The Core Principles of Scalp Trading

"Speed and fear" is the essence of scalp trading. The most important thing to remember is to protect your capital rather than capturing profits. Always remind yourself to buy and sell quickly and take profit on small price changes. Do not be greedy and do not attempt to bag the elephant. Basically the center assumptions are:

i. A brief exposure to the market lower the chances of running into an adverse event. (See, scalping has the advantage to let you fight greed and let you ride safely during these uncertain time.)

ii. Smaller moves are easier to obtain as bigger imbalance of supply and demand is needed to warrant bigger price changes.

iii. Smaller moves are more frequent than larger ones. Even during relatively quiet markets there are many small movements that a scalper can exploit.

iv. Accept the fact that scalp trader lose in a while. Do not put all your egg in one basket and do not let paper loss scare you off.

v. To benefit handsomely from smaller price moves, you need larger capital.

vi. Your wife is leverage and your best friends are buy/sell queues and volume. Your enemy is greed and your foes are fundamental indicators e.g. PE ratio, intrinsic value.