1. Introduction to Stock Trader Types
  2. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  3. Decision-Making Methods: Informed, Uninformed, Intuitive
  4. Informed Traders: Fundamental Traders, Technical Traders
  5. Swing Traders
  6. Buy and Hold Traders
  7. Value Traders
  8. Trend Traders
  9. KISS Traders
  10. Momentum Traders
  11. Range-bound Traders - Break-out Traders - Channel Traders
  12. Options Traders
  13. Options Seller Traders
  14. Day Traders
  15. Pattern Day Traders
  16. Intra-Day Traders
  17. Intra-Day Scalp Traders
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion

Intra-day scalp traders undertake one of the most challenging styles of trading to master. It requires unbelievable discipline and trading focus.

Intra-day scalp trading is a particularly short-term form of day trading as scalpers seek to lower risk exposure by lowering their time in the market. Scalping usually yields the smallest gains per successful trade. It is generally based on technical analysis of indicators such as moving averages, MACD (Moving Average Convergence Divergence), momentum oscillators, Fibonacci sequences, etc. Trades are often held only for minutes at a time, and sometimes even shorter than that.

Traders are attracted to scalp trading for the following reasons:

  • Less exposure to risk
  • They can place up to a hundred trades or more per day
  • Ability to fight the greed, since their profit targets are very small
  • Greater number of trading opportunities

Benefits of being an intra-day scalp trader

  • Positions are typically only held for short periods of time, allowing less chance for reversals to knock out the scalper’s trading position. This also means less need for patience and having to wait for a trade to close.
  • Scalpers typically take profits at 1:1 risk to reward or less, allowing their strategies to achieve a higher strike rate, rather than a high reward rate.
  • Because the position is typically held for a short period of time, there is also less knowledge of the market, and trading strategies needed, as long-term analysis is not as useful. Trends, pivot point, Fibonacci, and the like are fairly irrelevant.

Problems encountered by intra-day scalp traders

  • Not all brokers allow for scalping on their platforms.
  • Since good trades typically yield only 1:1 risk to reward or less, one loss can deplete the gains of several successful trades.
  • Since the pip (performance index paper) yields are often 5 pips or less, they may have to make many trades, even dozens in one day to accomplish their financial goals.

An example of an intra-day scalping trade - Pandora Media Inc. (NYSE: P)

 

Intra-day scalp traders must deal with two trends and this makes this type of trading a much more skillful endeavor. Scalpers must watch and know the daily chart trend plus the trend of the intra-day time frame they may be using to find support or resistance.

The day trader should know that a bounce is very likely at strong intra-day support levels despite the intra-day trend being down, as long as the daily chart trend is up. A scalp trader can buy the strong intra-day support level for the small bounce. Scalpers will only be looking to take a small profit on the trade. Once they are in the money on the trade, they move their stop loss to break even to protect against a loss. They need a great deal of discipline so that greed does not enter the equation when trading unless they are in the money and have already secured a gain.

Winning is critical

Unlike a number of other day trading strategies where they can have a win/loss ratio of less than 50% and still make money, intra-day scalp traders must have a high win/loss ratio. This is due to the fact that losing and winning trades are generally equal in size. The necessity of being right, is the primary reason scalp trading is such a challenging method of making money in the market.


Contrarian Traders
Related Articles
  1. Trading

    Scalping As A Novice Trader

    Scalping, a subset of day trading used by experienced traders, involves quick moves and decision making. We offer the basics for beginner scalpers.
  2. Trading

    Scalping: Small Quick Profits Can Add Up

    We look at different styles of scalping, and how they can all be very profitable.
  3. Trading

    Scalping: Small Quick Profits Can Add Up

    Scalping entails taking profits on small price changes shortly after a trade is entered.
  4. Trading

    Is Scalping Or Swing Trading Right For You?

    A look at how scalping strategy is different from a swing trading strategy.
  5. Trading

    Minute-to-Minute Trade Signals for Today's Scalper

    Scalpers can profit in today's modern environment by using technical indicators—outlined here—that are custom-tuned to very small time frames.
  6. Trading

    Introduction To Trading: Scalpers

    This type of trader makes many trades per day to "scalp" a small profit from each trade. Find out how it works.
  7. Trading

    Forex: How To Scalp Fundamentally

    Learn why event-driven scalping in the currency market involves balancing fundamentals with technicals.
  8. Trading

    4 Common Active Trading Strategies

    Learn four of the most popular active trading strategies and why active trading isn't limited to professional traders anymore.
Frequently Asked Questions
  1. I'm about to retire. If I pay off my mortgage with after-tax money I have saved, I can save 6.5%. Should I do this?

    Only you and your financial advisor, family, accountant, etc. can answer the "should I?" question because there are many ...
  2. My wife and I both converted our Traditional IRAs to Roth IRAs over a decade ago and have invested the maximum allowed each year since. We're buying our first home soon. Do we both qualify for one-time, tax-free, $10,000 distributions?

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ...
  3. Is a Thrift Savings Plan (TSP) a qualified retirement plan?

    Take advantage of the government's retirement plan for employees with the Thrift Savings Plan. As with a 401(k), contributions ...
  4. Who manages the assets in a Roth 401(k) account?

    Learn how to personally manage the assets in your Roth 401(k) plan and determine the best options available to help meet ...
Trading Center