Scalping Trading Strategies for Beginners
Scalping is a great way of trading the market if you want to place lots of small trades. Scalping is all about winning a lot of small trades to turn a healthy profit. That said, there are plenty of scalping trading strategies you can put to use, and deciding which one to go with can be difficult. Today we want to talk about some of the best scalping trading strategies, especially ones for beginners that are not too hard to master.
What is Scalping?
Scalping is a specific type of trading strategy that can be used in Forex trading, the stock market, and various other types of trading too. Now the whole point of scalping trading strategies is to take lots of small profits. Instead of placing just a few large trades that will stay open for a good period of time, scalping is all about placing lots of smaller trades that are only open for a limited amount of time.
It’s all about winning lots of small trades to turn a profit, and there are various scalping trading strategies out there. Let’s take a look at some of the most common and easiest to master scalping trading strategies that you can put to use to make some good money.
Scalping Trading Strategies
Now that you know exactly what scalping is, it’s time to take a closer look at some of the best scalping trading strategies for beginners, and really for traders of all skill levels.
Moving Average Ribbon Entry
Here we have a scalping trading strategy which involves the use of SMAs or simple moving averages. When it comes to scalping trading strategies, this is indeed one of the easier ones to master. To start off with this moving average ribbon entry strategy, you want to pull up a two minute chart. Now you are going to add a 5-8-13 simple moving average onto that two minute chart.
The point of this moving average ribbon strategy is to identify strong trends which buy or sell trades can then be placed with. It also serves as a warning mechanism for changes that may happen in the market, such as a trend reversal. Here, during strong trends, prices will stick to the 5 and 8 simple moving average bars. This is when the 5-8-13 bars align, and it’s an indication of a strong trend.
At the same time, this simple average ribbon entry scalping trading strategy can also indicate a range or reversal. When the prices crosses the 13 bar of the simple moving average, it’s an indication that signal momentum may be waning and set for a reversal. The ribbons can then flatten out during range swings or reversals. In this case, wait for the ribbons to realign, and wait for them to spread out. Do keep in mind that when it comes to scalping trading strategies, this is a great entry strategy which is not very hard to master.
Relative Strength/Weakness Exit Strategy
Here we have a slightly more complicated scalping trading strategy, one which involves a number of aspects. First of all, pull up that two minute chart again, because for this relative strength/weakness exit strategy, you will need it. Do keep in mind that this is an exit strategy, one which works great for Forex and other kinds of trading too, one that will help you take profits where you can and cut losses where you have to.
First off, here you will be using the Stochastics indicator as your indicator of choice, and you will also be using Bollinger bands to help determine an exit point for trades. Here you want to use a 5-3-3 Stochastics, along with a 13 bar, and a 3 standard deviation Bollinger band. You then also want to combine this with ribbon signals for the best results.
Now, when the Stochastics turns higher from the oversold level, or when they turn lower from the overbought level, are when the best ribbon trades are set. Moreover, after a profitable thrust, when the indicator crosses and moves against your position, an exit is required. You really need to watch band interactions with the price here.
Take profit into band penetrations, as they will serve to predict when a trend is slowing down or reversing. Remember, when using a scalping trading strategy, you can absolutely not afford to hold your position when a retracement occurs, which is due to the generally small profit margins associated with scalping trading strategies.
Another way you know to exit the trade is if a price thrust fails to reach the band, but the Stochastics still rolls over. Finally, once you get a got hold on this strategy, and you become comfortable with the interactions between various technical elements used here, you can then adjust the standard deviation of the Bollinger Band up to 4 or down to 2. This will help to account for daily changes in volatility. You can even superimpose multiple bands over each other to get a larger variety of signals to work with.
Scalping with Multiple Charts
Something else you can do here is to use a 15 minute chart with absolutely no indicators. The point of this is to keep track of background conditions that may affect your intraday trading performance. Here, you are going to add 3 lines, one for the opening, one for the high end of the trading range, and one for the low end of the trading range. The trading ranges set up during the first 45 to 90 minutes of trading.
Here, you will be watching for price action at those specific levels, as these can be used to set up large scale 2 minute buy and sell signals. Doing this, you should find that the biggest profits will occur when the scalps align with support and resistance levels on 15 and 60 minute charts, as well as daily charts.
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Scalping Trading Strategies – Final Thoughts
The bottom line is that scalping trading strategies, the right ones used the right way, can help to put plenty of money in your pockets. To learn more about trading strategies, check out the Income Mentor Box Day Trading Academy.