Is Scalping your Strategy? Find out if you have what it takes to trade in the short term

Essential Requirements Before Starting Scalping

Before diving into the world of scalping trading, it is crucial to honestly question yourself: am I truly prepared? This trading strategy demands more than just theory; it requires a balance between technological tools, market knowledge, and especially mental stability.

Answer these key questions sincerely:

• What are my real financial goals with this tactic?
• How much capital am I willing to risk without affecting my personal finances?
• Do I have the necessary time to analyze charts during London and New York sessions?
• How do I mentally handle pressure, losses, and periods of inactivity?
• Can I maintain discipline even during streaks of consecutive losses?

The psychological factor is as crucial as the tools you use. You will need exceptional self-control, the ability not to deviate from your trading plan regardless of whether you are winning or losing, and the skill to properly manage your capital, determining what percentage to allocate to each (lot size), how much you are willing to lose (stop loss), and what profits you seek (take profit).

What is scalping: A comprehensive definition

Scalping is, in essence, a tactic where the trader opens positions aiming to capture profits in extremely short time frames. Unlike day trading or swing trading, which can keep positions open for hours or days, scalping focuses on trades lasting from seconds to a few minutes.

This approach represents the fastest way to multiply or lose capital. The strategy involves executing multiple transactions during the same day, each generating modest gains that, accumulated, can result in significant returns. What sets this method apart is the intensity of dedication required: you practically need to be available throughout the trading session when markets are active.

Tools that are indispensable

To successfully apply scalping trading, technology is your most important ally. Without it, you simply cannot compete in markets that move at millisecond speeds.

Real-time charting platform: You need a system that reflects quotes without delays, such as TradingView or other specialized services. Charts should allow analysis with candles of 5 minutes or less; nothing longer than 15 minutes.

Direct connection to the broker: The trading application must be linked to your broker’s servers with minimal latency, allowing you to open positions in less than a second.

Robust technical infrastructure: High-speed internet is non-negotiable. A disconnection or delay could result in your order being executed at a completely different price than planned. Your device (computer or mobile) should have decent specifications, not necessarily top-of-the-line.

The 4 fundamental pillars of scalping trading

Liquidity: Your best advantage

This concept represents the supply and demand of an asset, that is, how easy it is to move the price. The forex market is the most liquid globally, with traders constantly generating movement in quotes. Greater liquidity means more buying and selling opportunities every minute.

Volatility: The double-edged sword

While liquidity is an ally, volatility can be an adversary. Sudden price movements over short periods create significant risks. Cryptocurrencies, for example, can experience changes of 200 USD in a minute. For scalping, a less volatile market is usually preferable.

Spreads and commissions: Costs that reduce profits

Every broker applies a spread, the difference between buy and sell price. For example, in EURUSD: Sell 1.05430 – Buy 1.05424, resulting in a spread of 0.6 pips. These costs accumulate quickly when you make 10+ trades daily. Researching brokers with reduced spreads is essential for profitability.

Schedule: Timing is everything

The best trading sessions occur when the London and New York markets are active. During the Asian session, movements are so small that scalping becomes impractical. Trading at the right time multiplies your opportunities.

Which assets are best suited for scalping

Currencies and indices are optimal: they operate Monday to Friday, offer high liquidity, and controlled volatility. It is recommended to focus on pairs with the US dollar (USD) combined with euro, yen, or pound.

Stocks have disadvantages: only 8-hour sessions, lower liquidity, and mainly limited buying opportunities.

Cryptocurrencies are a special case: extremely volatile but tradable 24/7 with good liquidity. Brokers apply higher spreads due to this volatility. Only recommended for experienced traders.

Technical indicators that work

Exponential Moving Average (EMA)

Shows the trend of the average price over time. Strategies suggest entry opportunities when two EMAs of different periods cross.

Relative Strength Index (RSI)

Measures impulses in price changes. An RSI above 70 indicates overbought (possible sell), while values below 30 indicate oversold (possible buy).

Stochastic

Similar to RSI but measures trend duration. Uses values of 80 (overbought) and 20 (oversold) as references.

Moving Average Convergence Divergence (MACD)

Generates clear signals when its lines cross, indicating trend changes.

Practical example of scalping trading in action

Suppose EURUSD with prices: Sell 1.05430 – Buy 1.05424.

Your plan: $100 account, 2% risk per trade ($2). Profit target 1:1 (win $2).

The trade:

• Buy 0.01 lots at 1.05430
• Stop loss placed at 1.05230
• Take profit at 1.05630
• Price reaches 1.05630 and closes successfully
• Result: 20 pips gained = $2

New balance: $102. Each successful close yields a 2% return; each stop loss close results in a 2% loss. Potentially, you execute 10+ trades in a day.

Advantages that make scalping attractive

• Reduced risk due to short position durations
• Potential for multiple gains in a single day
• Flexibility to diversify across several currency pairs
• Total autonomy in your decisions
• Immediate feedback and results

Disadvantages you should seriously consider

• Requires extreme concentration; low liquidity days limit opportunities
• Cumulative commissions can erode profits with high volume
• Demands 6-8 hours daily glued to the screen analyzing and executing
• Cumulative stress from multiple consecutive losses can affect confidence
• The potential to exceed your 2% risk in bullish streaks can wipe out previous gains

Your roadmap to scalping trading

Before investing real money, dedicate yourself to education: learn fundamental concepts such as pip, lot size, leverage, spread, liquidity, volatility, commissions, conditional orders (buy stop, buy limit, sell stop, sell limit).

Then, practice on demo accounts with virtual money. You will make mistakes without real consequences, experiment with technical analysis tools like Fibonacci, support, resistance, and the indicators mentioned.

Subsequently, evaluate multiple brokers assessing conditions, spreads, platform speeds, and support. Never stop learning even after becoming profitable.

Final warning: Trading is not a guaranteed income source. Many people lose money entirely. Without mastery of stop loss, you could lose more than you invested (some brokers protect by closing positions before negative balance). If you are patient, disciplined, and follow these recommendations, you will find scalping trading a rewarding activity.