Trade frequency versus edge: more trades do not mean more profit

[Amanhasnoname]

A common belief holds that scalping profits come from volume. More trades, more profit. The arithmetic says otherwise when costs are high.

Total profit equals the number of trades multiplied by expectancy per trade. If expectancy is positive, more trades help. If it's negative or marginal, more trades only make the loss larger.

Increasing frequency often reduces expectancy. Lower-quality setups are included, costs accumulate, and fatigue grows. The average trade gets worse as the count rises.

A straightforward analysis is to sort trades by setup quality, or by the order in which they occurred in the day, and plot cumulative profit. Frequently the first trades of the day contribute most, and later ones contribute little or negative amounts.

If so, capping the number of trades improves the result and saves effort.

The right number of trades is the point where marginal expectancy hits zero. Finding it requires data, and probably less activity than expected.

How many trades per day produce the best results for you?