【Supplementary Column】Why scalping tends to birth billion-dollar traders
Good job! This is Tomizaki from the Trading Office.
We have started募集 here at Gogojungle
Using Tick Chart for “Ultra-Short-Term Trading Skills”
● 「1-minute Chart Scalping Club」
Regarding
This time, I would like to talk a little on the theme of “Why Billionaire Traders Are Born Through Scalping”.
■□https://www.gogojungle.co.jp/tools/ebooks/54826
There are various approaches to trading methods based on time frames, such as scalping, day trading, and swing trading.
Of course, if you can make profits, there is no single correct time frame.
However, for individual traders with limited funds to achieve relatively large results in a short period, scalping with shorter time frames seems optimal.
Among traders who achieve results around me, and the so-called billionaires in the market, their time frame is almost all scalping, with position holding times only about 1–2 hours at most for day trades.
As far as I know, I haven’t heard of individuals achieving large results through so-called swing trades where positions are held for several days.
For example, randomly
A “Enter trades with 10,000 units, take profit 100 pips, stop loss 30 pips” versus
B “Enter trades with 100,000 units, take profit 10 pips, stop loss 3 pips”.
In theory, the expected value is the same.
What differs between A and B is the time it takes for the trade to complete, via take profit or stop loss.
In case A, it takes at least a few tens of minutes, possibly hours or days to complete the trade.
In case B, the trade completes in minutes or even seconds.
Shorter time frames like B, i.e., scalping, are vastly more time-efficient than A, and increasing the number of trades raises capital turnover.
While A’s trade takes longer to complete, with B you can complete many trades with the same expected value.
This is what increases capital turnover.
In fact, for individual traders with limited capital, increasing capital turnover is the key to achieving relatively large results in a short period.
That is why scalping with high capital turnover is a reason why billionaires are more likely to emerge.
For reference, as a rough idea of our company’s view on capital, trading with a fund of 1.5 times the margin required to open a position will use about 65% of the capital for trading.
Using about 65% of the capital does not mean full leverage, but this 65% figure strikes a balance between having room and taking moderate risk to increase turnover.
Of course, this level of risk is only conceivable with scalping where stop losses are small by a few pips.
Incidentally, the average stop-loss width for the said“Ultra-Short-Term Trading Skill”
If you can learn a scalping method with a positive expectancy, aim to operate profitably on a monthly basis first.
As mentioned earlier, scalping has a short trade completion time, leading to a higher number of trades. Therefore, if the method has a positive expectancy, you can almost achieve results in line with that expectancy on a monthly basis.
If you can operate profitably on a monthly basis, the next goal is to increase the operating lot size as your capital grows, reaching a stage where you can operate with 1 million units per shot.
Regardless of trade size, the trades are the same.
Of course, increasing one-shot trade size increases mental burden, but that serves as a guide toward achieving relatively large results.
If you can operate at a level of 1 million units per shot, I think you have reached one of the trader’s goals (a level where you can earn a living full-time).
For individual traders with limited capital, I believe short-term trading is the only option to achieve large results in a relatively short time. It is not about hitting rare 100 pips, but consistently earning 10 pips per day, which matters.
Hitting a home run once with a small lot and gaining 100 pips does not change the situation. Only by consistently hitting 10 pips per day with substantial lot sizes can you benefit from compounding.
Of course, for this “Ultra-Short-Term Trading Skill,” if market conditions are favorable, you can take 30 pips or 40 pips, but in reality 10 pips per day is enough.
Finally... why aim for 1 million units per shot? Because trading volume above that changes the approach a bit.
Most brokers allow positions up to 1 million units with a single click.
To go beyond that, you either wait a few seconds and click again, or use multiple brokers and arrange several mice to click with both hands.
This makes things considerably more difficult.
I know there are people around me who skillfully use multiple mice, but for ordinary people like me, it’s safer and steadier to open and close positions with a single click.
Well then, thank you for sticking with me until the end.
■□https://www.gogojungle.co.jp/tools/ebooks/54826
Also, we update almost daily on “Investment Navi+” about points for USD/JPY scalping. (There may be days I don’t participate in the market, though...)
These updates may provide ideas on what points we are targeting and what trades we are initiating. Please take a look.
■□ Investment Navi+: USD/JPY Scalping Section - FX Scalping Institute
Thank you for your time.
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■□https://www.gogojungle.co.jp/users/111390