What is Scalping?

Scalping the market is a trading technique in which a trader attempts to profit from short-term price changes intra-day. It tends to work best in a choppy market that is not trending in one direction only.  Even if the overall trend of that market is up or down, you can benefit from both directions when you scalp. The best markets to scalp are those with the most volatility and narrow trading ranges.  The most common markets to scalp are the Indices (e-Mini SP, e-Mini Nasdaq, e-Mini Russell and e-Mini Dow) for the reasons listed above and the point values that make taking one to five-point profits on a scalp beneficial.

Factors to Consider for a Scalping Strategy:

Market Makers play an important role in the futures markets as scalpers.  Their primary purpose is to add liquidity to the market.  The best sign of a liquid market is the range in the bid/ask spread.  A tighter bid/ask spread gives scalpers a better opportunity to trade successfully.  Market making occurs when a scalper tries to take advantage of the spread by posting a bid and an offer on a contract. This is generally thought of as the most difficult strategy to execute successfully due to the small possibility for gain and large possibility for loss.

The most important element in scalp trading (or trading in general) is to develop your own rules, follow those rules, and good money management.  If the market conditions on any given day do not meet your criteria to scalp the market, the best trade is no trade.  Good luck and happy trading!

*O/C/O means order cancels order. So, when one order is filled, the system will automatically cancel the other