Stock Trading Strategy: 3-Book Bundle – Stock Market Investing for Beginners + Day Trading for Beginners + Penny Stocks + BONUS Content: Trading Psychology of Millionaire Investors by Prof. Tyler Yamazaki

Author:Prof. Tyler Yamazaki [Yamazaki, Prof. Tyler]
Language: eng
Format: epub, pdf
Publisher: Blue Labyrinth Publishing
Published: 2019-03-10T08:00:00+00:00

Chapter 6

Strategies

Scalping

Scalping is a trading strategy whose goal is to make a profit from small changes in price. Those who use this strategy typically place as many as 100 or more trades in a given day. Scalping takes advantage of a combination of large position size and small price gains in the shortest market timeframes. The goal is to either buy or sell a number of shares at either the bid or ask price and then sell once the price has only moved a few cents.

Scalping is a fast-paced type of trade that nimble traders will excel in. The ideal margin for this type of trading is 4 to 1 in order to make the most profit in the shortest amount of time. Typically, scalpers focus on either the 1-minute or 5-minute candlestick charts. Commonly used indicators include the MACD, RSI and stochastic. Price chart indicators like pivot points and Bollinger bands are often used to determine levels of resistance and support. It is recommended that you have at least $25,000 worth of trading capital in order to utilize this strategy successfully.

Common mistakes to this strategy include choosing poor execution times, not setting the correct stop losses, late exits, late entries and overtrading. Scalping creates a high amount of commissions which means you are going to want to look for a per-share commission price structure for the best results.

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