Let’s explore what scalp trading is and the ways beginners can utilise this short-term strategy.
On their own, these scalp trading positions don’t bring much of a profit. However, scalpers usually engage in a high number of trades every day. This high volume of trading increases profits throughout the trading session.
Some scalpers seek to hold a position for fifteen seconds or less, while others will hold for a couple of minutes — regardless, scalpers should not hold positions overnight.
So then, what is the best scalp trading strategy?
The indicator has two lines — the faster, more responsive %K line and the slightly slower, less responsive %D line. It is the relationship between these two lines that the scalper focuses on, as each line calculates the moment of the underlying market over slightly different time frames.
As an oscillator, its readings will always be between 0 and 100. This indicator is frequently used as an “oversold” (below 30) and “overbought” indicator (above 70). However, that is not the way a scalper will use the oscillator.
A scalper holds onto the position until the lines cross the other way and hold flat, awaiting a new signal. The scalper will buy long when the fast line crosses above the slow line and hold that position until the fast line crosses below the slow line. A short position is initiated when the fast line crosses below the slower line and is closed when the fast line crosses back above the fast line.
When the short-term moving average line crosses over the longer-term one, it is a bullish signal. Scalpers will enter the market seeking quick profits. When the longer-term average crosses below the short-term line, you might consider opening a short position to profit from a downward market move.
You can use simple moving averages (SMAs) or exponential moving averages (EMAs), which are weighted to give more value to recent price movements. EMAs are more sensitive, so many scalpers prefer them because they allow them to enter the market slightly earlier.
Like the stochastic strategy, you’ll want to exit the trade as soon as the indicator reaches the other extreme.
We also provide access to 10+ liquidity providers and use NY4 servers to ensure the quick execution of your trades.
Some traders also use automated strategies that handle execution automatically once all market conditions are met for a trade.