## Scalping – Scalping Strategy
Scalping is one of the fastest trading strategies, involving a large number of transactions in a short time – usually from a few seconds to a few minutes. The main goal is to achieve profit from very small price movements, which accumulate over multiple transactions throughout the day.
### Key Elements of Scalping
1. Frequent Transactions
- A scalper executes even dozens of transactions daily.
- Each brings a small profit, but their sum can be significant.
2. Small Price Movements
- The strategy is based on predicting and exploiting small price changes.
- Profits and losses are small, but the number of transactions is large.
3. Quick Decisions
- Requires quick reactions and decision-making in fractions of a second.
- Discipline and emotional control are of immense importance.
### Popular Types of Scalping Strategies
- Market Making: Setting buy and sell orders on both sides of the order book to profit from the difference between the buying and selling price (spread).
- Breakout Scalping: Trading at the moment when the price breaks a significant support or resistance level, often with increased volume.
- Momentum Scalping: Entering trades in line with a strong trend, confirmed by technical indicators such as RSI or moving averages.
- Mean Reversion Scalping: Entering a trade when the price deviates significantly from the average, assuming it will return to it (e.g., using Bollinger Bands indicators).
- News Scalping: Exploiting increased volatility during important economic announcements or company reports.
- Market Depth Scalping: Analyzing order levels (Level II) and trading in the direction of large orders.
### Most Commonly Used Technical Indicators
- Moving Averages (EMA/SMA): Help determine short-term trends.
- Bollinger Bands: Indicate overbought/oversold levels.
- RSI (Relative Strength Index): Helps identify trend reversal points.
- Support and Resistance Levels: Help determine entry and exit points for trades.
### Advantages and Risks
Advantages:
- Small profits accumulate to a larger result.
- Low exposure to large losses due to the short duration of trades.
- It's easier to find small price movements than large trends.
- Possibility of automating strategies.
Risks:
- High transaction costs (commissions, spreads).
- Requires continuous attention and quick reactions.
- A very stressful trading style.
- Susceptibility to so-called slippage (price change between the time of order and its execution) and delays in order execution.
### Example Course of Scalping
1. Determining the trend: Analyzing a higher timeframe to establish the overall market direction.
2. Identifying key levels: Marking support and resistance or the range of the session opening.
3. Confirmation on a lower timeframe: Waiting for confirmation of the entry signal on a shorter timeframe.
4. Execution of trades: Entering with a tight stop-loss and quickly exiting after achieving a small profit.
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Scalping is a style for disciplined individuals who are stress-resistant and make quick decisions. It is not suitable for every trader, but with the right strategy, it can be very effective.