Scalping

Scalping is an ultra-short-term trading strategy that focuses on capturing small price movements within a very short time frame, often lasting seconds to minutes. Scalpers aim to make dozens or even hundreds of trades per day, accumulating small profits that add up over time.

Since scalping relies on quick execution and low spreads, it is best suited for highly liquid assets like Nifty and Bank Nifty futures & options. Scalpers use tight stop-losses and high leverage to maximize returns while managing risk.

Key Characteristics

• The objective is to make multiple small trades throughout the day instead of holding positions for long.
• Works best in high volatility conditions, focusing on rapid price fluctuations.
• Risk management involves tight stop-losses to limit risk since profits per trade are small.
• Uses VWAP, RSI, Moving Averages, Price Action, and Order Flow Analysis for trade decisions.

Time Frames Used

• Entry & Execution: 1-minute (M1), 5-minute (M5) charts
• Confirmation & Trend Analysis: 15-minute (M15), 30-minute (M30) charts

Example

A trader spots momentum in Bank Nifty at 44,800, enters a long position at 44,805, and exits at 44,820 within a minute, making a 15-point profit. With 10 lots (250 quantity) in Bank Nifty options, this results in a ₹3,750 profit (before brokerage and charges).