Hey hey: what's up my friends, so in today's episode right i'm going to talk about scalping right and the reason right why most traders lose money. Sculpting the markets number one caught by news right, so a scalpel right! You know you are, you know, entering the markets in in and out relatively quickly right, maybe capturing you know five six or five pips right and that's it and you know you can do it consistently for a few days right now, five pips, there seven pips there, Eight pips there and then on the fourth day right uh, you are caught off guard a news. Release came out and you know you're unaware of it, and you know you are down pretty much 40 pips, 50 pips and wiped out all the gains that you've accumulated right over the earlier days. So it's a scalpel right.

It's very important right to know when news release is coming, especially if it's pertaining to the markets, you're trading. So if you trade fx, you better be sure right that you know what are the major news coming out that could affect your currency pairs, like you know, nfp, fomc, etc. So news release right as a sculptor. It's important because this uh it can go two ways.

Number one is that you know if there's a major news release coming out - and you know you don't want to you - don't want to you - know, take a gamble. What you can do square for all your position. Exit all your position right before the news is out. So this way you're kind of like you, know, protected and you know, will not get.

You know. Spiked up uh by the news release number two right: those who are proficient scalpel right. They can actually take advantage of the news release right and profit from it right. So i you know, i'm not going to go into further details on what that entails, but as a sculptor, you have to be aware of news release that could affect your markets.

Number two: you simply don't have what it takes to be a scalper. So here's the thing right, scalping is not for everybody, and this is especially so right if you're, the type of person who is you, know kind of like wishy-washy. You know you can make up your mind. You know it's like you know, like your wife asks you hey rainer.

Where would you like to go for this dinner tonight and i'm like you know, i'm not sure man, then my wife gives a suggestion. I'm like, maybe maybe not that she gives another suggestion, i'm not sure about that. Maybe yes, we could try that and then she gets angry walk away and we don't have dinner for that day right. So if you're the person right there is similar to the rainer that i've just described, then sculpting is not for you, because scalping right requires you to be decisive.

You are probably trading. You know on the really low timeframe, sometimes scalpers don't even look at charts. They simply look at the order flow and make decisions of it right. They are making.

You know, split second decision. So if you always, you know on the sidelines, you know don't want to make a decision afraid to be wrong. You know not sure what to do. Then clearly, sculpting is not for you see where i'm coming from right, so this one, you know best what type of person you are if you're someone who's, always undecided, you, like others to take charge.

You don't want to make decisions. Scalping is definitely not for you. Next, one number: three: you can't read the price section of the market, so as a scalper, it's very very important right to read the price section of the market. It could be via order flow.

It could be by looking at charts right, but whatever the case is right as a scalpel, you have to understand right. The intricacies of your market inside out so different markets have different behaviors and their behavior change over time and as a sculptor, you have to be able to read the behavior of the markets. You're trading, maybe like today, let's say it's a trending day markets are, you know, consistently making higher highs and higher lows. Then, as a scalper, you have to see that and be able to exploit that trading opportunity right of an uptrend.

Maybe the next day market goes into a range you have to so call uh, anticipate that right and then trade the range of the next day. So as a scalper, you can see that you know it's not always you know being a one-trick pony right. You know buying up trends, buying the pullback et cetera, because the market could change the next day. Maybe on the third day it could change again goes into a downtrend, so you can see as a scalper.

You have to be able to read the price section of the markets. That's because you're pretty much trading, maybe one two or three markets. You don't have the liberty to like you, know, watch 50 markets and cherry pick right. The setups across the 50 markets that you're watching because trust me, you don't have the mental capability right to sculpt to be sculpting 50 markets at once.

At least i don't see - or i don't know any trader or any scoper. Who does that? Okay, that's a different story: all together. If you're trading off a daily timeframe, you can trade 50 markets, but as a scalper, okay, you have to master. You have to read the price section of a few markets that you're trading, because things like change very quickly as a scalper number, four uh.

You have the wrong expectations right about scalping, okay, so so here's the thing right. Anything many people think that you know i want to be a sculptor, because i want to make you know pips every day i want to make you know, profits every day, here's the thing right as a scalper. You also have losing period, and it's very simple right. If you think of scalping as a certain strategy right to trade, the markets right, no trading strategy will work all the time.

Do you agree with me? That's because the market changes all the time, so the only way for a trading strategy to work all the time is if a market conditions never change. So, for example, market is forever in an uptrend and you buy buy the dips. You buy the breakouts hey, you can make money every single day every week every month, if the market don't change, but let's be honest right. If you've been trading for like three months or six months or a year, you know that no market remains the same forever.

Regardless of time frame that you're looking at this means right, it's a scalper. You shouldn't expect to be making profits every single day, because market changes over time and how consistent you are or how good you are depends on how quickly you can adapt to the new market condition, and that's where we talked about earlier by reading the price section Of the markets right, but you want to go in with the expectations that you know you will have losing period, especially when market conditions change. Your strategy stops working you're taking time to adapt. You will encounter drawdowns and losing period so be prepared for that.

And finally, the fifth reason why scalpers lose money is because they don't pay attention to their transaction cost the spread. So, let's say, for example, i'll keep things simple. Let's say there is no transaction cost. Maybe you trade fx and you uh.

Let's say you: trade euro dollar, five pips uh, stop loss, five pips target profit, but here's the thing right. If you have a spread of let's say one pip, that's about 20 right of your potential profits. Can you see where i'm coming from? Let's say you have a five pip stop loss and a five p take profit right, but if you are paying one pip every time right as a spread right, this will cost you a lot in the long run. So let's say your spread is 20 of your returns and, let's say hypothetically right every month as a scalper, you can make 20 a month.

But if you're, paying like one pip in spread with a five people target and stop loss, you're pretty much flat for the mom, because that 20 right will go towards paying off that spread. Can you see where i'm coming from? And that gets worse right? If your spread is even wider, so this is kind of like the nemesis right of a scalper. That is that you have to monitor right. Your transaction cost your spread very closely because if a market has very widespread large transaction costs, the odds are just simply against you.

Okay, so look into your transaction transaction cost. If you are, you know someone with a high volume, you can negotiate with your broker. You know how you can reduce down your transaction cost if you trade fx, it may be 0.3. 0.2 right.

If you have, you know certain tie ups with your broker. If you trade stocks right, then again discuss that with your broker, because this is something that is not to be, you know taken lightly. So this is why you know hft firms they trade, so often they can bring down their transaction costs are almost to zero and one get rebates right back from the exchange okay. So this is important and quick recap right to what we have discussed today.

Number one right: the uh. One of the reason why sculptors lose money is because they get caught off guard by news number two. They don't know what it takes right. If you're someone who is you know wishy-washy, you can't make up your mind.

Sculpting is not for you number three. You can't read the price section of the markets. Number four! You don't have the right expectations about trading at number: five you get killed by commissions and spread all right so with that's it. I have come to the end of today's episode.

I will talk to you soon.