What is a scalping strategy?

Views 36KAug 9, 2023

Key points

● scalp trading is an ultra-short-term trading strategy.

● Every time strips his scalp, the profit target of each opening is very small, and the way to make money is to make a Mickle add up.

● scalping strategy is not suitable for all traders and needs to strictly observe trading discipline.

Concept understanding

Scalping, also known as hat grabbing, stock reselling, etc., is an ultra-short-term trading strategy.

The essence of scalping trading is to open a large position in an ultra-short period of time, and quickly complete the buying and selling transactions, each transaction only makes a small profit, many transactions within the day, never hold the position overnight.


Strategies and skills of scalping trading

Scalping is the shortest form of intraday trading, specializing in profiting from small changes in asset prices.

Scalping trading is very fast-paced, and sometimes requires traders to make trading decisions in just a few seconds, which requires great concentration and judgment.

Investors who are adept at using scalping strategies tend to be proficient in a variety of technical analysis and trading methods.

For example, in order to accurately track the support and resistance levels of price fluctuations, traders will use a combination of momentum indicators such as moving averages, Bollinger lines, MACD, RSI and so on.

A common scalp trading technique is to set a profit target of 1% or 0.5%, track stocks that break through intraday highs or lows, and use Level 2 quotes to place orders.

In addition, some scalping traders follow current events or industry developments in real time, betting on possible events, which are expected to lead to scalp trading opportunities as long as they happen as scheduled.

Advantages and disadvantages of scalping

An important advantage of the scalping strategy is the relatively small size of the deal and the small exposure to the wind. Because small fluctuations in prices make it easier to enter the market, it provides more trading opportunities.

The disadvantage of the scalping strategy is that strict trading strategies and discipline do not apply to everyone. If the market changes, traders are likely to suffer huge losses if they fail to follow the market in time.

Disclaimer: The above content does not constitute any act of financial product marketing, investment offer, or financial advice. Before making any investment decision, investors should consider the risk factors related to investment products based on their own circumstances and consult professional investment advisors where necessary.