Strategy #3: Scalping (Add Up Quick Profits)
No, this has nothing to do with brutal violence.
The whole philosophy behind scalping is “little drops of water” make the ocean. This trading style is about stashing small gains until they accumulate into huge profits.
As soon as the asset generates profit, a quick exit is made. That means you need to be disciplined with quick and flawless execution.
Because a swing loss could wipe out any small gains a trader makes. In order to prevent this here’s what you need set up:
- a live feed
- a direct-access broker
- multiple trades set in place
How to Scalp Trade
When it comes to scalping, you make the bet that most stocks will go up. The reality is some stocks will go up and some won’t.
That means you want to set your stop-losses for ALL the assets you’re betting on at once. While that is set in place, you’ll be scalping as many small profits as possible.
If you do it right, you’ll have a truckload of small winners but miss out on huge gains.
So be it.
Because you’ll end up with more winning trades than losing ones. And if there are losses, they shouldn’t eat into your desired scope of profits.
Scalp Trading Strategies for Beginners
There are two types of scalp trading beginners should consider:
- Large-Scale Scalping: purchase a large number of shares and sell them for a gain of a very small price movement. The only way this is profitable is if you purchase several thousand shares or more and wait for any small gains (even in cents) and exit. The downside is that you must have a lot of liquid capital. You will also need a broker or platform that can get you access to those profits quickly.
- Traditional Scalping: get a specific amount of shares, set up trade alerts or signals and exit as soon as any amount of profit is made.
The Only Risk Involved is Stupidity
Scalping appears to be relatively safe because most assets are bound to make some gains. And depending on your trading style or mindset, it’s perfect if you are a bull-bear hybrid.
You take quick gains at volume but protect yourself from losses if you strongly feel risk-aware.
So make sure your stop-losses and exit strategies are set in place beforehand. To be frank, the biggest risk involved when it comes to scalping is stupidity and recklessness.
Remember, little drops of water make the ocean… but make sure your boat is set to float when the waves come in.