Why scalping is an awesome first step for beginners?

Scalping is fun!

If you are like me, then the first thing you probably did with your first ever demo account was to scalp the hell out of it and blow the account in no time. That was my first lesson in trading, don’t fight the markets. But it sure was fun scalping for the first time.

The thing is that successful traders are not a special breed who are born with some
special talent or anything. They all started, just as you and me. But the unique thing about successful traders are that they learn from their mistakes. When I say mistakes I don’t mean flawed analysis or losing trades, I mean common mistakes such as guessing the markets, random trading and chasing the markets etc.

This is exactly why scalping is a great first step for beginners.

Quick learners…

Eperience is the most valuable asset of a trader. So what other method can offer experience quickly and efficiently than scalping, right? Yes, backtesting with historical data is another method to improve your trading skills too. But if you want to have real, live market experience quickly, scalping is the way to go. But be warned! if you’re just starting out trade with only demo accounts, until you feel confident and confortable enough to handle real money accounts.

Broker research

When I first started scalping, I quickly learned how important it is to get a broker with tight spreads. As a beginner, it was a very good experience searching for the right broker that allowed very short term trading, less restrictions and more importantly minimal spread and commissions. Then I learned quite a lot about dealing desk and non-dealing desk brokers, ECN brokers etc. Beyond all that knowledge, now I know exactly what to look for, if I were to change brokers. This is very important, as there are bucket shops everywhere. My point here is that I felt how broker spread was eating into my profits, because I was scalping. If it wasn’t the case, I wouldn’t put much thought into limitations and costs of my brokers.

Losing is part of the game….

Scalping has and continue to teach me an invaluable lesson in trading. “Get used to losing trades!” Losing trades are like an annoying cousin. Its part of your life and thoughts, you know its gonna peek at you any minute, mostly when you least need it and its very annoying. So deal with it. This one is not particular for scalping though. But you can’t argue with how much you can learn in a matter of days or weeks of scalping as a beginner.

Practice is the only way forward to have a successful life as a trader. Everything needs to be practiced, trading and strategies (the technical stuff,) psychology, consistancy, patience, risk tolerance and so forth. Because short time frames are too noisy they provide a solid training platform for strategies and technical analysis. It also helps a beginner to learn different variations of the same strategy may exist and indicators often provide lagging, false signals.

Have you heard the news

Scalping also has taught me (many times over) that I have to be mindful of news releases, their forecasts and expected market reaction. Although its a better idea to avoid trading during news releases, its great fun to watch the markets react to certain news. This is the time when pure technical strategies fly through the roof. The markets are highly volatile during these periods and because I felt how stressful it could be to be in trades during news, I am looking for any news ahead even when I trade higher timeframes such as the daily.

In the end, it all comes down to personality. Scalping is not for everyone and it takes a lot of hard work, persistant learning, discipline, speed etc. Not that other trading methods despise those qualities. One thing I can guarantee you is that if you keep scalping for few days or weeks consistantly, you will have more chart-time, knowledge and experience in trading in a matter of weeks, whereas it would take months or even years to achieve the same level of expertise trading other trading methods such as day trading or swing trading.