Scalpers with a small edge per trade often assume that many trades will smooth things out. Over the very long run, yes. In the short term, a small edge plus normal variance can produce drawdowns that end an account or a challenge.
Simple illustration with a coin-flip style model:
- Win rate 55%, payoff 1:1, so edge 0.1R per trade.
- Risk 1% per trade, 20 trades a day.
The expected result is positive. But a run of 10 losses in a row happens surprisingly often over thousands of trades. At 1% risk that's roughly a 10% drawdown, and runs of 14–15 are not out of the question over a year.
What changes the picture:
- Lower risk per trade. At 0.25% the same streak is a 2.5% drawdown.
- Daily loss limit. It doesn't change the edge, but it stops one bad day from becoming a crater.
- Improving the edge, not the frequency. Doubling trades with the same edge doubles variance in money terms too.
A quick Monte Carlo of your own trade results (shuffle them a few thousand times and look at the worst drawdowns) is worth an evening. It's a much better reality check than average monthly results.
Has anyone run a risk-of-ruin simulation on their scalping stats? Did it change your risk per trade?
