Scalping Strategy
Advanced1-5 minute chartsDay Trading
Strategy Overview
Making multiple quick trades to capture small price movements.
How It Works
Scalping involves making dozens to hundreds of trades per day, holding positions for seconds to minutes to capture small price movements. Scalpers focus on liquid stocks or forex pairs with tight spreads, using high leverage to amplify small gains. Success requires lightning-fast execution, strict discipline, and the ability to cut losses immediately. Scalpers often trade off order flow, Level 2 data, and tape reading rather than traditional indicators.
Setup Rules
- 1Trade only highly liquid instruments
- 2Spread must be 1-2 cents maximum
- 3Use direct market access broker
- 4Trade during high volume periods
- 5Have multiple monitors for data
Entry Rules
- Enter at bid/ask for better fills
- Trade momentum off key levels
- Use order flow imbalances
- React to tape speed changes
Exit Rules
- Target 5-10 cents profit per trade
- Exit immediately if trade goes against you
- Never let winner turn into loser
- Use market orders for fast exits
Risk Management
- Risk only 0.25-0.5% per trade
- Use tight stops (2-5 cents)
- Trade smaller size for consistency
- Daily loss limit mandatory
Advantages & Disadvantages
Advantages
- • Many opportunities daily
- • Small stops = controlled risk
- • No overnight risk
- • Compound small gains quickly
Disadvantages
- • Requires intense focus
- • High commission costs
- • Stressful and demanding
- • Need significant capital for profits
Best Market Conditions
High volume, volatile sessions with good liquidity