A Jeweler’s Precision: Scalping Method and Its Key Features
Scalping is often cited as one of the popular trading strategies, so it is high time we have a closer look at it. With some experience and trading practice, you’ll be able to use it with benefit for yourself.
Scalping belongs to short-term strategies, which means that positions are open for a day or so, and the trade is closed together with the closing of the daily session. From this viewpoint, this strategy is micro-trading, because scalping positions are open for 2-3 minutes only. A day trade can include hundreds of such positions, and with leverage and some money, it can bring you visible revenue. So do not take it lightly and get versed in the skills necessary for doing it right.
Personal Traits Of A Scalper
First of all, it requires a certain mindset. If you hesitate before making a decision, even what to have for dinner, scalping is not for you. If you are prone to panicking or FOMO, scalping is not for you. If you cannot take some loss before you gain – yes, steer clear of scalping (at least, now). As a scalper, you need to be able to act upon the slightest price cue, to do trading firmly and in a disciplined way, and to take losses calmly. They are inevitable, although temporary, so be sure to use instruments that counter this risk.
This strategy is time-consuming because you have to pay attention to the charts all day long. So treat it like a job. But it is not nearly as boring as traditional mid-and long-term strategies.
Technical Skills To Have
To do scalping successfully, you need to know your tools like a good musician knows the instrument. First, you have to learn about indicators, their meaning, and how to use them on the trading platform you have chosen. Opening and closing a position should happen momentarily, almost intuitively, because every second counts.
You need to know what currency pairs are volatile enough to make room for profit-making. You need to know when to trade because markets are in full swing, and when to take a break because it is lunchtime in the trading zone you work in.
Finally, you need to thoroughly investigate trading indicators, their meaning, features, and technical realization on the platform.
Finally, scalping is a strategy that is really easy to automate with the help of trading programs. It may not be the most reputable thing, but it is not illegal and many traders rely on it heavily. Basically, it is a program that opens and closes positions instead of you, according to the settings you’ve chosen.
Key Indicators To Use
The simplest way to practice scalping for beginners is to use moving averages (MA). These averages indicate the price fluctuation over a given time, and if you put one MA over another you’ll see mini-trends. They begin and end at the cross points of two MAs. Your task is to understand where the trend is going in every case, notice the recurrence and fine-tune your trading after this recurrence.
To understand it fully, you’ll have to read about scalping strategy in more detail, but here’s an example to get you started.
For example, select MA of period 7 and MA of period 14 and tick the box of exponential method (to do it, you have to know the functionality of a trading platform like you know your house).
You will see two lines that intersect regularly. The pattern of intersection – what line is above the other and what happens next – prompts you what to do. It may be so that when MA 7 is above MA 14, the price goes down (temporarily) and it makes sense to sell. If when MA 7 is below the price will go up, it is a cue to buy. Such fluctuations happen multiple times a day, and with patience and decisiveness, you’ll profit from them.
One last tip: before you invest real money, do some demo trading. It will cost you nothing, and it will save you lots of neurons and cash. Whether with scalping or sing trade, practice beats everything and helps you win against all odds.