If you are reading this section you may want to have look at our section on forex day trading first, as the information is also applicable to forex scalping.There are numerous forex scalping systems which claim to make money. They publish track records, telling you how you can make big long term gains by scalping small regular profits.
Of course, if you have read what we have written in forex day trading, you will know that these track records are not real – there made up. They are simply simulated in hindsight knowing the closing prices. If we all knew tomorrow’s price today, we would all be millionaires – but forex trading is a bit more difficult than that!
Below you will see the disclaimer which accompanies most forex scalping system track records. After reading it, you will understand why the track record presented is totally meaningless:
“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”.
Anyone who trusts a track record with the above written accompanying it is asking for trouble as the system has never been proven in real time. It’s surprising how many people trust these made up track records, then wonder why they lose in real time trading!
As we have said in our forex day trading section – all short term volatility is random, you can’t get the odds on your side and you can’t win – PERIOD.
If you think about it the reason is obvious:
You have millions of traders from all corners of the globe, with different forex trading strategies, varying levels of skill and the vast majority subject to their emotions.
So how can you predict what this vast diverse mass of traders is going to do in a matter of hours or minutes?
You can’t and to think that you can is laughable.
Just as day trading systems fail, so do forex scalping systems as the logic simply does not allow you to gain a trading edge.
Forex scalping is promoted as a low risk form of trading however its very high risk as you have no chance of winning. You are simply guaranteed to wipe out your equity if you try it. Sure you can be lucky – but in any random game, your luck will run out and you will lose.