What is scalp Trading?
Scalping or Jobbing is a day trading method specially booking profit on short movement of particular scrip. As soon as a position make profit, scalpers will close the trade immediately. An exit strategy is a very important part of this trading. Because the average stop loss is bigger than the average profit, the scalping ends up with a loss.
What could be the Risk reward ratio of scalping?
The risk reward ratio is the most important part in the scalping trade. Small risk and high reward ratio is always a good practice. If a Scalp trader practicing with 1:1 RR, it may be a tough to book consistent profit. The same way 1:3 or 1:4 also not advisable for scalping because, usually scalpers placing orders in short movement. Imagine a trader fix his risk as Rs.1000 and target as 1000. if he attempts 10 t trades and out of 10 trades he won 7 and loose 3. Now he got Rs.2000 as profit. But if he choose 1:2 risk reward ratio in the same situation, his profit will be Rs. 8000. in short 1:2 is the best practice for scalping.
What is the Best Time frame for Scalp Trading?
Time frame is not much important in scalping, even though higher time frame like 15 minute or more is not advisable. between 2-7 minute is a better time frame for high liquids and high volume scrips.