Section 1 – Scalp Trading Overview
Scalp Trading Definition
Scalp trading is one of the most challenging styles of trading to master. It requires unbelievable discipline and trading scope. Scalp trading has been around for many years but has lost some of its allure in recent times. Traders are attracted to scalp trading for the following reasons:
- less exposure to risk
- you can place up to a hundred trades or more per day
- ability to fight the greed, since your profit targets are very small
- a greater number of trading opportunities
Section 2 – Scalp Trading Strategies
#1 – Scalp Trading with an Oscillator
One of the most attractive ways to scalp the market is by using an oscillator as the leads the price action.
Yes, it sounds pretty simple; however, it is probably one of the hardest trading methodologies to nail down.
Since oscillators are leading indicators, they provide many false signals. The reality is that if you scalp stocks with one oscillator, most likely you are going to accurately predict the price action 50% of the time.
Literally the equivalent to flipping a coin.
#2 – Scalp Trading with the Stochastic Oscillator
The slow stochastic consists of a lower and an upper level. The lower level is the oversold area and the upper level is the overbought area. When the two lines of the indicator cross upwards from the lower area, a long signal is triggered. When the two lines of the indicator cross downwards from the upper area, a short signal is generated.
#3 – Scalp Trading with Stochastics and Bollinger Bands
In the next trading example, we will combine the stochastic oscillator with Bollinger bands.
We will enter the market only when the stochastic generates a proper overbought or oversold signal that is confirmed by the Bollinger bands.
In order to receive a confirmation from the Bollinger band indicator, we need the price to cross the red moving average in the middle of the indicator. We will stay with each trade until the price touches the opposite Bollinger band level