The main indicators of a scalping trading strategy

The scalpers try to profit from small fluctuations in the market, using tickers that will never stand still. For many years, these agile day trading crowds have relied on 2-level buy/sell screens to locate buy and sell signals, and read the imbalance between supply and demand from the national best buy and sell prices (NBBO)—— Most people see it. They will buy when technical conditions push the selling price down to a normal level, and sell when technical conditions push the buying price up to a normal level. Once the equilibrium conditions return to the spread, they will make a profit or loss in a few minutes. .

However, today, this method is not very reliable in our electronics market for three reasons. First, the order book was permanently emptied after the flash crash in 2010, because in that chaotic day, long-standing orders were targeted for destruction, forcing fund managers to hold them off-market or execute them in secondary venues.

Secondly, high-frequency trading (HFT) now dominates intraday trading, generating highly volatile data that undermines in-depth market interpretation. Finally, most transactions now take place outside of exchanges in dark pools that are not reported in real time.

Key points

  • Scalpers try to profit from small fluctuations in the market and take advantage of continued market activity.
  • The scalpers can respond to the challenges of this era through three technical indicators tailored to short-term opportunities.
  • Scalping strategies are most effective when strong trends or strong range fluctuations control the tape in the disk; they do not work well in times of conflict or chaos.

The scalpers can respond to the challenges of this era through three technical indicators customized for short-term opportunities. The signals used by these real-time tools are similar to those used for long-term market strategies, but they are suitable for two-minute charts.

They work best when strong trends or strong interval fluctuations control the tape in the disk; they do not work well in times of conflict or chaos. When you suffer losses faster than the usual typical profit and loss curve, you know that these conditions are in place.

1. Moving average ribbon entry strategy

Place a 5-8-13 simple moving average (SMA) combination on the two-minute chart to identify strong trends that can be bought or sold in reverse fluctuations, and warn about impending trend changes. This is A typical market day is inevitable. This scalp trading strategy is easy to master. During the strong trend of keeping the price in contact with 5 or 8 SMAs, the 5-8-13 ribbon will align, pointing higher or lower.

The momentum of penetrating the 13 SMA signals is weakened, which is conducive to range or reversal. During the period of fluctuations in these ranges, the functional areas tend to flatten, and prices may often cross the functional areas. Then the scalper observes the rearrangement, the ribbon will become higher or lower and unfold, showing more space between each line. This tiny pattern triggers signals to buy or sell short.

2. Relative strength and weakness exit strategy

How does the scalper know when to stop profit or stop loss? 5-3-3 Stochastic indicators, 13 bars, 3 standard deviation (SD) Bollinger bands and ribbon signals on the two-minute chart are used in combination, which works well in active markets, such as index funds and Dow components And other widely used markets hold issues like Apple Inc. (AAPL).

When the stochastic indicator rises from the oversold level or falls from the overbought level, the best ribbon trade is established. Similarly, when the indicator crosses and rolls over your position after a profitable thrust, it needs to exit immediately.

You can time more accurately by observing the interaction between the band and the price.Profit from band penetration because they predict that the trend will slow down or reverse; scalping strategies cannot withstand retracements Any kind. In addition, if the price push fails to reach the range but the stochastic indicator rolls, it will exit in time, which will tell you to exit.

Once you are satisfied with the workflow and interaction between the technical elements, you can adjust the standard deviation up to 4SD or down to 2SD at will to account for changes in daily volatility. Even better, superimpose additional bands on your current chart so that you can get a wider signal.

3. Multi-chart scalping

Finally, pull up a 15-minute chart without indicators to track background conditions that may affect your intraday performance. Add three lines: one for the opening and two for the high and low points of the trading range set 45 to 90 minutes before the trading session. Pay attention to price movements at these levels, as they will also set larger two-minute buy or sell signals. In fact, you will find that when your scalp aligns with the support and resistance levels on the 15-minute, 60-minute, or daily chart, your maximum profit on the trading day will appear.

Bottom line

Scalpers can no longer trust real-time market depth analysis to obtain the buying and selling signals they need to book multiple small profits in a typical trading day. Fortunately, they can adapt to the modern electronic environment and use the technical indicators reviewed above, which are customized for a very small time frame.


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