Top Indicator Strategies for Scalping Trading
If you are a trader, you may have heard of the scalping technique. Scalping refers to booking profits from small market movements and changes in the prices after a trade is executed and is profitable. It is a style of day trading that requires a pre-planned exit strategy.
Scalping is not about making big profits on a single trade. Instead, it focuses on booking smaller profits with multiple trades. As a result, scalping can require a lot of time and information. However, indicators can help simplify it by giving you some information to bank your trades on.
If you are a trader, scaling indicator strategies can help you earn better profits from your investments. Keep reading to find out more:
The SMA indicator, also known as the Simple Moving Average indicator, takes the aggregate of closing prices over a period of time. This indicator can help you identify if the price of your security or commodity is rising or falling. So, you can find a trend. Once you identify the trend, you can create a scalping trading strategy.
The EMA indicator, also known as the Exponential Moving Average, considers more recent prices than the SMA indicator. If the EMA increases, it can be a good time to buy a stock. You can also buy a stock if the prices drop below the EMA or are more or less the same as the EMA. However, if the EMA falls, it may be time to sell the stock.
Also Read: Steps on How to buy & Sell Stocks
3.Parabolic SAR Indicator
The Parabolic Stop and Reverse indicator can help you find detailed information on price action trends. This scalping trading indicator shows the chart points below the price if there is an upward trend. If the trend changes, the chart positions move above the price. This means you can retrace the signal. The SAR indicator can help you determine the short-term momentum of a financial asset. It can also be used to place a stop-loss order.
Also Read: What is Stop Loss Strategy & How do you Use it?
Short for the Moving Average Convergence Divergence indicator, MACD is one of the many scalping strategies. It is used to find out the relationship between two moving averages. You can calculate the MACD by measuring the 9 days, 12 days, and 26 days moving average. Then, you can subtract the 26 days EMA from the 12 days EMA and set the 9 days EMA as the default setting, also known as the signal line.
5.Stochastic Oscillator Indicator
The Stochastic Oscillator indicator is used for CDFC trading, as well as indices and forex. This scalping trading indicator takes into consideration the closing price of the asset and compares it with several high and low prices of the same asset recorded over a given period of time.
The Stochastic Oscillator indicator always takes 14 days as the standard period. But you can change this if you want. Another thing to note is that the value of this indicator always fluctuates between 0 and 100. This is one of the most reliable indicators for scalping trading.
6.Average Convergence Divergence Indicator
The Average Convergence Divergence indicator can offer more intricate and detailed information compared to other indicator strategies. This indicator helps you capture market trends and, at the same time, understand momentum. To calculate the average convergence divergence indicator, you need to subtract the 26 days EMA from the 12 days EMA. The 9 days EMA is always the default when calculating the average convergence divergence indicator.
To Sum it Up
Using any of these indicators or a combination of them can help you in trading. However, these strategies can be challenging. So, be sure to learn more about them with time and experience to truly benefit from these scalping strategies.
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Frequently Asked Questions
Scalping can be used in forex markets, future markets, and stocks.
Traders who use the method of scalping to trade are known as scalpers.
Scalping is a style of trading where you book profits from small market movements and changes in the prices after a trade is executed and is profitable.
Scalping can be complex and difficult to execute. Therefore, it is better to research and learn more about scalping strategies before you start trading. Moreover, you must also understand that scalping can come with some disadvantages, such as high trading commissions of the broker. So, it is important to pick a good broker.
All indicators can help in scalping trading. So, it is advised to use them in combination to ascertain your trading strategy.
Yes, scalping is legal in India.