Scalping Trading Strategy
Scalpers aim to profit from extremely small, rapid price movements by holding positions for seconds to minutes. They execute many trades per session, each targeting small gains that add up over time.
Scalping is an ultra short-term trading strategy that targets very small price moves (1–10 pips in Forex or 0.1–0.3% in stocks) by executing high-frequency trades throughout the trading session, relying on tight spreads and fast execution.
Entry Setup Rules
- 1.Trade only during peak liquidity sessions (London-NY overlap)
- 2.Identify micro support/resistance on 1M–5M chart using Level 2 order book
- 3.Enter on 1M momentum candle in trend direction
- 4.Target: 3–7 pips for Forex, 0.1–0.3% for stocks
Exit & Target Rules
- 1.Stop Loss: 3–5 pips maximum (tight execution required)
- 2.Take Profit: First target hit immediately — no holding for larger moves
- 3.Maximum 3 consecutive losses → stop trading for the session
Real Market Setup Example
EUR/USD is trending up on the 5M chart during London session. Price pulls back to the 5M 20 EMA at 1.0840. A 1M bullish candle closes above 1.0841. Scalper enters long at 1.0841, SL at 1.0835 (6 pips), Target at 1.0850 (9 pips). Position closed in 4 minutes.
Advantages
- • Multiple profit opportunities within a single session
- • Positions rarely held through major news events
- • Capital not exposed for long periods
Common Pitfalls to Avoid
- • Scalping during low-liquidity periods with wide spreads
- • Using a standard spread broker instead of an ECN account
- • Not enforcing maximum daily loss limits per session
Calculate Risk for this Setup
Ensure your position size stays within your 1% risk threshold.