Thu. Feb 21st, 2019

Strategies for intraday trading: scalping

Strategies for intraday trading: scalping


The intraday trading It is a highly complex investment strategy that consists of opening and closing positions within a single day. It is, therefore, a very short-term tactic with a low cost in terms of commissions (you do not have to pay overnight) but with a high risk of losing the investment.

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The intraday trader is subject to a high level of stress since he has to be aware of the movements of the market at all times to be able to make decisions in a matter of a few minutes, even seconds. Therefore, not only must have a broad knowledge of the market and be able to predict the trend that will follow, but also must have a great capacity for concentration and tolerance to risk.

Within intraday trading, one of the most common strategies is scalping, which consists of opening and closing operations in very short periods of time, seconds or minutes. Given the speed with which positions are taken, it is necessary to have high quality equipment and very fast trading platforms. Likewise, the hiring of a broker that has this type of services is required since not all of them include it in their offer.

With scalping, the investor tries to take advantage of asset movements in both bullish and bearish trends. Therefore, it is advisable to operate in markets with high liquidity and high volatility. In this regard, although you can use this strategy in any market, it is advisable to put it into practice in Forex for being the most liquid.

In this sense, the so-called senior Forex pairs are the most traded and popular in the world and, therefore, have more liquidity and volatility: GBP / USD; CAD / USD; EUR / USD; USD / JPY; CHF / USD; AUD / USD; NZD / USD.

One of the advantages to highlight of this trading technique is that it facilitates more entry opportunities and therefore generate small profits. Some benefits that, together, must add more than the possible losses that are recorded. For this it is very important to have a well-fixed stop loss to limit bad results and to define in advance the strategy that we are going to follow.

The average gain in this type of short-term trading is around 5 pips maximum and is often done with a high leverage to speculate in the currency markets and obtain a higher return. As the number of trades per day can be very high, it is important to hire a broker with small spreads and smaller commissions.

Technical indicators for scalping

There are several technical forex indicators for scalping. One of the most used is 1 minute of Ichimoku, although there are others like MACD measure the strength of the market, Bands of Bollinger, the Renko or Fibonacci. Depending on the indicator used, different strategies can be applied in the short term, including the Scalping Forex 1 minute, one of the most basic and with more resources.

This technique is, according to experts, a good choice for beginners. Of course, it is essential to practice before demonstration accounts, not only to be able to take control in making quick decisions but also to know if we are able to withstand a high level of stress and have the maximum concentration required by intraday trading.

However, for those who are not prepared for such pressure or have time to develop a scalping strategy, there are other practices such as swing trading: it is not so short-term as to have to be aware every second of the screen but it is not long either term and therefore offers more investment opportunities.

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