There seems to be two types of scalping forex strategies, that are most widely traded. Those with ultra tight stop loss and those with ultra wide stop loss.
No one seems to be willing to risk exactly how much he would like to get. And there are so many benefits to it (and not only in scalping forex strategies)!
Benefits of 50/50 trading (stop loss equals take profit).
For the best results, trade with professional ECN/STP broker with MT4. If you can't trade with profit. Automatically copy the traders that are already profitable.
Faking the risk reward ratio
In the matter of RRR (risk reward ratio) a lot of traders prefer strategies with tight stop loss and wide potential take profit. However, in highly volatile and chaotic market, this almost always means that losses will be more (much more) frequent. By artificially narrowing stop loss we are not really improving our profits. We can be sure however, that losses will be more frequent and trading discipline becomes harder to keep. You can't game the market by expecting that tighter stop loss improves your chances for profitable trading.
By having profit target equal to max loss (RRR 1/1), even in absolutely chaotic conditions. Our trading will be similar to coin toss. We will be losing just under 1 pip (commission + spread) in the worst case scenario. Therefore, our trading strategy can be solely based on slight edge we get from whatever method we find fit (forex indicators, forex patterns, formations, VSA).
Using your brain as never before
50/50 method is ideal to be traded without any indicators or other tools. Just you, pure and clean charts and the best pattern recognition machine in the known universe. Your brain. Human mind seeks patterns all the time, for the whole lifetime. Our memory is based on patterns. We are even able to recognise patterns subconsciously and we do it all the time ! By removing variable of different Stop loss/take profit, you can fully concentrate on recognising the structure of the market and getting the slight edge to win. There is no added pressure that could distort your perception of price. Remember that if you suck in it, it will closely remind of coin toss (minus the spread).
You only need a slight edge to be profitable, for the rest of your lifetime.
Let's say you enter 100 trades a day.
Win: 1 USD:(11 pips), (1,1 USD – 0,1 USD spread and commission).
Loss: 1 USD:(10 pips), (1 USD + 0,1 USD spread and commission)
In absolutely chaotic market you would lose next to nothing (if you do it long enough and if that one extra pip in profit doesn't rip your chances apart). But Let's say you have a slight 10 percent edge (which is really easy). You just made 20 USD. This strategy is extremely scalable thanks to market volatility. If you made 20 USD in a day, you can also make 2000 USD. If you can get 10 percent edge, 20 percent edge will be available soon.
How to get that small edge.
Trend identification alone, can give you enough edge, to trade this approach with profit. Learn to recognise chart patterns. VSA can be also very beneficial in almost any type of forex trading. I other words. Learn all you can. Your knowledge equals profit andno onee can take that away from you !
Progress can be easily measured, recorded and improved
You can practice. Lot of forex traders feel that they are putting in the effort but they do not really feel like improving. Why ?. Because often times there are too many variables.
With this trading approach you can easily practice and what is more important measure any improvements, by simply comparing percentage of winning trades over time in your trading history.
No one know what will market do in the future. No one holds a functional crystal ball. However next market reaction can be often times anticipated with high level of accuracy (breakouts, fakeouts, tests, up thrusts ....).
Improvement will not come easy. But once it comes it will last you a lifetime. A lifetime of prosperity and valuable trading skill that can be applied to any market traded by humans.