Emotional damage in the sense that scalping forces your trading to be subject to randomness, frustration. Just an observation, I'm sure others don't see it that way.
I dabble around with system development and in general it's easier to over come slip&comm in longer time frames. There are publicly know strategies that are consistently profitable over time... e.g. canslim, turtle. Intraday wise, a lot of volatility is required to bet directionally and looking at an ES chart I'd be surprised if any system is consistently profitable.... 9 out of 10 days the chart looks just like some static noise, versus if you look at a daily chart of oil, gold, dax, brazil, korea.... and how about India.
i see a lot of flipping, grinding trade for scalpers, and then when the gold plated headline comes along, they are too frustrated and too short in their time frame to take advantage.
I look at scalping this way. It used to work, on the floor of the exchanges. You had an edge, a broker would sell you the bid, buy the offer from you. On Electronic screens, there is no edge, you are just trying to read the flow, or thinking you can read the flow. Much of the time you become the hood ornament on some order from a trader that doesn't give a shit about 5 ticks in teh bund, he just wants to fill 50,000 contracts.
I agree on most of your points. However, there are some guys here who scalp, probably automated , some with size, some using optiosn as backstop that mimicks floor trading. Buy bid.sell offer. Look at journals under rebate trading and mksummny.
Last 10 years: Transaction costs down 90% Decimalization + automation take spreads down about 70-80%... plus lower volatility. It's almost a wash... But, IMO, it's harder to make money today paying $3.50 for 1000 share flip... Than it was in 1995 paying $29.99 for same trade... cuz you made 1/4 or $0.25 easy. Eventually it dawns on most pros... That ** high volume scalping ** is clearly the way to go... And that's why everybody is feverishly building ** very expensive ** automated algo systems. It's just a mathematical conclusion that many experienced quants feel is correct. But it's a fairly close call... Position trading works just fine if you are good. rm+
Sure, there are good scalpers, they can make a lot of money. But they will NEVER make SERIOUS money scalping. Never. A good living? Sure. Developing career long trading skills and the ability to attract and manage money? No. Again, I know scalping works for some people, but it limits their ability to earn and in my opinion, is far riskier than learning position trading skills.
Ah yes, the automated algo systems. Everybody has one. Sounds like the neural networks of 10 years ago. They work great in a low volatility environement which is what we've had. Turn them off or get killed when mkts start to move.