Posted by Key Takeaways
- Scalping is a very short-term trading strategy
- The profit target of each scalping position is very small, and the way to make money is to accumulate small amounts into large amounts
- Scalping strategy is not suitable for all traders and requires strict compliance with trading discipline
Concept understanding
Scalping, also known as scalping, stock flipping, etc., is an ultra-short-term trading strategy.
The essence of scalping is to open a large position in a very short period and quickly complete the buying and selling transactions, making only a small profit on each transaction, making multiple transactions during the day, and never holding positions overnight.
Scalping Trading Strategies and Techniques
Scalping is the short-term form of day trading, specializing in profiting from small changes in an asset’s price.
The pace of scalping trading is very fast, and sometimes traders are required to make trading decisions in just a few seconds. And which requires super concentration and judgment.
Investors who are skilled in scalping strategies are often proficient in various technical analyses and multiple trading methods.
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 Bands, MACD, RSI , etc.
A commonly used scalping trading technique is to set a profit target. Usually 1% or 0.5%, track individual stocks that break through the intraday highs or lows. And use Level 2 quotes to place orders.
In addition, some scalpers will pay attention to current news or industry trends in real time and bet on some events that may happen. As long as the events happen as expected, they are expected to bring scalping trading opportunities.
Pros and Cons of Scalping
An important advantage of the scalping strategy is that the relatively small transaction size means less exposure to risk. This provides more trading opportunities because it is easier to enter the market when the price fluctuates slightly.
The disadvantage of scalping strategy is that strict trading strategy and discipline are not suitable for everyone. If the market changes, once the trader does not follow the market to react in time, he may suffer huge losses.