I'd like to share a key piece of information with scalpers out there. First, the definition of scalping for this thread is 1 hour to 5 minute charts.
Winning breeds winning. Losing breeds losing. This is a statement that everyone has heard in one form or another but let's have a look at why. Here is an example of what is likely going through a trader's head during a winning trade, but following a losing trade.
Example 1:
First trade, lost $100.
Current trade, up $30...up $40...up $50...stalling....
Once your trade reaches that stick point, you feel excited at the probability of closing out a profitable trade. The problem is that you won't, because you think you should be patient and wait for it to reach $100 so you can wipe that nasty trade off your account for the day.
Current trade, back down to $40...back down to $30...back down to $20...back down to $10... hits the break even stop loss with a gain of $5.
You ended the trade with only $5.
Example 2:
First trade, won $100
Current trade, up $30...up $40....up $50...stalling....Close out!
You ended with a $50 profit. This is because you didn't need to make up for anything. You were happy just to add to the winning trade and it helped you to not hold on too long.
The moral of the story is that anything you can do to forget a losing trade is beneficial. The more it sinks into your mind, the worse you will trade and the more you will try to recoup that in greedy ways. You get what you get and you don't have a fit, ever heard that one as a kid? The market stalls for a minute and starts going back down, close out. Let yourself be one step closer to the overall goal.
It's been rehashed over and over, but I thought it could use another rehashing because I am a scalper on some trades and would like to see more people become comfortable with the idea that it can be done and done well. Psychologically, most people cannot handle it but just like anything in life, it can be practiced and mastered within reason.
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