a single click, keeping the mind stable.
Thank you for staying with me until the end.
■□https://www.gogojungle.co.jp/tools/ebooks/54826
Additionally, we update almost daily on “Investment Navigator+” about points for USD/JPY scalping. (If I’m not in the market, there will be no updates...).
These hints may help you understand what points we target and what trades we initiate. Please read this as well.
■□ Investment Navigator+: USD/JPY Scalping Section - FX Scalping Institute
Thank you for your time.
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■□ Trading Office Profile Page
■□https://www.gogojungle.co.jp/users/111390