Scalping is the methodology that traders use to speculate the markets in a very small time frame, such as the M1 and M5.
This tactic is one where one can benefit from short-term oscillations aiming to capture a fast profit.
To be able, though, to implement scalping the right way, careful risk and money management is needed, such as your pre-determined stop loss and take profit.
Usually, the average number of pips for a scalper varies between 5, 10 or 15 for both stop loss and take profit.
When it comes to scalping, the entry and exit criteria should be made as simple as possible, minimizing, in the best possible manner, the ”chaos” and discrepancies in the market.
Many scalpers use price action, via candlestick patterns, pin bars, or indicators such as the Stochastic Oscillator, the Relative Strength Index (RSI), volume and volatility tools.
When scalping, your exit criteria are equally important
Furthermore, similarly to long-term strategies, the exit criteria is by far more important and critical than your entry.
A tool that is widely used for scalping purposes is the Fibonacci indicator.
The Fibonacci can be used not only in identifying support and resistance areas but for exiting trades.
For example, assuming that you have placed a buy order, using the Stochastic Oscillator, and the price was at the 61.8%, Fibonacci. Your exit settings could be the 0.0% (stop loss) and 161.8% (take profit).
On the other hand, should it be a sell order, the 161.8% is your stop loss and the 0.0% is your take profit.
Whatever the case, as long as you follow your plan, strategy, methodology, risk and money management, your scalping technique could be highly profitable.
Your objective should always be to minimize your losses as fast as possible and let your profit meet your pre-determined target, especially in scalping.
Are you a scalper? Do what is right!