Scalping is a trading style adopted by many stock market traders; here you earn profit from short-term investments. A scalper needs to be very diligent and disciplined to notice every price change in the financial market. They take the opportunity of these price changes and make small profits in various small deals. Visit مجموعة متعددة البنوك
Instead of waiting for a huge opportunity a scalper trades in several small deals and earn profit in volume. Because of this reason scalping trading requires a lot of involvement and experience to identify the market trends. Even in a quiet market small price changes take place regularly. A skilled scalper grabs those price changes to earn small profits in a short time. But they have to be really careful because one huge loss can wipe out all the small profits.
To make such quick decisions every scalper uses many technical strategies and tools. Scalpers are at minimal risk of facing adverse market situations, as they have very low exposure in the market. In this article let us see the 4 simple scalping trading strategies that work pretty well in the financial market.
4 Top Scalping Strategies
Scalp Trading Using Stochastic Oscillator Strategy
Traders can use a stochastic oscillator for scalp trading. The stochastic can predict to provide you with information about the potential turning points. It can do it by comparing the prices of a security to its recent range. Using such an oscillator helps to capture the price movements in the financial market.
An arrow mark will show the stochastic. Here a trade should have an exit point at the top end of the stochastic range. There may be two probable situations- one is you have to ‘buy the dips.’ And the other one is to ‘sell the rallies.’ Therefore a scalper must look for bearish crossovers constantly.
Scalp Trading Using The Moving Average Strategy
The next useful method most scalpers use is to calculate the moving average. Usually, they calculate the average between two short-term deals and one relatively much longer-term deal. Comparing these three they try to indicate the trend of the market. An important thing to remember is that these trades change with the trend.
You have to be consistent with your strategy and not try to catch every possible move. In scalping, a proper risk management plan must be ready with you all the time. You must avoid huge losses, otherwise, all your smaller wins to be annihilated. To calculate the moving average you have to understand charts.
Scalp Trading Using The Parabolic SAR Strategy
The parabolic SAR is an essential Indicator in scalping trading. The indicator highlights the direction in which the market is moving. It also helps to provide an entry and exit point. SAR is the short form of stop and reversal. The indicator is shown as a line of dots just above or below the price bars.
There are two types of dots –one is bullish and the other is bearish. The dots that are below the price bar are called bullish and the dots above the price bar are called bearish. The change in the position of the dots suggests that there is a change soon taking place in the market trend.
Scalp Trading Using The RSI Strategy
Another popular strategy to use in scalping trading is the RSI Strategy. A scalper can use it to find the entry point that goes with the trend. If RSI drops as low as 30 and then starts to move above, a possible entry point is created. It is the chance a scalper may take to invest using the RSI strategy.
Similarly, if the RSI rises high, moves towards 70 and then starts to decline, a ‘sell the rally’ is created. These are opportunities a trader must understand and look for in the trends.
Things To Know Before Investing In Scalping Trading
- This kind of trading demands your time, as you have to be always cautious about the small price changes in the financial market. Traders who invest in long-term trades can step away from the platform but in scalping trading, you have to be always present. This trading style demands the full attention of the trader.
- You have to invest in several small trades throughout the day. And you have to be very careful not to lose your money because a huge loss can lead you to negative equity.
- You should have the ability to make a quick decision depending on the market situation. Your quick responses to market movements can only make you a successful trader. Market trends can change in a fraction of a second, so to capture the opportunity you must be really prompt.
- You must have knowledge about the financial market and any changes in the world that may make an impact on it. Therefore you have to always be updated about the market conditions and identify the market trends. To identify the market trends you must have experience and the right trading skills.
- Every national and international event can have a huge impact on the financial market. You better be aware of all these events and if you feel unsure restrict yourself from trading that day.
Scalping traders should have is a stringent exit strategy. Apart from the above scalping strategies, this is the most important one to have. Otherwise, a huge loss can wipe out all your small profits. Scalping trading is an activity that requires a lot of patience and discipline to become successful. Also, a scalper needs to have a quick response to market price changes.
If you want to do scalping trading you must be careful not to chase a deal. Chasing is one of the key reasons many traders face huge losses. They should have a strict ‘stop loss’ discipline. If you are interested in scalping you must have the market knowledge and skill to understand the market trends. Mindlessly buying and selling can prove harmful for you. You can use the above strategies to enjoy a successful journey in the trading business.