When I first started trading M1 on a regular basis it looked like scalping to me. Why? on any time frame, for most pairs, even m5 on some, but mostly on m15 and above 10pips is usually a scratch trade. But soon I discovered that 10pips is NOT scalping on M1. Not at all. For scalps usually the market generated stop losses are far away.
For example, trading EUR/USD on M15 time frame would require at least 30pips stop loss. Now hitting a 10pip target with a 30 pips stop loss would mean hitting 0.33% account rise with a risk of 1% per trade. That is certainly not a winning formula specially because that would require a very high success rate (win rate of 75% and higher would be required to remain profitable)
Now come down to M1, you normally require between 10-15pips stop loss on most pairs and especially on EUR/USD. suppose you took a trade when the market generated stop loss requirement was 10pips. Now, you only need 3 pips profit (less spread) to make a 0.3% account growth risking 1% per trade. We all know how easy it is to hit 3pips? Again you'd need a very high rate of success to remain profitable.
So what is it that you want?
Well, logically a 1% account rise per day has the potential to turn any account size into a huge total within relatively very short period of time and that can be done using 10,15,20,100 or even 300 pips stop loss. Suppose you're using 300pips stop loss risking 1% of your account balance, how many pips do you need to make 1% account growth? Easy pease, 300 pips. Is it a good idea to use 300 pips stop loss on a 5minute chart? It could be, but certainly not on the charts that we usually see using our MT4 platforms. What we see on our charts is market generated stop losses less than 15pips.
Is making 10 pips a trade scalping?
Absolutely NOT. When you make 10-20 pips on M1, in most cases you have traded an entire impulse wave. If you were to translate this into a daily chart, using the understanding of the Fractal Geometric nature of the universe that we live in, each 10 pips on m1 are roughly equal to 300 pips on daily, 100-150 pips on H4 and 50-100 pips on Hourly charts.
Are you suffereing from PE?
) Profit taking is very tricky business. You can never get it right. One solution today might be not a good solution tomorrow. Taking profits on TZ1 could be a spot on exit today, yet tomorrow (or the next trade) it might mean making a lot less than you could have otherwise. Exiting on Black dot on this trade could be a very good decision yet on another it could turn into a premature exit out of an impulse wave. So how do you satisfy your need and satiate your hunger for pips? Well on M1 we say, 1. if you've taken a valid "Exit Signal" generated it does not matter what was the outcome of the trade. so if it happens to be a negative trade that is the "Rent Trade" or "Finder Fee" as Nick nicely puts it. (Our New and Valued AIMSter ^:)^ ) so bet it. You already knew that 50% of the time you'll end up paying a Rent. But you dont wan to pay more rent then what you make. 2. If you've exited without a valid exit signal but it is more than 1:1 profit your exit cannot be classed as "Premature Exit" but you must have some logical reason, otherwise you could fall in to the trap of impulsive, stressful and uneasy trading style.
In other words in the long run, using our Statistical Advantage, The Edge, i.e. the Setup you will generate huge consistent profits as long as you follow your trading plan. And AIMS Stress Free Trading is your Trading Plan if you understand!
I will stop here and do something else now. e.g. have some dinner!
cheers
