Scalping trading

Scalping is trading for very small price moves. A typical scalp aims for a few ticks or a fraction of a percent and lasts from several seconds to a few minutes. A scalper may make dozens of trades in one session.

The idea is that small moves happen far more often than large ones. The scalper gives up the big move in exchange for many small ones and for very short exposure to the market.

Scalpers trade the most liquid hours, when the spread is tight and orders fill fast. The trading sessions guide shows when the main markets overlap.

• 1-minute chart – the main chart for most scalpers.
• Tick and seconds charts – for the fastest trades, where each candle is a set number of trades or seconds.
• 5-minute chart – slower scalps and the nearest levels.
• 15-minute and 1-hour charts – context only: the trend of the session and the levels that matter.

• Pick a liquid market with a tight spread – major forex pairs, large stocks, index futures, top crypto pairs.
• Mark the session levels on a higher chart: the high and low of the day, the previous close, VWAP.
• Wait for price to reach a level or to start a short burst away from it.
• Enter with a defined stop a few ticks away. The stop is placed with the order, not after it.
• Exit at a fixed small target or at the first sign that the burst is over.
• Stop for the day at a preset loss limit.

Every trade pays the spread, a commission or fee, and sometimes slippage. In scalping these costs are large next to the target. If a scalp aims for 0.20% and the round trip costs 0.08%, the costs take 40% of the gross result of a winning trade and add to every losing one.

This is why scalpers care about fee tiers, maker and taker rates, order types and the speed of the platform more than other traders do.

• Spread – the gap between bid and ask, paid on entry and exit with market orders.
• Commission or exchange fee – charged per trade or per volume.
• Slippage – the difference between the expected price and the fill in a fast market.
• Funding or financing – small for trades this short, but leverage magnifies every other cost.

Scalping is a form of day trading, since positions are closed the same day. Slower intraday methods are described in day trading strategies, and multi-day holding in swing trading.

• Holding time – a scalp lasts seconds to minutes. A day trade lasts minutes to hours.
• Number of trades – a scalper may trade dozens of times a day, a day trader a few times.
• Target – a scalp takes a few ticks. A day trade aims for a larger part of the day's range.
• Costs – they weigh most in scalping because the target is the smallest.
• Attention – scalping needs full focus for the whole session.

• VWAP – the average price of the session weighted by volume, a common reference line.
• Exponential moving averages with short periods – direction of the last minutes.
• Volume – bursts of activity that start short moves.
• ATR – the size of a normal candle, used to set realistic stops and targets.
• Order book and time and sales – many scalpers read them alongside the chart.

• Ignoring costs – a method that looks fine before fees can lose after them.
• High leverage – a small target tempts traders to use large size, and one fast move erases many wins.
• No hard stop – in a seconds-long trade there is no time to think about an exit.
• Trading thin markets or quiet hours, when the spread is wide.
• Overtrading after a loss to win it back.
• Letting a losing scalp turn into a long hold.