Scalping is a high-frequency procedure to capitalize on little market movements. From a general perspective, scalpers can seize any market. However, identifying a specific market type can enhance the strategy of a scalper by systematically looking for the most optimal and exact signals for entries.
What Is The Best Market For A Scalper
The markets usually comprise three stages:
- Accumulation or distribution: When the price consolidates in a zone for a considerable period. This stage ends in a breakout movement.
- Momentum: The strong movement that establishes the direction for the market to follow consequently.
- Trends: When the market moves in a clear direction, up or down, for a prolonged period.
By understanding how markets move, developing a winning strategy is the next step. So, what are the optimal markets for scalping? Let’s review all of them.
Check out the best markets for scalping at Altrady!
Scalping Consolidations
During this type of market, the price moves back and forth between a range of support and resistance zones.
There is a crucial rule among experienced traders for trading consolidations: avoid entering in the middle of the range.
That rule implies that the best zones to trade are the upper and lower ends, where the stronger demand and supply are present.
Then, how do scalpers trade a consolidation? Take note:
- By automated execution: Traders can place limit orders at the upper and lower ends to seize the rapid downside and upside reactions when the price reaches those zones.
- By manual execution: Traders can leverage chart and candle patterns to rule an entry. Engulfing patterns or double tops/bottoms play a substantial role in this way.
Scalping Momentum
Momentum is not precisely a type of market but is a primary movement that establishes the next trajectory of a market type. In this sense, it presents several opportunities for scalpers to seize an optimal entry into the market and make quick profits.
The best price momentum usually occurs when the price breaks through a significant zone. So, where can scalpers find momentum? Let’s see:
- Range breakouts: When the market is ready to get out of a consolidation, the price will attempt to go through either the resistance or support zone. If the attempt is successful, there will be momentum as a consequence of the liquidation sweep influenced by the market hype at the moment. This is an opportunity for a quick profit.
- Engulfing patterns: An engulfing candle is intrinsically a breakout movement over the top of a previous candle. After a movement like this, scalpers seek an entry on the next candle. Typically, they execute the entry when the next candle pulls back at the middle point of the engulfing candle.
Scalping Trends
The idea here is as easy as trading in favor of the prevailing direction. For such an attempt, scalpers can leverage the following:
- Pullbacks: These are little retracements in the middle of a trend. In such scenarios, engulfing patterns can be an entry signal.
- Continuation: Following a pullback, the price will attempt to continue its path. It implies a breakout momentum that scalpers can seize with a stop market order over the last swing high/low of the trend.
Check out also these Scalping trading strategy techniques!
Conclusion
Scalpers can spot opportunities in consolidations, breakout momentums, and trends that represent the most optimal markets and moments to make a quick profit.
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