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
Seconds
Hold Time
$0.05-0.20
Profit Target
50-100+
Daily Trades
70%+
Win Rate Needed

Professional Scalping Strategies

Order Flow Scalping

Trade based on order book imbalances

Level 2 & Time/Sales

Setup Process:

  1. 1.Watch bid/ask size imbalances
  2. 2.Identify absorption at levels
  3. 3.Enter when large orders appear
  4. 4.Exit on order flow reversal
  5. 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

Time & Sales

Setup Process:

  1. 1.Watch print size and speed
  2. 2.Identify acceleration in buying/selling
  3. 3.Enter on momentum surge
  4. 4.Exit on tape slowdown
  5. 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

1-minute charts

Setup Process:

  1. 1.Use 9/20 EMA crossovers
  2. 2.Confirm with VWAP direction
  3. 3.Enter on pullback to EMA
  4. 4.Exit at resistance or 10 cents
  5. 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

1-5 minute charts

Setup Process:

  1. 1.Identify clear range boundaries
  2. 2.Buy support, sell resistance
  3. 3.Use limit orders for entry
  4. 4.Exit at opposite boundary
  5. 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

Sub-minute

Setup Process:

  1. 1.Have news feed ready
  2. 2.Pre-position or react instantly
  3. 3.Ride initial momentum
  4. 4.Exit on first pause
  5. 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

Level 2

Setup Process:

  1. 1.Find stocks with wide spreads
  2. 2.Place limit orders inside spread
  3. 3.Buy bid, sell ask
  4. 4.Capture spread difference
  5. 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:

SPYQQQAAPLTSLAAMD

Tight spreads, high volume

In-Play Stocks

Examples:

GappersNews stocksEarnings movers

Volatility and volume

ETFs

Examples:

TQQQSQQQUVXYTLT

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

Scalping Resources