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Introduction

Scalping is a trading strategy that attempts to make profits on small price changes, and normally it involves establishing and liquidating a position in short time intervals. Some of the benefits of scalping are that it involves low risk due to the relatively short periods per trade and small moves are much easier to capture as markets are usually confined in narrow ranges.
This article looks at the steps a trader should take when scalping.
1. Assess market conditions

Identifying the technical market conditions is the first critical step as the different market conditions require different trading strategies. The three most common market conditions are Range markets, Breakout markets and Trending markets.
  • Range Market
A range occurs when price is moving virtually sideways. Fig 1 illustrates a range bound market.
Fig 1: Range bound market condition
As in Fig 1 the price movement is confined to a range and quickly reverses should it become overbought or oversold upon touching the boundaries of the range which act as support and resistance.
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Mohammed9 avatar
Mohammed9 21 Jan.

good work has valuable information from a well educated person thanks

Angelwales avatar
Angelwales 22 Jan.

Tinashe, I am not trader, but I enjoy to read. I think you are very talanted trader. Many thanks for good material!

lelipuzik avatar
lelipuzik 23 Jan.

Brilliantly! Good luck!

Vale avatar
Vale 30 Jan.

Thanks for great article llolor!!!

CharmingRimma avatar

+1 vote

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Dear Traders,
I haven't been very active in the community recently and today I decided that it is time to begin sharing some of the successful trading strategies I'm using with my first article.
The Bollinger Bands indicator always fascinated me and I've been lucky to meet John Bollinger several times in person during trade shows and seminars. He has a deep knowledge about the markets and is a very funny and humorous guy. If I had to describe him with one word: simply genius! Depending on how old you are and since when you're using computers you probably can imagine how things were when he invented the Bollinger Bands. Some decades ago we had no Excel or sophisticated trading platforms and the process of calculating the bands was a very work intensive task. To simplify things, we can also see the Bollinger Bands as a statistical model with a moving average (middle channel), a line above two standard deviations apart (upper channel) and a line below also two standard deviations apart (lower channel).
There are numerous ways one can use the Bollinger Bands for trading the markets. Today, I like to show you the my Bollinger Band strategy I'm using in trending
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garisan avatar
garisan 21 Dec.

Very interesting. I want to ask how do you set your stops as you never know how many bars will take to reach them and because of the dynamic nature of the BB you'll never know at what level they will be. Thanks.

fullmoon avatar
fullmoon 22 Dec.

@garisan, thanks for your good comment. You are totally right about the dynamic nature of the bands.

I do not adjust the stop to widening bands, since that would damange the risk/reward ratio. Normally, you are just fine to keep the initial stop. If you like, you can adjust it closer to your entry as the market moves and as the respective band goes in your direction. But never move it away, because your account risk gets higher than initially planned.

With targets I adjust it according to the bands though - I guess I explain the whole trade management in a separate article.

garisan avatar
garisan 22 Dec.

Ok, that would be great, thank you.

lstbsb avatar
lstbsb 6 Jan.

Hi mate, thanks for the text.
At your first analysis (EURUSD chart with a 15 minute time frame from November 18th ), you´ve determined the stop loss being the same as the profit one, in absolute values. Dont you think that by risk management, the stop loss point should not be the same value as the take profit one? Normally,shouldn´t we step back in operations in which the stop loss is, for example, 20 pips, and the take profit one, also 20 pips? I say this in real trades, not in simmulations. Cheers !

fullmoon avatar
fullmoon 6 Jan.

@lstbsb thanks for your comment. You can alter the strategy as you wish as any traded strategy must fit the personality. If the bands are at 40/40 distance for TP/SL you can also do 20/20 or 20/40. I personally like the 1:1 ratio since I can keep focusing on having a higher win ratio than 50%. I will explain my stop strategy in the current months article.

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