Scalping is a very popular trading technique among beginners, often perceived as a quick and lucrative method to make money on financial markets. However, the reality is much more complex and the associated risks are high. In this article, we analyze in detail what scalping really is, the actual performance of traders who engage in it, the impact of transaction costs, and the profiles for which this trading style is suitable. Finally, we propose less risky alternatives for French investors.
What is Scalping?
Scalping is a trading strategy that involves executing a large number of trades, often several dozen per day, with the objective of profiting from very small price movements (a few pips or cents). Positions are generally opened and closed within seconds to a few minutes. This method differs from day trading or swing trading by its very short time horizon.
Scalping is mainly practiced on highly liquid markets such as Forex, stock indices, or certain futures contracts. The main argument put forward is the possibility of generating quick gains with low risk per trade, thanks to tight stops. However, this view is often biased by a lack of consideration of real costs and human behavior.
Scalping: An Illusion for 80% of Beginners
According to a study by the French Financial Markets Authority (AMF) published in 2022, nearly 80% of beginner retail traders lose their entire capital within the first few months, especially those who practice scalping (AMF, 2022). This alarming statistic results from several factors:
High leverage effect: Scalping often uses significant leverage to maximize gains on small movements. This also amplifies losses.
High transaction costs: The large number of trades generates cumulative costs that heavily weigh on profitability.
Fatigue and stress: Scalping requires extreme concentration and immediate responsiveness, generating high stress and frequent errors.
Lack of experience: Beginners underestimate market complexity and the discipline required.
These elements explain why the majority of beginners fail to be profitable with this method.
Calculation of Costs on 50 Trades per Day
To better understand the impact of costs, let's perform a realistic calculation based on a scalper trader executing 50 trades per day. Take the example of a €10,000 account on the Forex market with an average spread of 1 pip and commissions of 0.2% per trade (all-in, commissions + spreads) — which is common among popular brokers in Europe (Banque de France, 2023).
Parameter
Value
Explanation
Initial capital
€10,000
Trading account amount
Number of trades/day
50
Typical for an active scalper
Average cost per trade
0.2%
Includes spread + commission
Average amount per trade
€1,000
10% of capital per position
Cost per trade in €
€2
0.2% of €1,000
Total cost per day
€100
50 trades × €2
Total cost per month (20 days)
€2,000
€100 × 20 days
These costs represent 20% of the initial capital each month, even before considering gains or losses. To be profitable, the trader must therefore generate at least €2,000 in monthly profits, i.e., a 20% net return, which is extremely difficult to achieve consistently.
Who Can Really Scalpe Successfully?
Scalping is not an activity suitable for all profiles. Traders who succeed in this field generally share the following characteristics:
Solid experience: Deep understanding of markets, orders, and trading mechanisms.
High-performance technical infrastructure: Fast platform, stable internet connection, direct market access (DMA).
Strict risk management: Strict use of stops, appropriate position sizing.
Psychological discipline: Ability to manage stress and follow a strategy without being driven by emotion.
Significant capital: Scalping with small capital is often ineffective due to fixed costs.
In practice, it is often professional traders or hedge funds who exploit scalping, thanks to their technical and human resources. Retail investors, especially beginners, have little chance of lasting success.
Less Risky Alternatives for French Investors
For French retail investors wishing to engage in financial markets without taking excessive risks, several alternatives are recommended:
Passive investment via ETFs: ETFs (exchange-traded funds) allow investing in a diversified basket of stocks or bonds with low fees and no active management. According to INSEE, savings invested in ETFs in France increased by 35% in 2023 (INSEE, 2024).
Positional trading: Taking positions over several days or weeks limits the number of transactions and thus fees, while allowing the market time to evolve.
Managed portfolios: Using wealth management advisors or structured products provides access to diversified strategies tailored to risk profiles.
In-depth training: Before attempting active trading, it is crucial to acquire solid training and practice on a demo account.
Conclusion: Clear Verdict for Investors
Scalping, although attractive for its "quick and lucrative" aspect, is a very risky strategy that leads 80% of beginners to lose their entire capital (AMF, 2022). Transaction costs accumulated over 50 daily trades can represent up to 20% of capital each month, making profitability almost impossible without professional skills and resources.
Only experienced traders with high-performance infrastructure and significant capital can hope to profit from scalping in the long term. For the general public, it is preferable to opt for less costly and less stressful strategies, such as passive investment via ETFs or positional trading.
In summary, scalping is more a myth than an accessible reality for the majority of French retail investors. Caution and training are essential before venturing into it.
