Scalping Trading [Best Strategies to Make Money]
Published: 2 October 2020 by Andrew
Making money by doing many small and very fast operations is one of the most profitable trading strategies, but to do Scalping successfully you need to follow some basic rules, let’s discover them together in this detailed guide.
We will also see the steps to follow to do Scalping, which we summarize in these steps:
- You register with a regulated and secure Broker.
- Practice on the Demo account to become familiar with the trading platform.
- You make the minimum required deposit and have access to the real market.
By following these steps you can do Scalping without paying commissions in total safety.
Thanks to online brokers such as eToro it is possible to do Scalping on numerous markets. Here are the best platforms available:
Min. Deposit: 50€
Min. Deposit: 100€
Min. Deposit: 50€
Min. Deposit: 250€
Min. Deposit: 100€
Min. Deposit: 250€
Scalping: What is that?
Scalping is a trading strategy that is based on the profit generated by small changes in the price of a stock.
You can do Scalping on Forex but also on Stocks, Cryptocurrencies and other assets, although the most liquid stocks and markets are certainly the most suitable for this trading strategy.
Traders who use Scalping as a strategy to do Forex trading or online trading on other markets usually make from ten to a few hundred trades per day.
Traders who practice this method are called scalpers and their technique is based on the fact that it is easier to capture small profits that, added together, can generate a large profit at the end of the day, but a rigorous strategy is required to limit losses.
How to do Scalping
To do Scalping you need a very fast and reactive trading platform, moreover it is essential to use Broker without commissions, because otherwise, with such a high number of daily trades, the fixed costs would cancel out all the profit.
The simplest and cheapest platforms for Scalping are those offered by online brokers with these characteristics:
- They must offer CFDs, contracts that allow you to trade both up and down (short selling)
- They don’t have to charge commissions
- They must have at least one license issued by CONSOB or CySEC
- They must use a trading platform with international assistance
When you have chosen the most suitable platform to do Scalping, simply:
- Buy the CFD of the stock you are interested in to earn if prices go up.
- Sell the CFD of the stock you are interested in to earn if prices fall.
- When the price moves in the right direction, close the trade and collect the net profits, without commissions.
Best Broker Platforms for Scalping
Choosing the best platforms to do Scalping presupposes a series of tests on the safest and most reliable CFD Brokers, to verify the speed of the software, the tools and the indicators available, in order to compare the results and find the most suitable intermediary for this Strategy of Trading.
If you do not want to do these tests yourself, you can rely on the experience of OnlineTradingCourse.net, which has already carried out this comparison and believes that the CFD Brokers with the best platforms for scalping are those of eToro, ForexTB and IQ Option.
eToro: Scalping or Automated Copytrading
eToro offers one of the most intuitive and fastest trading platforms to do Scalping, moreover its reliability is guaranteed by the CONSOB license and numerous other international authorizations.
With eToro, in addition to doing Scalping, you can rely on an automatic trading system called Copy Trading.
This system, patented by eToro, allows you to copy the market operations of the best traders in the world (on eToro) automatically and free of charge.
To use Copy Trading just follow these steps:
- Register on eToro
- In the “People” section, choose the traders to copy, based on how much they earn.
- With a click, Copy Trading will copy the operations of the chosen traders into your account.
- At that point you will get the same returns as these trading experts (in proportion to the investment made), at no additional cost.
To understand what returns we are talking about, by way of example, we show the earnings of some eToro traders that you can copy:
Click here and choose which trader to copy
Before investing money in Copy Trading or Scalping, you can test the platform on the free Demo account, where there is no risk, because the money is virtual.Click here to sign up for free
For more details you can read our full eToro review.
ForexTB: Scalping trading course
ForexTB is now very popular with traders all over the world, especially for the training and support it offers its users for free.
Authorized by CySEC it is a safe intermediary and to do Scalping it provides two trading platforms to choose from:
- Metatrader 4 is a platform with numerous tools available, which meets the needs of the most experienced traders.
- The web platform is simple and accessible from any browser, without making any downloads.
If you are interested in Scalping and want to learn this trading strategy, ForexTB offers a Trading Course considered among the best on the market, which explains the basics of online trading and the various strategies. This ebook is free and to download it there is the link below:Click here and download the Trading Course for free
Operational traders greatly appreciate the support offered by this Broker, which materializes with the sending of free Trading Signals to all investors. These operational indications are very reliable and have a 70% success rate.Click here to get free trading signals
Read our ForexTB review for more information.
IQ Option: Scalping with 10€ deposit
IQ Option stands out among trading intermediaries thanks to the minimum deposit required to open a real account.
This deposit has always been an obstacle for novice traders and IQ Option has solved this problem by setting it at only 10 Euros.
The IQ Option platform is very clear, complete and simple to use, moreover the low minimum deposit allows you to do Scalping even by investing a few euros on each operation.Try the IQ Option platform for free
The security of this Broker is guaranteed by CONSOB and it is possible to do tests without risking anything, on the free Demo account, and then switch to the real one by paying only those 10 Euros.Click here and access the IQ Option Demo account for free
To learn more about Scalping, IQ Option offers a training area full of free content, essential for learning the secrets of technical analysis.Click here to register on IQ Option (official link)
If you want to know more, you can read our review on IQ Option.
Scalping: How does it work?
A scalper must take as many small profits as possible while limiting losses as much as possible.
Scalping is successful if done very rigorously but obviously sacrifices the size of possible large movements to make many small operations.
Typically a scalper has to maintain a high ratio of winning to losing trades while keeping profits slightly above losses.
To do Scalping you must respect these basic rules:
- Limit exposure to risk by operating very quickly and with very short stop losses.
- There is no place for discretion, you need to follow a strategy and adhere to its rules with discipline.
- Smaller movements are more frequent than larger ones even during relatively “quiet” markets but the choice of asset can make a difference.
- Scalping can be adopted as a primary trading style or complementary to a longer term strategy such as Intraday Trading or Swing Trading.
Frequency and costs of Scalping
Scalping involves numerous trades, up to hundreds during a trading session.
These operations can cost a lot in terms of fees and reduce your profit considerably at the end of the day.
For this reason, choosing the right intermediary is essential and, as we have said in the previous paragraphs, commission-free CFD brokers are certainly an excellent choice.
The Scalping strategy depends on the trading indicators, which must signal when to enter the market and possibly also when to take profit.
Some strategies are so fast (even a few seconds) that they only generate input signals, then it is the scalper, based on a series of very specific rules, that decides the times and levels of output.
In the next paragraphs we will see some of the most used Scalping strategies.
This strategy is based on the simple Moving Average, which is inserted on the chart with 3 different settings: 5, 8 and 13 periods.
The timeframe is usually 2 minutes but the 1 minute or 5 minute one can also be used.
Below we see an example chart that shows the entry points generated by the crossing of the moving averages.
The scalper then observes the realignment of the 3 moving averages and scalps like this:
- After a crossing of the moving averages, if the fast MM (blue) crosses again the other two on the upside, he Buys
- After a crossing of the moving averages, if the fast MM (blue) crosses again the other two on the downside, he Sells Short.
The profit must be taken almost immediately, usually in a ratio of 2: 1 to the stop loss.
This strategy is more complex and is based on different indicators and oscillators, the ideal chart is always 2 minutes but it can also be adapted to the 1 minute or 5 minutes one.
- The 3 moving averages are always at 5, 8, 13 periods.
- The stochastic oscillator must be set at 5-3-3.
- Bollinger Bands at 13 with a standard deviation of 3.
In the graph below there is an operational example of this Scalping strategy.
The entry is the same as the previous strategy and is based on the crossing of the fast moving average. When it crosses upwards you buy and when it crosses downwards you sell.
The Stochastic provides the exit signals along with the Bollinger Bands which give further confirmation.
Scalping trading follows an ongoing trend. In this case the scalper enters and exits several times, adapting to the micro oscillations of a trend.
Identifying the trend and momentum is useful because it allows you to always enter in the same direction avoiding drawdowns, always risky in trading.
Another strategy used by scalpers is the countertrend. But beginners should avoid using this strategy which is very insidious and follow the main trend.
Scalping techniques are based on very fast charts, often at 1 minute or 2 minutes, depending on the asset traded.
In Forex strategies, it is difficult to go beyond the 2-minute timeframe, while there are some less reactive markets, such as stock market indexes, which allow a 5-minute Scalping.
Scalping is based on technical analysis and to take advantage of it you need to know some indicators, among which are essential:
- Exponential Moving Averages: These averages are weighted to react more sensitively to the most recent price movements.
- MACD (Moving Average Convergence Divergence): This is a very useful momentum indicator.
- Bollinger Bands: These bands contain the vast majority of price movements (around 95 percent).
- RSI (Relative Strength Index): is a momentum indicator that measures strength and resistance levels on a scale of 1 to 100.
In this guide we have analyzed Scalping, its characteristics, how it works and the importance of the rules in this frenetic strategy.
The high number of operations is a characteristic of Scalping and to reduce costs it is necessary to use online brokers without commissions such as those recommended in the previous paragraphs.
If you have no trading experience it is preferable to test Scalping on a Demo account, to avoid taking risks and then move on to trading on the real market.
Here are the official links of the free Demo accounts offered by the best Forex brokers:
- Access the eToro Demo account for free by clicking here
- Register on ForexTB and try the Demo account by clicking here
- Access the IQ Option Demo account for free with this link
It is a trading method based on very short and frequent operations.
You profit from small price movements on very low timeframe charts.
In our guide you will find the best Scalping strategies explained in detail.
CFD brokers like eToro are suitable for Scalping because they offer quick platforms and are commission free.