SCALPING. WHAT STRATEGY TO CHOOSE TO THE TRADER?
If you are reading this article, then for sure you know that there are many markets, trading strategies and ways to make a profit. The volume of information and the number of opportunities today have grown so much that a beginner trader will need several years of continuous work to test each of them. The number of books, courses and seminars is no longer quantifiable. Where to draw your eyes? Bitten in battles to market skeptics, it is already clear that rapid enrichment is a marketing myth, and they pay attention to other factors:
• the conformity of the trading strategy to the goals set,
• the way of life,
• the propensity to take risks,
• the psychotype and the way of thinking.
This, in the final analysis, becomes the determining factor when choosing your niche in trading. Do not take the ideas in this article too dogmatically, there are always exceptions from general statistics and unwritten rules of the market. Perhaps you will become this exception.
There are rumors that the only option for a beginner trader to increase the account is to do scalping or trading with a large trading leverage and targets of 5-10 ticks. Prices inside the day change frequently and big trend days are rare, therefore, according to statistics, it's easier to take a small target than the more remote one, which attracts traders. Initially, scalping existed in stock "pits", and then moved to the screens of monitors. Professional scalpers have the closest contact with the market in comparison with other traders, which means that there is no candle and no technical analysis at all, but a reading of the order flow, "ribbon", horizontal and cluster volumes. The essence of the scalper's advantage is to see the imbalance between supply and demand earlier than others, to react immediately, to take a move in several ticks and to come out with a profit. The five-minute "candle" (bar) on the chart is already outdated information for the scalper. Therefore, professional scalping exists mainly in exchange markets, where it is possible to see what is happening inside the "bar".
WHERE'S PROFITABLE TO TRADE SCALPING AND WHY?
Popular markets for this style: the futures for the S & P500 (ES) index on the CME, less often the futures for oil CL (it is more suitable for day trading). The popularity of the ES futures is such that the outbursts of trading activity in the stock "glass" on this instrument can be easily determined visually. Before sharp movements, there is an acceleration of the order flow and an increase in volume, which can be used to gain advantage. Scalping currencies are the least suitable. The Forex market is driven by large players, dealers of large banks, and the emotional component inside the day on it is not so manifested. The exceptions are the news release periods, but you will hardly be able to scalp during the "storm", say, EURUSD. Scalping is also sometimes traded in the US stock market. To do this you need to understand its dynamics well and gain experience. Emotional glow on the NYSE / AMEX / NASDAQ stock exchanges is not inferior to the heat on the S & P500 futures, the glass and the "ribbon" are also there. However, the entrance ticket to the stock market will cost more. If you start trading on the futures ES you can with 2-3 thousand dollars, then for the shares will need several times more.
Scalper's lifestyle is hard work during active hours of the trading session (2-3 hours). The maximum opportunities for the scalper will come from the opening of markets in the US. We will talk about dozens of transactions per day and maximum concentration on the process. Analysis and preparation for the scalper are not so important, the accumulated instincts and iron discipline are important. Scalper actively struggles to maintain its small advantage and maintain the mathematical expectation of trade at the proper level, otherwise the commission (which he generates in large quantities) will turn into significant losses. Try on yourself, how much does this style suit you?