Scalping As A Novice Trader

[mortijoon]

Scalping, a subset of day trading, is a strategy that involves frequent entry and exit in a trade in order to realize small but multiple gains from the intra-day movement during the trading session. Traders who employ the scalping technique are called scalpers. Scalpers indulge in numerous trades during a day’s trading session with each position held for a very short span of time, ranging from few seconds to minutes. Scalping is not only used with stocks, but also with futures and forex.

 

With low barriers to entry in the trading world, the number of people trying their hands at day trading and related strategies such as scalping has increased. Scalping is not the best trading strategy for rookies as it involves fast decision-making, constant monitoring of positions, and frequent turnover. However, if you are keen to try your skill set at scalping, here is what you need to know.

 

Target

The first thing a novice scalper needs to remember is that the aim of scalping is to pocket small profits over a short holding position. The target profit is usually very small. Say hypothetically, a scalper may buy a stock at $30.75 and sell at $30.90, and again pick it at 30.80, gaining around in few cents with every successful trade. Scalpers commonly look to take advantage of a stock’s bid-ask spread.

 

Order Execution

A novice needs to master the art of efficient order execution. This is because a delayed or bad order can wipe out what little profit was earned and even result in a loss. Since the profit margin per trade is limited, the order execution has to be accurate. This requires supporting systems such as the Direct Access Trading (DAT) and Level 2 quotations.

 

Frequency & Costs

A novice scalper has to make sure that he keeps costs in mind while making trades. Scalping involves numerous trades, as many as hundreds during a trading session. Frequent buying and selling is bound to cost in terms of commissions, which can shrink the profit. This makes the decision to choose the right online broker crucial. The broker should not only provide the requisites like direct access to markets but also competitive commissions. And remember, not all brokers allow scalping.

 

Trading

Spotting the trend and momentum comes in handy for a scalper, who can even enter and exit briefly to repeat a pattern. A novice needs to understand the market pulse and once the scalper has identified that, trend trading and momentum trading can help achieve more profitable trades. Another strategy used by scalpers is counter-trend. However, beginners should avoid using this strategy and stick to trading with the trend.

 

Trading Sides

Beginners usually are more comfortable with trading on the buy side and should stick to that before they gain sufficient confidence and expertise to handle the short side. However, scalpers eventually must balance long and short trades for the best results.

 

Technical Analysis

Novices should equip themselves with basics of technical analysis to combat increasing competition in the intra-day world. This is especially relevant in today’s markets dominated by high frequency trading, as well as the increasing use of dark pools

 

Volume

Scalping as a technique requires frequent entry and exit within a short timeframe. Such a strategy can only be successfully implemented when orders can be filled, and this depends on liquidity levels. High-volume trades offer much-needed liquidity.

 

Discipline

As a rule, its best to close all positions during a day’s trading session and not carry them to the next day. Scalping is based on small opportunities that exist in the market, and a scalper should not deviate from the basic principle of holding a position for a short time period.

 

In Summary

As a newcomer to scalping, make sure that this style suits your personality. It requires traders to follow a disciplined approach, make quick decisions, spot opportunities, and constantly monitor the screen. Traders who are impatient and feel gratified by picking small successful trades are perfect for scalping.

[myregister]

Never ever do something like this without any supervisor, i advise for novice trader keep focusing with their trading and using this strategy when you already know about it and the risk behind it, Scalping tend to use higher SL and less TP in order to hold more risk but the compensation is small profit.

[shemoalaa85]

Scalping tend to use higher SL and less TP in order to hold more risk but the compensation is small profit.

[pepy]

Isn't this a bit over, i mean scalping means lower profit target but as novice trader it  would be better if we learn all type of strategy and then choose which one that more suitable for us, you don't have to get it through just some basic.

[myregister]

This is not over i mean as long as you have mentor to help you that is not a big deal, you also can learn first as newbie and just scalp with small amount of lot, that should be helpful rather than forcing yourself to trade just because you want to get faster profit, but as scalper there will be a beginning and that is as novice trader.

[pepy]

Beginning? hmm, well you got the whole point there i don't know what kind of technique or strategy that you are using right now but for someone who want to stick with scalping must know about it how to do it well and make it as better scalping, and for sure there is the beginning for that trader so they able to master it later.

[myregister]

You can try as novice trader but keep that in mind the result maybe not like what you all may think before you still can lose and more than you imagine, but as long as you are able to manage the risk well or already know how to manage the risk then you can scalp, but still do it intelligently.

[pepy]

Man, there is first time for everything what they need is to learn. I am sure you also novice before you come into this place isn't it? Also they can use demo account to minimize the loss when learn about it before become a real scalping who may earn enermous amount of pips.

[myregister]

This so called first time for everyone is actually exist but remember that not all traders can reach a state where they can make profit by scalping only. So i can assume that there are some novice traders that may successful to be a successful scalper too, if not some of them may lose bigger money than they can imagine.

[pepy]

Scalping as novice trader isn't a good thing if you do it in real account , first you need to train yourselves in demo account use scalping, spend around 6 months or more, with trade not less than 4 days in a week. See how you improved so much, and with this you will avoid so much problem as novice trader who want to do scalping.

[myregister]

So basically we can say that  a scalper should train first if they are novice traders? Well that is a good idea and i don't believe even newbie can make profit with long term trading just in few trial, there must be some errors that even they cannot bear, and thanks to scalping which requires low amount of pips, i think they can learn this strategy faster.

[pepy]

Yes, they should train that is the only thing they can do, first demo account and keep scaling until you exhaust and learn more there. If you think you're good enough then change to real account. Here, you will applied your scalping strategy in real market and i think your chance to lose is lower if you practice seriously.

[myregister]

But the problem is indicator. Do you know what kind of indicator which we must put to know how good we are when trade? Is that indicator to see how we growth trustworthy? I don't against new trader prefer scalping but we must know even scalping is a technique from high risk business so it is risky too.

[pepy]

This is acceptable for them because they want to optimized every single seconds or minutes they have. But usually scalpers SL isn't that high like swing traders. Scalping which i've been experienced and some people i know is at around 10 up to 30 pips at most in case something really wrong happen.

[myregister]

By the common logic we know that scalpers won't have much risk, but that is just the first type of scalpers there is a scalper that actually prefer quality over quantity, with a slight higher pips they are ready to risk their position for bigger pips. This is justifiable since their earning is higher than typical scalpers who just target small pips such as 5-10 pips per position.

[pepy]

By common logic for sure, a trader will risk small amount of bucks but that is not the case. Many scalpers want to risk more in order to get small fast profit, mostly scalpers has around TP:SL ration at 1:2 or at least 1:1.5. If they want to gain 10 pips means they must risk around 15 or 20 pips. If SL is too low it would be hit easier so that is why they extend it.

[myregister]

That is what i know but still there are few scalpers who prefer higher quality of trading that use balanced risk ratio. Few of my friends which i know offline still use that kind of scalping, not so fast but not so long and it targetted not less than 10 pips and at most 25 pips, per position the open, usually this kind of scalpers do spend longer time with termainal than typical scalpers.

[pepy]

In the end scalping is lovable for novice trader because it is easy to implemented and let me tell you that this strategy actually work for some people, as long as you have good and low latency internet connection you may grab around 30-100 pips per news as long as you can open and close faster and do that repeatedly

[omar-profits]

although it is too long article, but it is very useful, when you talk about scalping I think I should listen and respect every word and take it as an Important, because scalping is the most profitable strategies in my opinion.

[myregister]

No, Scalping is not the most profitable strategy but i don't deny that will give us more profit or even more than we imagine but still not the best, because if that is best most of the people who trade with it will make more profit, but in fact that is not what happened. As novice trader, scalping is optional since i think risk management is the very first important part of novice to mastered.

[Vaabum]

Newbies just think they can make money fast this way. But this is not always the case.