Trading Styles: Every One Sends You a Bill

Every trading style looks free on the menu. The menu lists the win rate, the speed and the stories of people who made it work. It never lists the bill, because the bill arrives later, in a currency the menu did not mention.

This piece reads the bill before you order. It takes the three styles most traders end up in, scalping, trend trading and counter-trend trading, and asks what each one charges. The answers come from Samuel Rondot, who now runs the algorithmic trading desk at Ouinex. Between 2009 and 2012 he wrote a public series on these styles, drawn from watching several hundred client accounts at a retail broker. Every figure below is his observation, dated, with the original linked at the end. None of it is a forecast and none of it is a promise: leveraged trading carries a high risk of loss.

The objection: a style is only a label

The strongest case against this exercise runs like this. A style is a label. What decides your result is expectancy, the average amount you make per trade after costs, and expectancy can be measured. Test the three styles on the same market, keep the one with the best number, and the question of how each one feels is a distraction for people who cannot read a spreadsheet.

That holds up to a point. Expectancy is real, and a style without a positive one has no future. The problem is that a backtest has no hands. It never hesitates at a stop. It never holds a winner for six months waiting for the one trade that matters. It never sits in a loss that has lasted four days. Samuel's accounts showed the same method carrying one person for years and ending another, and the difference was rarely the method.

So the bill matters, because you are the one who pays it. Here is what each style charges.

Scalping bills you in attention

Scalping means trying to win small, very often. In 2012 Samuel described the routine: pick one product, take a few points on an index or four or five pips on a currency pair, and repeat it every day you trade. He had seen scalpers place five hundred trades in a day, and he noted that the most prolific were not necessarily the best.

The advantages are psychological as much as financial. Positions last seconds to a few minutes, so the stop sits close to the entry, and a close stop is easy to place and easy to honour because there is little room to argue with it. His explanation is the sharpest line in the series: once a stop is hit, the position belongs to the past, and whether the market turns 100 points later or 1,000 points later changes nothing. The same traders found it easier to take a holiday than any other group, and their gains arrived more regularly, because a short horizon offers more favourable windows.

A reader challenged that last claim the same week, and he was right to. More opportunities also means more false signals. The regularity comes from frequency and averaging, not from a hidden edge in the short timeframe.

Now read the bill. Every scalper Samuel spoke to named the same cost: fatigue. After a session they were as drained as after a marathon, and every one of them trained physically to keep going. There is a second line he did not itemise. Every trade pays the spread, so a style built on hundreds of trades a day multiplies that charge hundreds of times, and the cost per trade has to be small enough for the arithmetic to survive. Bid-ask spread explained shows where that cost sits.

Scalping charges you up front, in the present. What happens when the schedule is reversed?

Trend trading bills you in patience, and in losing trades

In his 2010 count, the trend traders Samuel watched won on 30 to 40% of their trades. Take 35% as he did. Five percent of trades were very big winners, thirty percent were small winners, and sixty-five percent lost. The small wins and the losses roughly cancelled, so the year came from the 5 to 10% of trades that ran.

Read that as an invoice. Two trades in three lose, and you pay that in small, frequent amounts. Then you must hold the winner you most want to close, because the one that pays for the year does not announce itself. In 2012 he wrote that the best traders' yearly gains sat on ten trades at most, and that you would have to learn patience. Closing at a clean number feels like discipline. Applied to every trade, it is also the rule that makes you leave the rare one early, along with the ninety ordinary ones it was designed for.

There is a second charge, and he found it where received wisdom says the opposite. The common belief is that a falling market in crisis suits trend following. He saw the reverse. Crises produce trend accidents, violent moves that turn on you, and the biggest losses he saw on trend accounts came in those periods, sometimes several months of gains lost on a single trade. His 2012 view of the best conditions was a rising trend with low volatility, because volatility is what shakes you out. Read that as one set of accounts in one decade, not as a rule. The mechanism is the useful part: a position held for a long time is exposed for a long time.

Position size changes the shape of the bill without changing the total. Traders who held a fixed size earned less but more steadily. Those who started large and shrank had the best win rate and the largest single losses. Those who added as the trade ran had the lowest win rate, sometimes nothing for three to five months and then a year's gain in one trade. Samuel had watched only one or two traders in each group, and said so: it would be dangerous to draw conclusions from that. Trend trading explained covers the method itself.

Patience is expensive, but it is at least visible. The style that looks cheapest hides its invoice.

Counter-trend trading sends one invoice, and it is large

Counter-trend traders bet that an excess will correct. In 2009 Samuel wrote that the ones he watched often won more than 60% of their trades. The cost is that 5 to 10% of their trades are heavy losers. In his words, that is built into the style, not an accident of it. A 2012 piece put a number on the waiting: a counter-trend trader spends the great majority of the time, he said 95%, holding an unrealised loss.

The waiting changes the trader. Losing becomes routine, and routine losses are easier to hold past the point where they should have been cut, because the premise of the trade was that this one, too, would come back. Then the market takes a very long time to correct an excess, and every counter-trend technique fails at once.

A stop does not fix it, and his reason is a paradox worth keeping. Stops cut the heavy losers, but they also stop you out of trades that would have turned into winners. You shrink your gains and your win rate, and the win rate is the one thing the style lives on. His conclusion was that the balance sits in the leverage you use: how large your maximum risk is against the size of the account. Mean reversion can be traded for years, but the account has to survive the one session that does not revert. Across fifteen years in the business he knew exactly one counter-trend trader who had come through every trap.

If counter-trend sends one large invoice and trend sends many small ones, what does the win rate on the menu tell you?

A win rate is a menu item, not a price

Very little, on its own. Samuel's rule of thumb was that a win rate needs at least three hundred trades before it means anything. A method that wins 60% of the time does not deliver six wins in every ten. It can deliver a long run of losses before the wins arrive, and the trader who expects a tidy alternation is the one who raises his size after six losses in a row and breaks the account.

So compare styles on what each costs when it goes wrong, not on how often it goes right. He also remembered early 2006, when a lively market fell asleep and stayed asleep, with tiny moves in one direction. Methods that had worked for years stopped paying, and the traders who changed method mid-drought were hit again the day the market returned to normal. His advice was the only one that survives every style: prepare before the market asks you to. Why win rate and streaks mislead works through the arithmetic.

The bill does not change when the market never closes

Samuel wrote about indices and currency pairs that close overnight. Crypto markets do not. The bill is the same, but the clock that collects it is different.

For the scalper, the holiday advantage is harder to keep. A market with no close has no natural end to the session, so the fatigue bill is open-ended unless you set a stopping rule yourself. The trader who works one product for a day or two, as Samuel's scalpers did, now has to decide where a day ends.

For the trend trader, a perpetual futures position has no expiry, so you can hold a trend as long as you like. You also pay or receive funding while you hold, depending on which side of the market you are on, so the cost of patience gains a line item. Trend trading in a market that never closes does not avoid the overnight gap. The move simply happens while you sleep instead.

For the counter-trend trader, the one large invoice has a mechanism. If a leveraged position moves against you far enough, the position is closed for you, and the account never gets to wait for the snap-back. Estimated liquidation price shows where that point sits before you place the trade.

Read the bill before you order

Ask which currency you can pay in. Attention every day, with a spread on every trade. Patience through two losing trades in three. Capital and nerve for one bad afternoon. Samuel's answer in 2012, after several hundred accounts, was that there is no single best style, and that each trader does what they are capable of and can manage emotionally. That is not a shrug. It is a filter, and it runs before the strategy does.

Run it before you open a position. Then check what each trade costs on Ouinex, because the cost of a style is the sum of the temperament it demands and the fees it incurs. The menu will never list that. The bill always does.

Trading styles: questions answered

What are the main trading styles?

The three covered here are scalping, trend trading and counter-trend trading. Scalping targets very small moves, held for seconds or minutes. Trend trading holds positions to follow a sustained move. Counter-trend trading bets that a move has gone too far and will reverse. Swing trading sits between scalping and long-term trend trading, holding for days or weeks.

Which trading style is best for a beginner?

No single style is best. In 2012 Samuel wrote that each trader does what they are capable of and can handle emotionally. A better question is which cost you can pay: constant attention, long patience through frequent small losses, or the discipline to survive a rare large one. Practise a style on a demo account before you commit real capital to it.

Is scalping a good style?

It suits some people and exhausts others. The case for it is close stops that are easy to honour and gains that arrive regularly. The case against is fatigue and a spread paid on every trade. No style carries a promise of profit, and the result depends on your costs, your execution and your discipline.

What is the difference between trend trading and counter-trend trading?

A trend trader follows a move already under way and typically wins on fewer trades, with the profit concentrated in a handful of big winners. A counter-trend trader bets against the move and typically wins more often, but accepts occasional heavy losses. The two have opposite cost profiles: many small losses against a rare large one.

Read the series

Each article below was published by Samuel Rondot between 2009 and 2012. The originals are linked at the top of each page.

• Scalping: Trying to Win Small, Very Often (17 February 2012)
• Scalping: Holidays, Regular Gains and Fatigue (21 February 2012)
• Win Rate and Streaks: Why It Takes 300 Trades (30 May 2012)
• Winning Traders, or Consistent Traders? (11 December 2009)
• Trend Trading: The Key to Success (27 July 2010)
• Counter-Trend Trading: The Key to Success (archived July 2010, no publication date)

Trading leveraged products carries a high risk of loss. The figures above are one trader's observations of client accounts between 2009 and 2012, not studies and not forecasts.