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Scalping

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165 views2 pages

Scalping

Uploaded by

Bs Kt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Scalping

1. Introduction

Scalping is a very short-term trading strategy that focuses on profiting from small price changes.
Scalpers quickly enter and exit trades, typically holding positions for seconds to minutes.

2. Key Characteristics

• Timeframe: Seconds to a few minutes.


• Frequency of Trades: Very high; scalpers may place dozens or even hundreds of trades
per day.
• Targeted Profit: Small profits (e.g., a few cents or pips), repeated many times.
• Precision & Execution: Fast execution speeds and tight spreads are critical.
3. Scalping Techniques

1. Market Making: Providing liquidity by placing limit orders at bid and ask prices, aiming
to profit from bid-ask spreads.
2. Order Flow Reading: Using Level II quotes and order flow to anticipate short-term
price moves.
3. Technical Patterns: Identifying micro patterns (e.g., micro support/resistance, small
breakouts) on ultra-short timeframes (1-minute charts).
4. Risk Management

• Strict Stop-Losses: Because profit targets are small, losses must also be small, so using
tight stops is essential.
• Broker Fees & Spreads: Transaction costs can eat into profits, so choosing a low-fee
broker with tight spreads is crucial.
• Emotional Control: Scalping can be intense and requires high focus to avoid emotional
or impulsive decisions.
5. Pros & Cons

• Pros:
◦ Multiple opportunities for small gains throughout the trading session.
◦ Positions are closed quickly, so less exposure to market swings.
• Cons:
◦ High stress and time intensity.
◦ Transaction costs can accumulate quickly.
◦ Requires fast internet and reliable, low-latency execution.
6. Conclusion

Scalping can be rewarding for traders who enjoy rapid trading and have the discipline to stick to
strict risk management rules. It demands quick decision-making, fast execution, and absolute
focus.

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