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Understanding Scalping Fundamentals
Scalping is a trading strategy that focuses on making numerous small profits on minor price changes, typically holding positions for seconds to minutes. This approach requires precision, quick decision-making, and excellent risk management.
Key Scalping Principles
Entry Criteria
- •Tight spreads and low commissions
- •High liquidity markets
- •Clear trend direction
- •Strong volume confirmation
- •Multiple timeframe alignment
Risk Management
- •1:1 or 1:2 risk-reward ratios
- •Maximum 1% risk per trade
- •Quick stop losses
- •Position size scaling
- •Daily loss limits
⚡ High-Frequency Scalping Techniques
📊 Momentum Scalping
Strategy Overview:
- • Enter on momentum breakouts
- • Use 1-5 minute timeframes
- • Target 5-15 pip moves
- • Exit on momentum exhaustion
Best Markets:
- • Major forex pairs
- • High-volume crypto
- • Liquid indices
📈 Range Scalping
Strategy Overview:
- • Trade within defined ranges
- • Buy support, sell resistance
- • Use 15-30 minute charts
- • Target 3-8 pip moves
Best Conditions:
- • Sideways markets
- • Low volatility periods
- • Clear support/resistance
🛠️ Essential Scalping Tools
📊 Technical Indicators for Scalping
Entry Indicators
- • EMA Crossovers: 9/21, 5/13 for quick signals
- • RSI: 14-period with 30/70 levels
- • Stochastic: 5,3,3 for momentum
- • MACD: 12,26,9 for trend confirmation
- • Volume: Volume-weighted average price
Exit Indicators
- • ATR: Dynamic stop losses
- • Bollinger Bands: Price channel exits
- • Parabolic SAR: Trend reversal signals
- • Time-based: Maximum hold time
- • Profit targets: Fixed pip targets
💰 Risk Management Excellence
🛡️ Position Sizing Rules
Account Risk Management:
- • Maximum 1% risk per trade
- • Daily loss limit: 3% of account
- • Weekly loss limit: 5% of account
- • Stop trading after 3 consecutive losses
Position Size Formula:
- • Risk Amount ÷ Stop Loss Distance
- • Example: $100 risk ÷ 10 pips = 1 lot
- • Adjust for leverage and margin
⏱️ Time Management
Session Planning:
- • Trade during high liquidity sessions
- • London/New York overlap (2-4 hours)
- • Avoid news events and low liquidity
- • Take regular breaks every 2 hours
Trade Duration:
- • Maximum hold time: 30 minutes
- • Average hold time: 5-15 minutes
- • Exit if no profit within 10 minutes
🚀 Advanced Scalping Strategies
🔄 Multi-Timeframe Scalping
Timeframe Hierarchy
- • 1-minute: Entry and exit timing
- • 5-minute: Short-term trend
- • 15-minute: Support/resistance levels
- • 1-hour: Overall market direction
Execution Strategy
- • Only trade with higher TF trend
- • Use lower TF for precise entries
- • Confirm with multiple timeframes
- • Improves win rate by 15-20%
📊 News Scalping
Pre-News Setup
- • Position before major news
- • Use wider stops (20-30 pips)
- • Target 50-100 pip moves
- • Exit within 5 minutes
Risk Considerations
- • High slippage risk
- • Gap risk on stop losses
- • Reduced position sizes
- • Only for experienced traders
Ready to Master Scalping?
Scalping requires discipline, quick reflexes, and excellent risk management. Start with small position sizes and gradually increase as you gain experience.