Scalping Strategy: Small Profits, High Frequency

Overview

Scalping targets small, frequent profits — often 2–10 pips per trade — across many trades per session. The edge comes from a high win rate and tight risk control, not big moves. It demands fast execution, low spreads, and emotional discipline.

Setup

• Instruments: major forex pairs with tight spreads (EUR/USD, GBP/USD, USD/JPY)
• Timeframe: 1-minute or tick chart
• Indicators: 20 EMA, 50 EMA, VWAP (in equities), RSI(14)
• Session: London open or New York open (highest liquidity)
• Broker requirement: raw spread / ECN account, low commission

Entry rules

1. Confirm trend direction on the 5-minute chart (price above 20/50 EMA = longs only)
2. Drop to 1-minute, wait for a pullback to the 20 EMA
3. Enter when a bullish candle (long) closes back above the 20 EMA with momentum
4. Execute within 1–2 seconds of the signal; scalping rewards speed

Stop loss rules

• Hard stop: 3–5 pips beyond entry (never wider than 1 × spread × 3)
• Move to breakeven after 2 pips of profit
• Time stop: exit if the trade hasn't moved in your favor within 60 seconds

Take profit rules

• Target: 2–4 × the spread, typically 4–10 pips
• Scale out: 50% at first target, trail the rest with a 1-pip trailing stop
• Never widen a target to "let it run" — scalping is hit-and-run

Risk management

Parameter	Value
Risk per trade	0.25–0.5% of account
Max trades per day	20
Max daily loss	1% of account (then stop)
Position size	Risk ÷ (entry − stop)

Use the position size calculator before the session to pre-set your lot size.

Common mistakes

• Trading news spikes — spreads widen and slippage destroys edge
• Revenge-scalping after a string of losses
• Holding losers past the time stop "just a bit longer"

Key principle

Win rate is high (often 60–70%), but reward is tiny. The strategy only works with low costs, fast execution, and absolute adherence to the time stop. Slippage and spread are the real enemies.