Scalping Strategy
High-frequency trading strategy that capitalizes on small price movements.
Overview
Scalping is a trading strategy that aims to profit from minimal price changes, making multiple trades within short time periods. This approach requires quick execution and precise timing.
This strategy requires high liquidity and low spreads to be effective. Monitor trading fees carefully as they can significantly impact profitability.
Strategy Components
Market Analysis
- Order Book Analysis
Monitor order book depth and liquidity
- Price Action
Short-term support and resistance levels
- Volume Profile
Trading volume at different price levels
Technical Indicators
- Moving Averages
Short-term EMAs (1-5 minute)
- RSI
Overbought/oversold conditions
- MACD
Short-term momentum shifts
Implementation
Key Parameters
Entry Conditions
- • Price crosses short-term MA
- • RSI indicates reversal
- • Sufficient order book depth
Exit Rules
- • Fixed pip target reached
- • Opposite signal appears
- • Time-based exit (max hold time)
Risk Management
Position Sizing
- • Fixed percentage of account balance
- • Adjust based on volatility
- • Consider exchange limits
Stop Loss
- • Tight stops (1-2 spreads)
- • Break-even stops
- • Trailing stops
Performance Optimization
Key factors for optimizing scalping performance:
- • Minimize latency in order execution
- • Monitor and adjust to spread changes
- • Track fee impact on profitability
- • Regular strategy parameter optimization