There may be no T&S, DoM or Order Book on FX... But this goes for everyone else as well!
I agree, trading futures would probably be a better idea in the long run. But for now, I don't have the capital for futures, and scalping by chart isn't that difficult once you get used to it, imo. You might enter more BE trades as a result, but it's hardly impossible to scalp FX.
The trouble is - you won't have b/e trades, you'll give the spread on each one of them. The spread will eat away at your account and your tiny targets mean that the spread will force you to aim for a ridiculous hit-rate in a market that doesn't give you sufficient information to trade off.
You being under-capitalised is not something the markets care about. You should either aim to trade as best you can or not at all. The markets are not kind places. Taking a second best approach to scalping because of your account size will guarantee you a smaller account.
In reality I don't think it's possible to be under-capitalised. There's markets you can scalp with a $2 r/t and a $31.25 tick size. You could aim for 1 tick trades in that market with an account less than $1000. I wouldn't recommend it but it sure beats Forex.
At this point, I think what you should focus on (but you won't) is understanding your place in the food chain, or even that there is a food chain, or even that you are on the menu.
There's a book that describes is beautifully.
Tape Reading & Market Tactics by Humphery B Neill.
This book was written in the 30's. It has the best description I've ever read of the game of trading and the retailers place in that game. I know you won't believe me if I tell you that the markets are specifically engineered to separate you from your money - but maybe you'll believe this dead guy.
They ARE out to get you and if you don't go in armed to the teeth - you WILL be buying their dinner.
Take it this way. If you trade with the trend and/or in the direction of weakness, then you're putting chances on your side. Then you can check a low t/f for confirmation that a move is about to begin. It's not precise, but I've found it works for me so far.
Yes, the spread can be prohibitive, which is why I stick to Eur/Usd for US open and Eur/Jpy for Asian session. I go for anywhere between 5 - 15+ pips, so this is ok. Spreads of more than 2 can really amplify those losers, though, especially if you do the kind of leverage scalping implies.
In the future I might switch to an exchange-based vehicle for the order book advantage. For now, I've found currencies aren't too hard to wrap your head around.
(As an aside, I would wonder if futures are that much better than FX given how much trickery is involved in the order book... Sounds like there's as much guessing going on there as in FX!)
I'm confused. Two posts back you were asking for advice and saying you were gravitating towards this style. Now you are a successful forex scalper? Gravity must be quite strong where you are.
Trade with the trend? Check a lower Timeframe that a move is about to begin? How will any timeframe tell you that something is about to begin?
A change in order flow preceeds a change in price.
By the time you see it in a chart, the chance to scalp it has gone. You cannot apply position day trading rules to scalping.
As Leopard said – your chances are slim. Your competition is paying almost zero spread. If you trade futures, you will be paying $2-$4 per r/t and your competition will be paying 30c.
Scalping is a game, right now you don’t understand the rules of that game but you think you can make them up by throwing in a bunch of technical analysis like our man with his blog here. There is a lot of manipulation and that is your route to understanding how other people are playing the game.
