Complete Scalping Guide

Case 3: USD/JPY Overtrading Failure Lesson (M1 Chart)

❌ Mistake 1: Scalping with Wrong Exchange

Scalping with Market Maker or exchanges with spread >1 pip, causing excessive per-trade cost, may lose even with 60% win rate.

✅ Solution: Must choose ECN/STP exchange with main features: 1) BTC/USDT spread 0.0-0.5 pips; 2) Execution speed <50ms; 3) Explicitly allows scalping (some exchanges prohibit); 4) No re-quotes; 5) Transparent commission (typically $3-7/lot round-turn). Recommend using VPS server deployed near exchange server (London, New York), reduce network latency to 10-20ms.

❌ Mistake 2: Pursuing Too Small Target Profits

Setting 3-5 pip target profits, but ignoring that spread, commission, slippage total cost may reach 1-2 pips, actual net profit only 1-3 pips, extremely poor risk-reward ratio.

✅ Solution: Target profit must be at least 3-5x total trading cost. Assuming total cost 1.5 pips (spread 0.5+commission 0.7+slippage 0.3), target profit should be at least 5-8 pips, plus 5-8 pip stop, to achieve 1:1 or better risk-reward ratio. Always remember: scalping is not a game of making 1-2 pips, but a strategy of accumulating 10-20 pip profits through frequent trading. Target too small, costs consume all profits.

❌ Mistake 3: Emotional Continuous Trading

After 2-3 consecutive stops, trader tries to "win it back", starts frequent opening, increasing positions, ignoring signal quality, eventually causing larger losses and psychological breakdown.

✅ Solution: Set strict "circuit breaker rules": 1) After 2 consecutive stops, rest 15-30 minutes, leave screen; 2) Daily loss reaches 3% of account, stop trading immediately, no more positions today; 3) After 3 consecutive losing days, rest 2-3 days, re-evaluate strategy; 4) Never increase position trying to "win back", this is gambling behavior. Scalping success comes from consistency and discipline, not all-in bets. Remember: protecting capital more important than making money, survival creates opportunity for profit.

❌ Mistake 4: Holding Positions Too Long

Price moves in profit direction, approaches target, but trader greedily wants "a bit more", result is price reverses, profit becomes loss. Or holding beyond 30 minutes, becomes day trading.

✅ Solution: Golden rule of scalping: quit while ahead, never be greedy. Specific execution: 1) Upon reaching profit target (10-15 pips), close immediately, no hesitation; 2) Set maximum holding time (e.g., 20 minutes), close position regardless of profit/loss when time expires; 3) After price moves 50% toward profit (e.g., 10 pip target, at 5 pip profit), move stop to breakeven, lock risk-free trade; 4) Use "time stop": if price doesn't clearly move toward target within 10 minutes, close and exit, may be wrong signal. Scalping is not trend following, don't fantasize "letting profits run", quick in-and-out is the core.