Scalping: Quick trading strategy for active traders

Is scalping really for you?

Before diving into the world of scalping, you need to be honest with yourself. Do you have the mental discipline to withstand 8 hours daily in front of screens? Is your initial capital outside of your priority expenses? Do you truly understand that you can lose everything? These questions are crucial because scalping is not easy money or freebies.

If you answered yes, keep reading. Otherwise, consider other strategies like swing trading or day trading, which require less time commitment but operate over longer periods.

What is scalping really?

It is a strategy where traders open and close positions in extremely short periods—seconds or a few minutes—to accumulate small but frequent profits. Unlike swing trading (which holds positions for days or weeks) or day trading (which closes everything at the end of the session), scalping is the fastest game in the financial markets.

The premise is simple: many small trades generate significant profitability if executed correctly. However, this speed is both an advantage and a potential trap.

Essential requirements for scalping

Technological infrastructure

You will need an ultra-quality internet connection—a latency of 5 seconds can mean losses. Your broker must have agile servers that execute orders in less than a second. Platforms like Tradingview offer live charts without delays, essential for analyzing 5-minute or shorter candles.

Your device (computer or mobile) does not need gaming processing power, but it cannot be insufficient either. A modern basic computer works perfectly.

Market knowledge

You need to understand technical terms: pip, lot size, leverage, spread, commissions, buy/sell stop, buy/sell limit, take profit, and stop loss. These are not optional—they are your operational vocabulary.

Even more critical: psychological preparation surpasses any technological tool. It requires absolute self-control, strict discipline, and the ability to stick to your strategy even during streaks of 5 consecutive losses or days when you gain easily. Emotional behavior destroys more accounts than the markets themselves.

Four pillars that determine success in scalping

1. Liquidity: Your best ally

It is the ease with which the price fluctuates according to supply and demand. Highly liquid markets (like forex) generate multiple opportunities daily. Low liquidity means few possible entries.

The global forex market is the most liquid. Cryptocurrencies also offer high liquidity, though with problematic volatility.

2. Volatility: The silent enemy

While liquidity is an ally, extreme volatility is an adversary. Bitcoin can change 200 USD in 60 seconds—great for profits, catastrophic for surprise stop losses.

Seek moderate volatility, not extreme. Conventional currencies offer this balance.

3. Spread and commissions: The hidden cost

The spread is the difference between buy and sell price. If EURUSD quotes at sell 1.05430 and buy 1.05424, your spread is 0.6 pips. Each broker applies different spreads. Wide spreads quickly erode scalping profits.

Broker commissions also matter greatly. Comparing brokers based on these parameters is mandatory.

4. Schedule: Not all moments are equal

When London and New York operate simultaneously (around 8:00-12:00 EST), liquidity multiplies. During Asian sessions, movements are so small that scalping becomes practically impossible.

After considering these factors, currencies and indices dominate successful scalping. Stocks (8-hour sessions, low liquidity), and cryptocurrencies (extreme volatility) pose greater challenges, although experts can master them.

Indicators guiding the scalper

Exponential Moving Average (EMA)

Visualize the trend by averaging recent prices. Popular strategies suggest opportunities whenever two EMAs of different periods cross. A 5-minute EMA crossing over a 20-minute EMA could generate a buy entry.

Relative Strength Index (RSI)

Measures momentum and trend changes. RSI above 70 indicates potential overbought (or sell opportunity), while below 30 suggests buying. This indicator is particularly useful in sideways ranges.

Stochastic

Works similarly to RSI but with different thresholds: 80 for overbought and 20 for oversold. Some traders prefer it because it offers slightly earlier signals.

Moving Average Convergence Divergence (MACD)

Detects divergence and convergence between two exponential moving averages. Each crossover of its lines generates potential entry or exit signals. It is especially valuable for identifying imminent trend changes.

Remember: no indicator is “better.” Your experience will determine which resonate with your operational style.

Practical example: How to execute a trade

Let’s take EURUSD with real prices:

• Sell: 1.05430
• Buy: 1.05424

Buy at 1.05430 (sell price). To generate profits, you need the quote to rise. Set a defensive stop loss at 1.05230 (risk 20 pips, approximately 2% of a 100 USD account with 0.01 lot size).

Your take profit (profit target) is set at 1.05630. If the market reaches that level, you automatically close and gain 20 pips, equivalent to 2 USD return (exactly 2% of risk).

Result: the account grows from 100 USD to 102 USD. If you achieve 10 similar trades in an 8-hour day, your account reaches 120 USD. This is the power of compounding in scalping.

Real advantages of scalping

• Limited risk due to short trades
• Potential gains amplified by multiplying daily trades
• Operational diversification across multiple currencies (EURUSD, GBPUSD, USDJPY)
• Total independence in your decisions
• Immediate results instead of waiting weeks

Disadvantages you cannot ignore

• Extreme concentration required during New York sessions (almost 8 hours nonstop)
• Cumulative commissions erode profits if the broker charges per volume
• Psychological stress after losing streaks
• Dependence on infrastructure without technological failures
• Adverse streaks that can demoralize even experienced traders

Steps before investing real money

First: Educate yourself through courses, seminars, and experts. Master the terminology: pip, lot size, leverage, spread, volatility, take profit, stop loss.

Second: Create a demo account. Practice without real money, make mistakes freely, experiment with different indicator combinations and assets.

Third: Master technical analysis tools: Fibonacci levels, supports, resistances, trend lines. Gradually integrate the mentioned indicators.

Fourth: Analyze brokers comparing spreads, commissions, platform speed, and account terms. Not all offer the same conditions.

Fifth: Constantly remember that not everyone profits from trading. Most lose. It is possible to lose more than your initial deposit if you abuse leverage. Some brokers close positions before the total collapse of the account (negative balance protection).

Patience, discipline, and continuous learning are your true assets in scalping. If you incorporate all these recommendations and maintain emotional composure, the trading world can be rewarding.