Forex scalping is a short term method of day trading and forex scalpers are looking to take small profits regularly by timing moves on hourly charts. The idea is to only take small profits but get lots of them, to build profits over time and earn a big consistent income. There are lots of forex scalping systems for sale but how do you pick a winner?
The first thing you need to do, is look at the track record of the scalping system presented to you and check for a disclaimer. If you see the one below ( or one with a similar wording), you need to forget the system and look at others. Here it is read it carefully:
“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.
Basically, the above means the forex scalping system has not been traded and the vendor has simulated the track record in hindsight. A disclaimer like this, tells you nothing about the profitability of the system, as of course if we all knew tomorrow’s price today, we would ALL be rich!
Making money in hindsight is easy, but we don’t have that advantage in the real world.
Now you may be thinking well that’s obvious enough – I Will just find a real time track record of forex scalping profits.
Get ready for a long search then! Why?
Well I have been searching for 25 years and not found a real time track record and the reason is:
Forex scalping doesn’t work over the long term, because the logic it is based upon is fundamentally flawed.
The logic is, you can predict where prices will go in just a few hours – but of course you can’t do this.
Volatility in short time frames is simply random.
Volatility can go anywhere in a few hours (and does) so, all that happens is stops get hit and you end up with lots of small losses. Because you are not running profits to cover them, you are simply destined to lose.
You can’t win long term, as even if you are lucky – luck doesn’t last forever!
Vendors know it’s a good and appealing story – but that’s all it is.
You never see a real time track record of gains and you have to wonder why a vendor if he really believes forex scalping works, doesn’t have the track record to prove it.