A scalping strategy for options

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A scalping strategy for options

The format of scalping on options is a fairly common way of making a profit in this area of the market. The speed of trading and its high profitability results are the main factors that attract people to this method of trading. Today we will consider the effectiveness of high-speed trading, as well as a few practical examples of scalping strategies for futures contracts that could become highly effective tools for predicting the market using short-term contracts.

How reliable is the scalping strategy for options?

The question of reliability and effectiveness of this strategy for scalping on the market is primarily related to the effectiveness of the trading signals of the system, as well as the correct risk management. In addition, the reliability of this scalping strategy is tied to the professional level of the trading terminal and the parameters of the trading conditions that are available on the operator’s platform. By picking the right technical and trading parameters for the scalping strategy you can get fairly stable and high results using this trading format. Here are a set of recommendations that contribute to the effectiveness of scalping on options:

• Use platforms for trading from professional companies — in this regard, we recommend the terminal for futures trading from the our brokers rating, where you will find all the necessary technical indicators for scalping, as well as a set of highly effective forecasting tools
• Carefully and accurately calculate the risks when registering trading positions. The correct ratio of the cost of the trade to the volume of capital will help you avoid critical losses and drawdown in your account
• To conduct trading in scalping mode, use a system with an efficiency level of at least 85% and maximum universality for all underlying assets

This list of recommendations will allow you to engage in high-frequency trading in a safe and profitable mode.

Scalping indicators for options

Market professionals recommend using technical indicators that are capable of generating signals on fast impulse changes in the price of an asset as forecast indicators for scalping trades on the futures market. In this case, the main trend indicators work perfectly, and they can be found on the many platforms:

This set of forecasting tools will allow you to build universal strategies for scalping on electronic options.

A scalping strategy for futures trades – practice

For our first practical example of a strategy for scalping on the financial market, we will show a system that uses a combination of settings of two trend indicators. This format of generating technical signals allows you to best assess the current market situation on the asset chart and opens up the possibility of determining the points of price quotes where the chart reverses to build corrections or new trends. So, let’s set the following technical forecasting tools on the asset quotes:

• EMA Indicators with technical parameters 10, 20, 30
• 2 MACD indicators — 50/75/9 and the standard configuration

We will use turbo trades with an expiration period of 120 to 240 seconds, and we will register the positions when we receive the following signals from the indicators:

• EMA Indicators – a beam of movings reverses upwards on the chart after convergence in one point
• Indicator MACD 50/75/9 – the lines intersect upwards
• Standard MACD – the movings intersect level 0 upwards

Signals for trades DOWN will have the reverse building configuration. This scalping strategy format has a technical signal efficiency ratio of 90% and allows you to make the most stable earnings for short-term trading. It should be noted that the risk management parameters for this system are of the classic parameters – the maximum amount of trading funds for one trade should not exceed 3% of the total amount of capital.

Scalping in 1 minute

The next scalping strategy format for electronic options is designed to work with contracts that have the minimum expiration period of 1 minute. Here, trend indicators are also used with subtle settings parameters, allowing for the formation of two types of trading signals for turbo contracts. In this way, we will achieve high cyclicity of our technical signals and increase profit opportunities for scalping since this operating approach makes it possible to register contract packages. So, let’s install the following instruments on the trading chart:

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• SMA 5 and 10 indicators — we use blue for the moving with a five-minute period of building, for the second technical tool we use the standard coloring.
• MACD indicator – standard

To register trades UP with expirations of 1 minute, we use the following types of technical indicator signals:

Signal for the 1st type:

• The technical movings of the MACD indicator intersect upwards
• The blue lines of the SMA indicator intersect the second moving upwards

Signal for the 2nd type:

• The MACD oscillator lines intersect level 0 upwards
• The SMA indicator movings diverge upwards on the chart without intersecting

Using these signals, you can register up to 40 trades with short-term options in one hour, of which 90% will close with a profitable result. This factor will make it possible for you to earn up to 300% per week on options scalping.

Let’s sum up — scalping with futures trades using the correct mode of risk management and in combination with an effective trading system is the most rapid way to increase your account balance.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Simple Scalping Trading Strategy: The Best Scalping System

Thanks for stopping in! We’ve had many requests for the best scalping trading strategy over the years. We decided to get on board and give you an easy scalping technique. We think this is the best scalping system you can find. The strategy is called The Triples S or (Simple Scalping Strategy). The Triple S is easy to learn. With practice, it will become a great addition to your scalping strategy. It could even be the best scalping method you have. This strategy is included in our best trading strategy series. We created this series to help traders become successful.

While many of our favorite strategies focus on maximizing your potential for big gains, scalping focuses on finding many small gains within a short period of time. Rather than focusing on the quality of trades, scalpers are much more concerned with quantity.

What is Scalping?

Scalpers can make thousands of trades within a given trading period. There are three characteristics of scalping strategies: short positions, small profit margins, and high levels of leverage. Scalpers attempt to target price gaps and other short-term trading “loopholes” that allow them to quickly turn around a large position for a profit.

In order to find the opportunities for scalping, you will need to begin by selecting a few key technical indicators. These indicators can help you determine when short-term price gaps are likely to happen.

Because scalpers focus on short-term positions with low-profit margins, the best scalping strategies (such as the Triple S strategy mentioned below) require some leverage. It’s recommended that scalpers start with a large amount of capital. Opening and closing larger positions allow you to reduce the marginal costs of trading and maximize potential gains.

The Simple Scalping Strategy was exclusively designed for scalping. You can give it a try on a 1 hour or 4 hour time chart. Feel free to try it out and let us know how it works by commenting below!

We feel it works best with the 5 minute and 15 minute time chart. You can try this with a 1-minute scalping strategy. But we will focus on M5 and M15 charts.

This is a highly profitable forex scalping strategy that uses a very accurate scalping indicator.

The simple scalping strategy uses the volume indicator coupled with price action analysis.

Let’s talk about this indicator for a bit, shall we?

What is the Volume indicator for Forex? How does it Work?

To start, here is what it looks like:

The volume indicator could be interpreted as the “fuel tank of the major trading machine.” Some argue that the volume indicator cannot be used with trading in the forex market. This is because there is no “central exchange” so how can it be read effectively? Another argument is that the volume that you see for Forex is the “Tick” volume that occurs. This means you are not seeing the entire volume that is being traded at the time like you would with stocks.

The tick volume is measured by how much the price is has ticked “up” or “down” in that particular candle bar. So the more people are getting in at the time, the longer the volume line will become. This is because there will be more movement in price action with all of those entry orders flying in. So it makes sense that the volume indicator is, first of all, very accurate, and second has no real lag to it. It is currently showing you what the price action is doing the number of “ticks” on that candle bar. This results in the bar looking like this:

Scalpers use volume indicators for multiple reasons. Volume and price have a very strong, short-term relationship, but changes in trading volume usually happen before sustained price movements. Paying attention to volume indicators makes it possible to take advantage of these movements before they actually occur.

Using candlestick charts can also help scalpers get a quick view of the market. Candlestick charts contain more information than simple price charts (such as daily price ranges), allowing traders to understand current price trends. Below, we will discuss our one-minute scalping strategy.

One Minute Scalping Strategy

Scalping is a trading strategy that usually works best using a short-term time frame. Contrary to position trading strategies, scalping focuses on making many profitable trades with notably small margins

Scalping is ideal for day traders and individuals who are capable of making key decisions in short amounts of time. Usually, you will not have much time to conduct a thorough fundamental and technical analysis while scalping. Moving averages are constantly changing and prices are constantly being “corrected.”

Whether you are scalping EUR: USD, other currency pairs, or other assets outside of forex, it’s important to pay attention to the details. Scalping typically occurs in 5-20 minute increments. However, if you were trying to implement a one-minute scalping strategy, volume indicators, M5/M15 time charts, and price action trends should be the first things you look at.

The key to scalping while using short time frames is to identify price changes before the rest of the market has had the chance to act. You should also be willing to accept very low profit margins—gaining less than 1% on a given action will still usually be in your best interest. Because of this, many scalpers may implement tight stop-loss and stop-limit orders over time. Also, learn more about the best hedging strategies here.

Now, let’s get to it!

The Triple S Simple Scalping Strategy Rules – Best Scalping System

Side Note** Since you are all the way down to an M5 or M15 time chart the price is very sensitive to any and all news. Because of that, I would not use this strategy 30 minutes before and after a major news announcement. To find out if there will be a news announcement just check here to confirm!

Rule 1: Apply Best scalping strategy indicator: Volume

Any trading system platform is okay because the Volume Indicator comes standard on all trading systems (platforms).

Step 2: Go to an M5 or M15 Time Chart

In this particular M5 time chart we are looking at a USDJPY pair.

What you want to look for first is if the volume indicator is showing you any trend, reversal, or stagnant price action. If the volume indicator increase, so will the price action. This is because there is a plethora of interest in that currency pair.

Once you see a drop off in the volume indicator, you know that there are fewer “ticks” and hence less interest in that trend. The strategy we want to focus on mainly is trend trading. You can use the volume indicator for reversal trades. But that’s not something we are interested in with this strategy.

Step # 3 Of the Best Scalping System is to Analyze the Volume Indicator: Look for a healthy Uptrend or Downtrend. Find pullback in Price action and wait for Volume to Slow Down or “Quiet down.”

The volume indicator should tell you an enormous amount of information. If you see the volume indicator do this:

You know that the trend is either:

A. Dying and heading for a reversal.

B. Take a break before continuing to the upside.

In this case, it took a break. There were fewer buyers and sellers at the time (traders making trading decisions). Then they picked up and continued to the upside. Our strategy takes advantage of this pullback before the price action continues upward in this example.

So in this analysis step to the strategy you need to check out the volume indicator. Based off of what you now know, make a good trading decision based off of the current price action.

Using our example, you should see a steady uptrend followed by a pullback/retracement phase.

Step # 4 Once you see the Volume Rise/Spike (after if slowed down) Make your Trade Decision Based off of Current Price Action: Best Scalping System

This part is all up to you. There is no “line crossing,” “arrow appearing” or “a small voice telling you to buy now!” You have to understand a little bit about how the price action works before you decide on your entry. Using our example, the Volume indicator shot up drastically meaning that traders are getting in on the action and thus driving the price upwards!

Once you see this big spike or see that the volume indicator is showing that there is some action heading your way you want to get ready to enter this BUY trade because all things are pointing upwards.

Entry/Exit Strategy for the Simple Scalping Strategy

With the current structure of this trade, it made sense that since we saw our “spike” in the volume indicator and it broke this small retracement trend we pulled the trigger and entered a buy!

Your exit strategy is simple. You go for 10-20 pips. Also, You Place a 5-8 pip stop loss. Once you are up 10 pips move your stop loss to 5 pips to lock in a small profit (unless the spread is very large which you would most likely break even then.)

This 20 pips in under 5 minutes will not happen every time, but when it does it will surely make you smile �� The reason we say go for 10-20 pips is for cases like this where you see a big jump after the retracement of the main trend. You do not want to get out too early.

Consider this strategy on any of the major currency pairs and you should see some great results!

**The rules for a SELL trade will be exactly the same, only opposite on your chart. (I.E. instead of starting with an uptrend first it will be a downtrend instead)

Other Technical Indicators for Scalping Strategies

As you can see, our Simple Scalping Strategy mainly uses volume indicators and candlestick charts. We developed this strategy knowing that these indicators give traders the tools they need to make quick and precise trading decisions.

Because scalping is driven by technical analysis, you should consider using other technical indicators as well.

  • Exponential Moving Averages: these averages have been specifically weighted in order to react more sensitively to recent price movements. When using EMA charts, keep a close eye out for potential “crossovers.”
  • Moving Average Convergence Divergence (MACD): this trend-reliant momentum indicator helps balance 26 periods and 12 period moving averages. Despite what you may assume, the MACD can be used within any trading time-frame.
  • Bollinger Bands: these handy bands contain the vast majority of price movements (about 95 percent). Use these bands to help determine when breakouts and trend reversals are most likely to occur.
  • Relative Strength Index: the RSI is a momentum indicator that measures levels of strength and resistance on a scale of 1 to 100. This can help limit the possible risks attached to scalping.

These indicators will help you make your scalping strategy with better confidence. As long as you are able to consistently follow our strategy and carefully include stop losses, scalping is a trading strategy will develop naturally.

Conclusion – Best Scalping Strategy

Simple Scalping Strategy could be a powerful 1-minute scalping system as well and if you try in on the time frame let us know your results! We could use the best scalping strategy indicator (volume) and have a whole basket of strategies to use with it. The reason is that it can confirm a trend, a can confirm a reversal, and it can show us when there is less interest between buyers and sellers.

With this best scalping system, you will find that it’s not only easy to scalp but also will find a high win percentage strategy and a chance to grow your account very quickly. If you are not a fan of scalping and enjoy swing trading or day trading strategies make sure you check out the Rabbit Trail Channel Strategy that will show you how to grab 50 pips at a time with a high probability of winning!

Thank you for reading!

Please leave a comment below if you have any questions about Scalping Strategy!

Also, please give this strategy a 5 star if you enjoyed it!

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Top Indicators for a Scalping Trading Strategy

Scalpers seek to profit from small market movements, taking advantage of a ticker tape that never stands still during the market day. For years, this fast-fingered crowd relied on Level 2 bid/ask screens to locate buy and sell signals, reading supply and demand imbalances away from the National Best Bid and Offer (NBBO), or the bid and ask price the average person sees. They would buy when demand set up on the bid side or sell when supply set up on the ask side, booking a profit or loss minutes later as soon as balanced conditions returned to the spread.

That methodology works less reliably in our modern electronic markets for three reasons. First, the order book emptied out permanently after the 2020 flash crash because deep standing orders were targeted for destruction on that chaotic day, forcing fund managers to hold them off-market or execute them in secondary venues.

Second, high-frequency trading (HFT) now dominates intraday transactions, generating wildly fluctuating data that undermines market depth interpretation. Finally, the majority of trades now take place away from the exchanges in dark pools that don’t report in real time.

Key Takeaways

  • Scalpers seek to profit from small market movements, taking advantage of a ticker tape that never stands still during the market day.
  • Scalpers can meet the challenge of this era with three technical indicators custom-tuned for short-term opportunities.
  • You’ll know those conditions are in place when you’re getting whipsawed into losses at a greater pace than is usually present on your typical profit and loss curve.

Scalpers can meet the challenge of this era with three technical indicators custom-tuned for short-term opportunities. The signals used by these real-time tools are similar to those used for longer-term market strategies, but they are instead applied to two-minute charts. They work best when strongly trending or strongly range-bound action controls the intraday tape; they don’t work so well during periods of conflict or confusion.

You’ll know those conditions are in place when you’re getting whipsawed into losses at a greater pace than is usually present on your typical profit and loss curve. Read on for more about such signals.

Moving Average Ribbon Entry Strategy

Place a 5-8-13 simple moving average (SMA) combination on the two-minute chart to identify strong trends that can be bought or sold short on counter swings, as well as to get a warning of impending trend changes that are inevitable in a typical market day. This scalp trading strategy is easy to master. The 5-8-13 ribbon will align, pointing higher or lower, during strong trends that keep prices glued to the 5 or 8-bar SMA.

Penetrations into the 13-bar SMA signal waning momentum that favors a range or reversal. The ribbon flattens out during these range swings, and price may crisscross the ribbon frequently. The scalper then watches for realignment, with ribbons turning higher or lower and spreading out, showing more space between each line. This tiny pattern triggers the buy or sell short signal.

Relative Strength/Weakness Exit Strategy

How does the scalper know when to take profits or cut losses? 5-3-3 Stochastics and a 13-bar, 3-standard deviation (SD) Bollinger Band used in combination with ribbon signals on two-minute charts work well in actively traded markets, like index funds, Dow components, and for other widely held issues like Apple Inc. (AAPL).

The best ribbon trades set up when Stochastics turns higher from the oversold level or lower from the overbought level. Likewise, an immediate exit is required when the indicator crosses and rolls against your position after a profitable thrust.

Time that exit more precisely by watching band interaction with price. Take profit into band penetrations because they predict the trend will slow or reverse; scalping strategies can’t afford to stick around through retracements of any sort. Also, take a timely exit if a price thrust fails to reach the band but Stochastics rolls over, which tells you to get out.

Once you’re comfortable with the workflow and interaction between technical elements, feel free to adjust standard deviation higher to 4SD or lower to 2SD to account for daily changes in volatility. Better yet, superimpose the additional bands over your current chart so that you get a broader variety of signals.

Multiple Chart Scalping

Finally, pull up a 15-minute chart with no indicators to keep track of background conditions that may affect your intraday performance. Add three lines: one for the opening print and two for the high and low of the trading range that set up in the first 45 to 90 minutes of the session. Watch for price action at those levels because they will also set up larger-scale two-minute buy or sell signals. In fact, you’ll find that your greatest profits during the trading day come when scalps align with support and resistance levels on the 15-minute, 60-minute, or daily charts.

The Bottom Line

Scalpers can no longer trust real-time market depth analysis to get the buy and sell signals they need to book multiple small profits in a typical trading day. Fortunately, they can adapt to the modern electronic environment and use the technical indicators reviewed above that are custom-tuned to very small time frames. (For related reading, see “The Ins and Outs of Forex Scalping”)

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