New and inexperienced traders are always on the hunt for effective strategies to enhance their trading skills. In this article, we'll explore some of the top 1-minute scalping trading strategies to help you make quick, informed decisions in the fast-paced world of trading. Stay tuned to discover which approach best suits your trading style and goals.
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Each of these strategies can be used for stock, commodity, cryptocurrency, equity or forex trading. We will take you through:
Table of contents
What Is Scalping?
Scalping can be defined as a trading style where a trader capitalises and profits from small price movements. The goal of scalping is to take as many small profits as possible. The trades are usually held for a short period, and the trader executing a scalping strategy will not hold positions overnight.
Scalping requires a very strict exit strategy, as one large loss could eliminate the many small gains you could obtain.
Now let us take a look at how scalping works.
How Scalping Works
Forex scalping is a trading style used by forex traders to buy or sell a currency pair and then hold it for a short period of time in an attempt to make a profit. While scalping attempts to capture small gains, such as 5 to 20 pips per trade, the profit on these trades can be magnified by increasing the position size.
The main premises of scalping are:
- Lessened exposure limits risk: A brief exposure to the market diminishes the probability of running into an adverse event.
- Smaller moves are easier to obtain: A bigger imbalance of supply and demand is needed to warrant bigger price changes. For example, it is easier for a stock to make a $0.01 move than it is to make a $1 move.
- Smaller moves are more frequent than larger ones: Even during relatively quiet markets, there are many small movements a scalper can exploit.
To understand scalping further, let us take a look at two scalping strategies:
Scalping Strategy 1
This 1 minute scalping strategy is really easy to learn and can be extremely profitable if used correctly.
So, what do you need to get started with this strategy?
- Asset: You ideally want to be trading an asset that is currently trending
- Time frame: Your chart should be set to a one-minute time frame
- Indicators: You'll need to use tStochastic 5, 3, 3 and 50 EMA/100 EMA
- Sessions: Trade in the highly volatile New York and London trading sessions
How To Enter A Long Position
Let's focus on how to enter a long position on the strategy. A buy position in scalping strategy will need to meet the following criteria:
- To enter a buy position, we first need to wait until the 50 EMA (Exponential Moving Average) is above the 100 EMA.
- Secondly, we need to wait for the price action to return to the EMA's.
- Finally, the Stochastic Oscillator must break above the 20 level.
If all three of these have occurred, there is now an opportunity to open a buy order (long position), fantastic!
How To Enter A Short Position
To enter a short position and sell, you will need the following to happen:
- The 50 EMA needs to be under the 100 EMA.
- Similar to the buy entry, you should wait for the price to reach the EMAs.
- The Stochastic Oscillator must then break below the 80 level before you open your sell order.
Stop-Loss & Take-Profit Levels
The SL and TP levels for this strategy are set out below:
- Take-profit: The ideal take-profit level for this strategy is 8-12 pips from your entry.
- Stop-loss: The best place for a stop-loss is around two to three pips under or above the most recent swing level.
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Scalping Strategy 2
The next strategy is easier to understand and follow, so let's get straight into what you will need to make it work:
- Asset: Assets with a lot of volatility ( e.g.currency pair such as the EUR/USD)
- Time frame: For this scalping strategy, you will need to use the thirty-minute and one minute chart.
- Indicators: For this strategy, you will only need the Bollinger band set up.
- Sessions: Again, the ideal sessions for this strategy are the New York and London sessions.
How To Enter A Long Or Short Position
To enter a position using this strategy there are only two things you need to be aware of, so I have grouped them into one.
- Firstly, you need to determine the trend and market conditions using the 30-minute timeframe
- If the price is in an uptrend then you enter a buy position once price has breached the lower Bollinger band.
- If the price is in a downtrend then you enter a sell position once price has breached the upper Bollinger band.
Take-Profit & Stop-Loss Levels
When using Bollinger bands as a trading strategy, it's important to note that profit targets should be based on where the price touches the opposite band, as seen in the picture, while stop-loss levels should be set 2-3 pips above or below the candle that broke the band.
Of course, with all types of trading plans, there are advantages and disadvantages, and one-minute scalping trading strategies in the forex market are no different.
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|Advantages of Scalping||Disadvantages of Scalping|
|Minimised risk as the trade is only open for a short period||Novice scalpers might be at risk of losing if they haven't carried out thorough backtesting|
|The trading plans allow for more frequent trades as they are smaller in size||Keeping a positive risk-to-reward ratio can be challenging|
|Finally, the strategies provide many potential entries throughout the day||There is a high risk of many consecutive losses|
|These strategies require you to dedicate a significant amount of time in front of the charts|
The Bottom Line
On the surface, scalping strategies appear simple and more lucrative than swing trading due to the fact that traders have the ability to collect a full day’s profit in just a few minutes.
In reality, however, the successful implementation of 1-minute scalping strategies can create unexpected challenges, and so, it should be understood that scalping strategy is only suitable for certain types of trading personalities.
Successful scalpers must show:
- A high level of discipline and
- Be willing to follow the parameters of a trading system at all times.
- Scalpers are often required to make important decisions without hesitating
- At the same time, scalpers are flexible and recognise the differences between a trade that’s working and one that isn’t.
In the end, a successful scalper is a person that’s able to play to the strengths of the market and exit trades at highly favourable moments.