👈In the trading world, there are many methods and strategies, but rarely do we find a method that relies on speed and precision like the scalping strategy. Imagine you are a hunter of opportunities, not waiting for the prey for hours but seizing it in seconds or minutes to walk away with small but recurring profits.
💭What is scalping?
Scalping is a short-term trading style that relies on making small profits from minor price movements by executing a large number of trades throughout the day.
The duration of the trade is often between a few seconds to several minutes and rarely exceeds one hour.
💻How scalping works
🚦Scalping relies on three essential elements:
1. Speed of execution
You need a fast-responsive trading platform to execute orders instantly.
Any delay of a fraction of a second could mean missing the opportunity.
2. Accuracy of entry and exit
The scalper enters the trade at a moment they see fit based on price movement or technical signals.
Exiting is done quickly once the targeted profit is achieved (usually 0.1% to 0.5% of the trade value).
3. Strict risk management
Due to the large number of trades, stop loss is essential to protect capital.
The risk ratio in a single trade is usually low (1% or less of capital).
🏗️Tools used by scalpers
Technical indicators such as: moving averages, RSI, and MACD.
Short time frames like one-minute (1M) or five-minute (5M) charts.
Stop Loss and Take Profit orders
🤔Examples of scalping
Example 1 – In the cryptocurrency market
Let's assume the price of BTC/USDT is $60,000.
The trader noticed a rapid increase of $30 in one minute.
Buys at $60,000 and exits at $60,040, realizing a profit of $40.
Repeats the process 20 times a day to accumulate small profits that turn into a good amount with repetition.
Example 2 – In the Forex market
The EUR/USD pair price is at 1.1000 and the scalper notices a break of resistance level.
Enters the trade and closes it after the price moves to 1.1005.
Profit: 5 pips, but with a large trading volume, the profit becomes worthwhile.
💪Advantages of scalping
Quick and recurring profits
Not getting attached to trades for long periods
Minimal exposure to large market fluctuations
🚨Disadvantages of scalping
It requires high focus and quick decision-making.
Needs a trading platform with instant execution and low fees
Psychological pressure can be high due to the number of trades.
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💡Scalping is not for everyone, but it suits those who have calm nerves, quick wit, and strong technical tools. If you are looking for excitement and quick profits, scalping might be your preferred method, provided you master it and adhere to risk management.
