Scalping is a high-frequency trading strategy aimed at quickly profiting from small market price fluctuations. Below is my operational process and risk management experience sharing:
Operational Process: First, choose trading instruments with high liquidity and low spreads, such as EUR/USD or gold, suitable for the fast pace of scalping. I use 1-minute or 5-minute candlestick charts, combined with technical indicators (such as moving averages, RSI, and Bollinger Bands) to identify short-term trends and overbought/oversold areas. When entering a trade, focus on key support/resistance levels, quickly set profit targets of 5-10 pips, with stop losses usually set at 3-5 pips. Trade execution relies on low-latency platforms to ensure orders are filled quickly.
Trading Strategy: I prefer the "breakout strategy," entering trades in the direction of the price when it breaks out of a short-term consolidation range, confirming signals with a surge in volume. Another strategy is "rebound trading," buying at support levels or selling at resistance levels to profit from price pullbacks. Each trade's position size is controlled at 1-2% of account funds to avoid excessive leverage.
Risk Management: Strictly enforce stop losses to prevent small losses from escalating. Set a maximum daily loss limit (such as 3% of the account), and stop trading once reached. Avoid trading during major news releases to mitigate the risk of extreme volatility. Additionally, maintain emotional stability and do not change strategies due to consecutive wins or losses.
Scalping requires extreme discipline and focus, making it suitable for experienced traders. By continuously optimizing strategies and implementing strict risk controls, one can achieve stable profits in fast-paced markets.