Scalping
Scalping is an ultra-short-term trading strategy that aims to profit from small price movements. Scalpers make many trades per day, each targeting small gains that compound over time.
How It Works
Scalpers enter and exit trades within seconds to minutes, capturing tiny price movements. They rely on high-probability setups, quick execution, tight spreads, and high volume. The strategy requires intense focus, fast decision-making, and strict discipline.
Key Principles
- 1.Many small wins add up
- 2.Cut losses immediately - no hesitation
- 3.Trade high-liquidity instruments only
- 4.Commission and spread must be minimal
- 5.Focus and discipline are essential
Entry Signals
- ▲Price hitting short-term support/resistance
- ▲Order flow imbalance
- ▲Very short-term moving average cross
- ▲VWAP bounce
- ▲Level 2 order book signals
Exit Signals
- ▼Target hit (often just a few ticks)
- ▼Any sign of reversal
- ▼Time in trade exceeds plan
- ▼Momentum fading
- ▼Maximum loss reached
Risk Management
- 🛡️Strict maximum loss per trade
- 🛡️Maximum daily loss limit
- 🛡️Position size appropriate for volatility
- 🛡️Never hold through news
- 🛡️Stop trading if losing focus
Best Markets
Common Mistakes
- ✗Holding losers hoping for recovery
- ✗Trading illiquid instruments
- ✗Ignoring transaction costs
- ✗Overtrading after losses
- ✗Not having defined targets
Scalping FAQs
Common questions about this strategy
Scalping can be profitable but has high barriers: you need low commissions, fast execution, high-liquidity instruments, and exceptional discipline. Most beginners lose money scalping.
Scalpers need: a fast, reliable trading platform, Level 2/order book access, low-latency internet, multiple monitors, and preferably direct market access (DMA). Commission costs must be minimal.
Start by watching price action and tape reading without trading. Practice in simulation. Master one setup before adding others. Only move to real money with very small size after consistent sim profits.