Scalping.

Scalping is an ultra-short-term trading strategy where traders open and close positions within seconds to minutes. The goal is to profit from small price movements, typically targeting 5-15 pips per trade. Scalpers execute dozens, sometimes hundreds, of trades in a single session.

Unlike day traders who hold positions for hours, or swing traders who hold for days, scalpers rely on high-frequency execution and tight spreads to generate returns. The strategy demands intense focus, quick decision-making, and a broker that offers low-latency execution.

Scalping works best in highly liquid markets where price moves frequently in small increments. Major currency pairs like EUR/USD, GBP/USD, and USD/JPY are popular choices because of their tight spreads and consistent volatility.

Scalping relies on identifying short-term momentum and exploiting small price discrepancies. Traders typically use 1-minute or 5-minute charts and focus on key technical indicators to time entries and exits.

A typical scalping session involves: watching for price to reach a support or resistance level, confirming momentum with an indicator like RSI or MACD, entering a trade with a tight stop-loss of 5-10 pips, and exiting as soon as the target profit is reached or momentum fades.

Common scalping setups include:

• Breakout scalping: Entering when price breaks through a key level with strong volume
• Mean reversion: Trading bounces off moving averages or Bollinger Bands
• Order flow scalping: Reading the order book to identify large pending orders
• News scalping: Trading the immediate reaction to economic data releases

Scenario: EUR/USD is trading in a range between 1.0850 and 1.0870 during the London session. The 50-period moving average on the 5-minute chart sits at 1.0855.

Entry: Price pulls back to 1.0856, touching the 50 MA. RSI reads 35, indicating oversold conditions. You enter a long position at 1.0856 with a stop-loss at 1.0848 (8 pips risk).

Exit: Price rallies to 1.0868 within 3 minutes. You close the position for a 12-pip profit. The trade lasted 4 minutes total.

Lesson: This trade worked because it aligned with the range structure, used a confirmed support level, and had a favorable risk-reward ratio of 1.5:1. Not every scalping trade will be this clean. Many result in small losses, which is why strict stop-losses are essential.