🛑🛑Best Techniques to do scalp trades 👇
The following are some of the top techniques used in scalp trading:
1. Technical Analysis: - Moving Averages : You can utilize very short-term moving averages, like 5-minute or 15-minute Simple or Exponential Moving Averages, to determine trend and further entry and exit points.
- Candlestick Patterns : Now, it's possible to look for candlestick patterns that tend to indicate reversals or continuations in price.
- Support and Resistance Levels : These will help to establish certain key price points at which the asset tends to reverse or pause.
2. Momentum Indicators:
- Relative Strength Index (RSI) : with the RSI outlining overbought/oversold conditions.
- Moving Average Convergence Divergence (MACD) : MACD shows changes in the strength, direction, momentum, and duration of a trend.
3. Volume Analysis
- Volume Spikes : High volume confirms the strength of a price move.
- Volume Weighted Average Price : Use the VWAP as an index to help determine if the security is comparatively over- or undervalued throughout the day.
4. Order Flow Analysis
- Level II Quotes: Get a sense of the order book's supply and demand.
- Time and Sales Data: Monitor trade executions for market sentiment.
5. Risk Management
- Stop-Loss Orders : Maintain a very tight stop-loss order to avoid probable losses.
- Position Sizing : With small positions, risk control can be assured as the frequency of trades is high in scalping.
6. Scalping Techniques :
- Market Making : Profit from the bid-ask spreads by creating the buy and sell orders simultaneously.
- Trend Trading : Follow the trend; that means gaining profit from short-term price movements.
- Range Trading : Trading within a known price range.
7. Trading Discipline :
- Plan and Stick to It: A clear trading plan must be formulated and religiously followed
- Avoid Overtrading: Number of trades per day are fixed for avoiding excessive risk factors