Scalping Strategies
Lightning-fast trades for small, consistent profits
Scalping Warning
Scalping is the most difficult and intensive form of trading. It requires exceptional discipline, split-second decision making, and significant capital for meaningful profits.
- • 95% of scalpers fail
- • Requires $25,000+ for PDT rules
- • High stress and burnout risk
- • Commission costs can exceed profits
Professional Scalping Strategies
Order Flow Scalping
Trade based on order book imbalances
Setup Process:
- 1.Watch bid/ask size imbalances
- 2.Identify absorption at levels
- 3.Enter when large orders appear
- 4.Exit on order flow reversal
- 5.5-10 cent profit targets
Performance Metrics:
- Hold Time:10 seconds - 2 minutes
- Win Rate:65-75%
- Risk/Reward:1:1 to 1:1.5
Tape Reading Scalping
Read the tape for momentum shifts
Setup Process:
- 1.Watch print size and speed
- 2.Identify acceleration in buying/selling
- 3.Enter on momentum surge
- 4.Exit on tape slowdown
- 5.Quick 3-5 cent targets
Performance Metrics:
- Hold Time:30 seconds - 3 minutes
- Win Rate:60-70%
- Risk/Reward:1:1
1-Minute Chart Scalping
Technical scalping on micro timeframes
Setup Process:
- 1.Use 9/20 EMA crossovers
- 2.Confirm with VWAP direction
- 3.Enter on pullback to EMA
- 4.Exit at resistance or 10 cents
- 5.Stop loss 5 cents
Performance Metrics:
- Hold Time:1-5 minutes
- Win Rate:55-65%
- Risk/Reward:1:1.5 to 1:2
Range Scalping
Trade bounces in defined ranges
Setup Process:
- 1.Identify clear range boundaries
- 2.Buy support, sell resistance
- 3.Use limit orders for entry
- 4.Exit at opposite boundary
- 5.Stop outside range
Performance Metrics:
- Hold Time:2-10 minutes
- Win Rate:60-70%
- Risk/Reward:1:1 to 1:2
News Spike Scalping
Trade initial news reactions
Setup Process:
- 1.Have news feed ready
- 2.Pre-position or react instantly
- 3.Ride initial momentum
- 4.Exit on first pause
- 5.Never hold through reversal
Performance Metrics:
- Hold Time:10 seconds - 1 minute
- Win Rate:40-50%
- Risk/Reward:1:2 to 1:3
Spread Scalping
Capture the bid-ask spread
Setup Process:
- 1.Find stocks with wide spreads
- 2.Place limit orders inside spread
- 3.Buy bid, sell ask
- 4.Capture spread difference
- 5.High frequency, small gains
Performance Metrics:
- Hold Time:Seconds
- Win Rate:70-80%
- Risk/Reward:1:0.5 to 1:1
Technical Requirements
Direct Market Access
DMA broker with fast execution
Critical for speed
Level 2 Data
See full order book depth
Essential for order flow
Low Commissions
Per share pricing ideal
Profits eaten by fees otherwise
Hot Keys
One-click order execution
Speed is everything
Fast Internet
Low latency connection
Milliseconds matter
Multiple Monitors
2-4 screens recommended
Track multiple data streams
Scalping Risk Factors
High Commission Costs
Impact: Can eliminate profits
Mitigation: Use per-share pricing, high win rate
Spread Slippage
Impact: Entry/exit at worse prices
Mitigation: Trade liquid stocks only
Emotional Burnout
Impact: Mental exhaustion from intensity
Mitigation: Take regular breaks, limit hours
Technology Failure
Impact: Missed trades or stuck positions
Mitigation: Backup systems, mobile app ready
Overtrading
Impact: Death by thousand cuts
Mitigation: Daily trade limits, profit targets
Best Instruments for Scalping
Large Cap Liquid
Examples:
Tight spreads, high volume
In-Play Stocks
Examples:
Volatility and volume
ETFs
Examples:
Predictable movement, liquid
Golden Rules of Scalping
Entry Rules
- • Only trade A+ setups
- • Never chase price
- • Use limit orders when possible
- • Respect the spread
- • Size appropriately for liquidity
Exit Rules
- • Take profits quickly
- • Cut losses immediately
- • Never hope for reversal
- • Exit on momentum loss
- • Don't be greedy
Scalper's Daily Schedule
9:00-9:30 AM
Pre-Market Prep
- • Check news and gaps
- • Identify in-play stocks
- • Set up watchlists
9:30-11:30 AM
Prime Time
- • Maximum volatility
- • Best opportunities
- • Full focus required
2:30-4:00 PM
Power Hour
- • Increased volume
- • Closing imbalances
- • Final opportunities
Recommended Platforms
Professional Platforms
- DAS Trader Pro: Industry standard for scalping
- Sterling Trader: Professional execution platform
- Lightspeed: Direct market access
- TradeStation: Advanced order types
Data Feeds
- Level 2: Full market depth
- Time & Sales: Print tape
- News Feed: Real-time headlines
- Scanner: Find opportunities
Scalping Psychology
Mental Requirements
- • Extreme focus and concentration
- • Quick decision making
- • Emotional control under pressure
- • Acceptance of small gains
- • Discipline to follow rules
Common Mistakes
- • Holding losers too long
- • Getting greedy on winners
- • Trading when tired
- • Revenge trading after losses
- • Overtrading poor setups
How to Start Scalping
1. Master Basics
Learn Level 2, tape reading, order flow
2. Simulator
Practice for 6+ months minimum
3. Small Size
Start with 100 shares max
4. Track Everything
Journal every trade meticulously