【Supplementary Column】Why scalping tends to birth billion-dollar traders

Thank you for your hard work! This is Tomizaki from the Trading Office.

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“Ultra-Short-Term Trade Skills” using Tick Charts

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Regarding

This time, I would like to talk a little about the theme of“Why billionaires are likely to be born through scalping””.

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■□https://www.gogojungle.co.jp/tools/ebooks/54826

There are various approaches to trading methods, including scalping, day trading, and swing trading, based on timeframes.

Of course, if you can profit, there is no single correct timeframe.

However, for individual traders with limited funds to achieve relatively large results in a short period, scalping with shorter timeframes seems to be most optimal.

Among the traders around me who achieve results, as well as the so-called billion-dollar traders, the timeframe is mostly scalping, with holding times of at most 1–2 hours for day trading at most.

To my knowledge, I have not heard of individual traders achieving large results through so-called swing trading where positions are held for several days.

For example, randomly

A　“Open a trade with 10,000 units aiming for 100 pips profit with a 30-pip stop”and

B　“Open a trade with 100,000 units aiming for 10 pips profit with a 3-pip stop”are

theoretically, the expected value is the same.

What differs between A and B is the time required for the trade to complete, either at take profit or stop loss.

In case A, it would take at least several tens of minutes, potentially hours or days, to complete the trade.

In case B, the trade completes in minutes or even seconds.

The short time frame of scalping, as in B, is overwhelmingly more time-efficient than A, and by increasing the number of trades you can improve capital turnover.

During the time A’s trade is completing, in B you can complete many trades with the same expected value multiple times.

That is what increases capital turnover.

In fact, for individual traders with limited funds, increasing capital turnover is key to achieving relatively large results in a short period.

Because scalping can increase capital turnover, it is precisely why billion-dollar traders are more likely to emerge.

As a rough reference, our simple view on capital is to trade with funds equal to 1.5 times the margin required to open a position; about 65% of available capital would be used for trading.

Because it is about 65% of funds, it is not full leverage, but this 65% value strikes a balance between leaving some room and taking moderate risk to raise capital turnover.

Of course, this level of risk-taking is only to be applied to scalping, where stops are limited to a few pips.

By the way, the average stop loss for this“Ultra-Short-Term Trade Skill”

If you can master a method with a positive edge in scalping, aim first to operate on a monthly positive basis.

As mentioned earlier, scalping finishes trades quickly, so the number of trades is high. Therefore, if you have a method with a positive edge, you can almost achieve the expected result on a monthly basis.

If you can operate positively on a monthly basis, the next goal is to increase the funds and raise the trading lot size, reaching a stage where you can operate 1 million units in a single shot.

Regardless of trade size, the trades themselves remain the same.

Of course, increasing the single-trade size increases mental strain, but that can also serve as a guide to achieving somewhat larger results.

If you can operate with 1 million units in a single shot, it may be one of the goals as a trader (a level where you can live off trading).

For individual traders with limited funds, I think the key is to focus on short-term trading. It’s not about rare 100 pips; it’s about consistently capturing 10 pips per day.

Hitting a home run once with a small lot for 100 pips doesn’t change the situation. By accumulating a certain lot and consistently hitting 10 pips per day, you can benefit from compounding.

Of course, for this “Ultra-Short-Term Trade 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 in a single shot? Because at higher trading volumes, things become somewhat different.

Most brokers allow positions up to 1 million units with one click.

To trade more than that, you either wait a few seconds and click again, or use multiple brokers and arrange multiple mice to click with both hands.

When that happens, the difficulty rises sharply again.

Around me there are experts who deftly use multiple mice, but someone like me, an ordinary person, feels more secure and mentally stable when I can open and close positions with a single click.

Thank you for sticking with me until the end.

■□https://www.gogojungle.co.jp/tools/ebooks/54826

Best regards.

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