Assume that you took a trade and within a minute of taking that trade, you are making a 2% profit. Now, because you want to earn a big profit, you won’t be happy with 2%, so you stay in that trade. And after 10 minutes, you see that your 2% profit has turned into a 15% loss. This is something that happens with traders again and again.
This is something that happens with traders again and again first you see a profit and then it turns into a loss. So if you are an investor and don’t know what is scalp trading or scalping? what are the pros and cons of scalp trading? How To do Scalping and what are the best strategies for scalping? then you should definitely check out one by one
What Is Scalp Trading Or Scalping?
So, first of all, you should be clear that scalp trading or scalping is not a trading. It is a way of trading, a style, in which traders enter a trade for a few seconds to a few minutes, capture the movement in a small price there, and leave that trade. That is, we try to make a profit from small price changes.
in this. So, you can apply this style in option trading, intraday trading, forex trading, and all kinds of trading. Because you just have to capture small points in this. The logic behind this is that, suppose a big movement is coming in a share, then it is easy to capture a small movement from that big movement.
Because in order to capture a big movement, sometimes such losses also happen. Apart from this, in every share, the small price movements are very frequent. You see all day that every share or the price of the option increases or decreases a little.
So, you can easily capture those small points. And with such small profit trades, you can earn a lot of money. In one line, scalping means, keep adding small and keep making large.
Pros And Cons Of Scalp Trading?
So if you are doing the scalp trading then you must be aware about the pros and cons that are associated with the scalp trading or scalping which are as follows:
| Pros of Scalp Trading | Cons of Scalp Trading |
|---|---|
| – Quick profits from small price movements | – High transaction costs due to frequent trades |
| – Reduced exposure to market risks | – Intense time and effort required for constant monitoring |
| – Enhanced focus and discipline | – Vulnerability to slippage in volatile market conditions |
| – Flexibility in capital management | – Risk of over-trading leading to substantial losses |
| – Market versatility across various assets | – Dependency on execution speed for swift order execution |
- The biggest advantage of scalping is that, because you stay in a trade for just a few minutes, the chances of unfavorable events are very low in less time. This reduces your risk exposure, and the probability of loss is also reduced.
- Even though you will have small profits, but the probability of profit will be high.
- You will see big movements or spikes in the graph, which you see them occasionally.
But the small movements are very frequent. So, you will get such trades very easily. So, what is scalping? What are the pros and cons of scalping what are the benefits of scalp trading? now the question arises, how to do scalping?
How To Do Scalp Trading?
So, as told scap trading or scalping is just a way of trading. So, you can do it in intraday trading, in option trading, in forex trading too.
You just need its strategies for this, in which you can capture small points. So, now I will tell you some basic scalping strategies.
Scalp Trading or Scalping Strategy
The best strategy is, you have to go to the indicator section. After going here, you have to apply two exponential moving averages. So, I have written an EMA.
So, now you can see two exponential moving averages in the chart. So, in this, we have to change one exponential moving average to 5 periods. So, we will change the length to 5 in the input. And here, we will change the style to green, and we will increase the thickness too. So, now you can see the green line.
This is our 5 period exponential moving average. And after this, we will change the other exponential moving average to 20 periods. So, here, we have changed the length to 20. We will change the style to blue, and we will increase the thickness too. So, this is a very simple and basic strategy, which is also called moving average crossover.
This, we have to buy when our 5 period exponential moving average cuts the 20 period moving average upwards. And sell when our 5 period moving average cuts the 20 period moving average downwards. So, in this case, you would have bought here, and after that, you could have captured a lot of points.
Conclusion
In short, scalp trading (or scalping) is a rapid-form aiming at tiny price changes in The strategy of the trading. Despite offering per minute cost changes and quick returns, it also takes extreme concentration and discipline plus considerable time and resources to invest.
Transaction costs and emotional pressure are two down sides. In scalp trading, it is essential to have a stable strategy, mature technology, and effective risk control. Whether you like its fast pace or are worried about the energy and aptitude needed for scalping, knowing more about this practice could help your trading choices.