On an invented price path, the price wobbles in a narrow band while a dozen very short trades are opened and closed, each counted after a spread that is large beside the move it is trying to catch: 12 trades are marked, 4 closed ahead and 8 closed behind.
A triangle marks where a trade opens and points the way it was taken. A green dot is a trade closed ahead, a red dot one closed behind. The path was invented to show how the approach behaves, including where it goes wrong. It is not market data and it proves nothing.
Also searched asscalping strategy · forex scalping · one-minute scalping · scalp trading
A description, not a recommendation
This is a description of an approach people use. It is not a recommendation. No approach works in every market, nothing here has been shown to be profitable, and the chart is invented.
The idea
Scalping is taking a very small move, many times. A trade is opened and closed within seconds or minutes, for a gain a few times the size of the spread. The thought behind it is that small moves are more frequent than large ones, and that a short holding time means less exposure to anything unexpected.
Usually heldSeconds to minutes · others held about as long
The rule, as people usually state it
There is no single rule. A common statement is: on a one-minute or five-minute chart, trade in the direction of the last few bars, take a fixed small gain, and close at a fixed small loss if the price goes the other way. Some versions use a short moving average or the edges of the last few minutes’ range to choose the direction.
What it needs from a market
- A narrow spread compared with the move being sought. This is the whole of it.
- A busy market: many buyers and sellers, so orders fill at the price asked for.
- Fast, dependable execution. A delay of a moment changes the result of a trade that lasts a minute.
What it costs
Scalping trades more often than any other approach on these pages, so it pays the spread more often than any other. The arithmetic is simple. If a trade aims for 5 points and the spread is 1 point, a fifth of every target is paid before the trade begins; at a spread of 2 points it is two fifths. A hundred trades pay a hundred spreads. Commission, where there is one, is added on top, and slippage of a point matters as much as the spread does.
When it fails
- When the spread widens: around news, at the daily rollover and in quiet hours. The target does not widen with it.
- When the market is thin and orders fill worse than asked.
- When one loss is allowed to run. A single loss ten times the usual gain undoes ten good trades.
The mistakes people make with it
- Counting gains before the spread. A method that looks ahead on mid prices can be behind once the cost is taken.
- Making the stop much wider than the target, so that a high share of small wins hides a few large losses.
- Trading more after a loss to win it back quickly.
- Ignoring fatigue. Hundreds of decisions in a session are hundreds of chances to make an error.
In the rule bench
The rule bench cannot express scalping. Its bars have no ticks inside them, its spread never widens and every order fills at once, so the things that decide a scalper’s result are exactly the things it leaves out.
Questions people ask
- Is scalping profitable?
- Nothing on this page shows that it is. The page describes what people do and why. Published research on trading rules is mixed, results that looked good in one period have often faded in the next, and costs remove much of what remains. The loss figures that regulators require firms to publish show that most retail accounts trading CFDs lose money.
- Why does the spread matter so much in scalping?
- Because the move being sought is small. The spread is the same size whether a trade aims for 5 points or 500. On the small trade it is a large share of the target; on the large one it is a small share.
- Is scalping allowed everywhere?
- That depends on the terms of the firm and the account. Some set a minimum holding time or treat certain very fast trading as abusive. The terms that apply are in the firm’s own documents; this page describes the general approach only.
The words on this page
An explanation for study. It is not advice, a recommendation or a forecast. This is a description of an approach people use. It is not a recommendation. No approach works in every market, nothing here has been shown to be profitable, and the chart is invented.