The name of the strategy is a little bit aggressive but if you get its logics you will understand the analogy. On simple words, scalping is a trading strategy designed to profit from small price changes, with profits on these trades taken quickly and once a trade has become profitable. All forms of trading require discipline, but because the number of trades is so large, and the gains from each individual trade so small, a scalper must have a rigid adherence to their trading system, avoiding one large loss that could wipe out dozens of successful trades.
That is why, the most popular type of contracts are turbo options with the expiration period as little as 60 seconds. If we draw an analogy with other trading methods, such strategy is scalping. We recommend scalping as a strategy for turbo options. It is simple, reliable and can be incredible profitable in a very short period of time.
What Indicators You Need to Use for Scalping?
As mentioned above, the scalping strategy is simple. It is based on the a few tools to accurately determine the direction and signals.
First of all, you need to choose an asset for trading. Scalping works best with volatile currency pairs. However, we do not recommend using it with cryptocurrencies.
Secondly, you need to set your chart to “Japanese Candles” and set 10 sec timeframe.
Trading shoule done on a stable trend so you should draw the price corridor. Use “Parallel channels”, a standard tool from the Pocket Option.
We recommend applying a scalping strategy within 60 seconds. It is extremely simple. Once you determine the trend and its price range, you can begin to alternately buy options when the price bounces from the channel upper and lower borders.
Experienced traders like scalping because it is simple and straightforward. However, in order to weed out false signals caused by market noise on lower timeframes, we recommend using an additional indicator. For example, you can use Stochastic Oscillator.
You should set the Stochastic indicator to lower timeframes. So, we recommend changing % K period from 14 to 5. Scalping can be accomplished using a stochastic oscillator. The term stochastic relates to the point of the current price in relation to its range over a recent period of time. By comparing the price of a security to its recent range, a stochastic attempts to provide potential turning points.
Scalping with the use of such an oscillator aims to capture moves in trending market, for example: one that is moving up or down in a consistent fashion.
How to Trade With a Scalping Strategy?
Congratulations, you configured the terminal and indicators. Now, it is time to start trading. Signals occur quite often, so you need to act as quickly and without delay.
Buy a CALL contract when the price reaches the lower border of the price channel, and Stochastic leaves the oversold zone.
Buy a PUT option when the price bounces off the upper border of the channel, and the Stochastic leaves the overbought zone.
The expiration period should be less than 60 seconds.
In conclusion, scalping requires a trader to have iron discipline, but it is also very demanding in terms of time. While longer-term time frames and smaller sizes allow traders to step away from their platforms, since possible entries are fewer and can be monitored from a distance, scalping demands a trader’s full attention.
Possible entry points can appear and disappear very quickly, and thus, a trader must remain tied to his platform. For individuals with day jobs and other activities, scalping is not necessarily an ideal strategy. Instead, longer-term trades with bigger profit targets are more suited.
Good luck with Pocket Option!
