Scalping Trading Meaning, Example, Strategy 2023
Scalping has always been the talk of the town for the traders and in this blog we have tried to cover all the features, stratergies and example of this trading style. So if ever you also felt to trade in scalping or want to start Scalping as a trading option. do give this blog a read.
These days when the stock market is becoming a very popular and a very attractive career option and because of which the Stock market or rather say traders are coming up with new-new strategies and innovation ideas and methods. One Such Style is Scalping or Scalp Trading or Scalping Trading(different names to address).
What is Scalping and Scalper Trader?
Scalping is a method of making profit from a short amount of time. It's a method wherein a trader enters the market for a very short duration which can last for a few mins. or secs., (it is usually done with large amounts of quantity) booking the profit and exiting from the market usually this methodology believes in booking shorter multiple profits rather than booking a huge loss.
A Trader indulge in performing scalping is known as Scalper Trader or Scalper.
Scalping Trading Example
Trader “A” imposes scalping to profit through price movements for a Stock “Z” of “rupees 200”. The trader will buy and sell a massive amount of shares like 3000, and sell them during, when the price increases resulting in huge profits.
Let us now looks few of the key features of Scalping:-
- Small Profit Margin- A Scalper always aims at making profits from small fluctuations of the market rather than going for one significant high movements. It believes in making small profits throughout the day from the trades.
- High Frequency Trades- Scalping involves positions that are for a very short duration of time which can range from few seconds to few minutes, this features making scalping a very high frequency Trades and also setting them different from a long-term trading.
- Technical Analysis and Chart Patterns- For a scalper its very important to have a sound knowledge of Technical indicators, moving averages, candlesticks and chart patterns as they play a huge role in identifying the market trends and making decisions such as when to enter and exit,when to take trades and when and where to execute scalping trading strategy etc.
- Advanced Technology and Fast Execution- For Scalp Trading a good network or internet connection is a must so that a scalper trader can execute his or her trade without any delay. In scalping fast execution is a must as a seconds delay can also cost a huge loss.
- Significance on Psychological Discipline- As we all know trading in general needs a lot of discipline and emotional control as if not strictly following the trading plan one can meet a huge loss .Therefore specially performing Scalping Trading one should have psychological discipline.
Here let’s discuss few Scalping Trading Strategy/Strategies
- Scalping Divergence-In this strategy a scalper trader often enters the market when the price and indicators show conflicting signals. This strategy is performed when there is a divergence between price movements and technical indicators, such as the Relative Strength Index (RSI) and MACD.
- Scalping Double Tops and Bottoms- In this Strategy a trader looks for a formation of a double Tops(reversal signal) or a double bottoms(Trend continuation signal) these types of opportunities occur when a price breaks the neckline of these kinds of patterns.
- Support and Resistance Levels- in this strategy a trader looks for a key support and resistance levels so that a trader can enter a position when the price fluctuates to support or resistance to catch small price movements between the levels.
So here were a few scalping strategies that could be of great use when performing Scalping.
Now as we have come across the end of the blog let me recommend you few “Scalping Trading Book” which would come in handy to get a more depth knowledge of scalping
- Scalping Trading top 5 Strategies
- Scalping is fun! 1-4
- The Basics of Ninja Scalping
- The Profitable Scalper
- Scalping and Pre-set Value Trading
So here are a few insights of Scalping Trading which would be a guiding light for all the bidding scalpers or who are thinking to try Scalp Trading or Scalping Trading. Scalping Trading itself is a style which if done right can make a trader a profitable trader.
So one should take correct knowledge of it before starting this trading.
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