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Scalping is a modern style of trading which involves extracting profit from small price movements within numerous transactions. A distinctive feature is the high intensity of transactions.
An aggressive scalper can open dozens and even hundreds of positions per day. Targets are small, from a few pips to several points. Almost all positions are closed during the day. Timeframes up to M15 are used; most often, M1–M5.
This trading style is most widespread among players in the Forex market, which is the most liquid round-the-clock marketplace. Here, the rules of classic scalping were invented, which involve trading on all micro-movements that exceed double spread and commission costs, exiting a position at the slightest trend reversal, and the habit of closing all positions overnight to lock in profits at the end of the day.
Closing positions overnight ensures protection from the morning gap and allows sleeping well at night without considering the results of night trading.
Speed is another essential factor for scalpers, no less critical than liquidity, so the choice of broker is crucial. A scalper constantly analyses price charts and makes decisions based on this data, so the broker must provide quick access to the information necessary for analysis: prices, news, charts of foreign indices, signals, statistics, etc.
As a consequence, fast scalping trades require an intermediary with an unloaded server so that, at the right moment, your request does not wait for a few crucial seconds for its turn.
Scalping is one of the quickest strategies employed by active traders. It includes exploiting various price gaps caused by order flows or spread differentials. Scalpers aim to make numerous small profits on minor price changes throughout the day.
Since the level of profit per trade is small, scalpers look for more liquid markets to increase the frequency of their trades.
Choleric/sanguine people make excellent scalpers, as scalping methods imply a good reaction to the appearance of a signal and quick fixation of profits. People with this temperament are not characterised by patience and diligence, so an abundance of quick trades is needed.
More calm people scalping will seem too aggressive. The need to react quickly to changing market conditions will cause discomfort.
Tips for Scalping
• Trade only during the busiest times of the trading day to capitalize on high liquidity and tighter spreads.
• Be disciplined about exiting positions as soon as they show signs of going against you.
• Utilize trading platforms that enable quick entry and exit trades.
• Keep transaction costs low to maximize profits over many trades.
• Always monitor the market because this strategy requires constant attention
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• Position Trading
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