Hello

This post is homework for the professor @yohan2on

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Trading Styles

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There are mainly 4 types of trading styles:

1. Intraday Trading(day trading) in this style of trading traders trade within one day limit. One needs to look at daily charts and be good at technical analysis.

2.Swing Trading or Positional Trading in this style of trading traders trade with the swing of the asset( upward or downward trend). It mainly lasts for 2,3 days till the swing goes on.

3. Long Term Trading in this type of trading style traders actually invest their money for a large amount of time they usually hold their positions. This type has the lowest risk among all.

Scalp Trading in this style of trading traders trade for a very small amount of time they maximum hold their position for 1 hour. Scalp trading can be made in as small as 1 minute of time. It is basically when a trader makes a small profit he exists his position they did not hold positions for longtime.

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Scalping

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Scalping is a method where a trader enters or exits within a few minutes of time trading with a huge volume. Scalping is looking for the right entry point through candle chart trend with maintaining a stop loss and when the trader makes a profit he exits his position.

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As everything has pros and cons so as Scalping.

Pros of Scalping

• Scalping has a high win rate.

• You may get a lot of opportunities within one day for trade.

• Lower risk because you trade for a small amount of time.

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Cons of Scalping

• Scalping does not have a good risk-reward rate.

• You may end up with large amount of trades in a day ( over-trading)

• As a scalper you exit from your position very quickly so you may lose some profitable trades.

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If you want to be a Scalper or Day trader it simply depends on you and your personality. If you compare which one is the hardest trading and which is easy then you came up with this series.

TOUGHEST FIRST to EASIEST

Scalping > Day tarding > swing trading > long term investment

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Thing you must have to know before you go for Scalping

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• You should know important locations to enter or exit or you should know the candlestick pattern.

• Scalping is the most difficult trading for that you must have to be very good at execution your orders. ( entry and exit).

• You have to be very discipline means when you enter a trade be ready to take profit or loss within a small time interval.

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Some technical thing you should know

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EMA

EMA stands for Exponential Moving average. It is a technical indicator used in scalping trading. EMA is a moving average that usually considers the recent data such as price action, the volume of trade. EMA helps traders to identify entry and exit points.

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FINGER TRAP SCALP TRADING STRATEGY

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As the name suggests fingertrap means something that traps your finger. A finger trap is basically a toy that has some push and pulls trick when you insert your finger inside it, it traps your finger.

On a similar basis Finger Trap, Scalp Trading is using small time frames and does not get trapped in long trade holdings.

It is invented by James Stanley of DailyFX.

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Thing to know in Finger trap scalp trading

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• You must have knowledge about EMA. Here we use 8-period EMA and 34-period EMA for detecting the trends and for buy and sell signals.

• When the price is above both EMA lines this is a signal for upward trend.

• When the price is below both EMA lines this is a signal for downward trend.

• You always set your stop-loss normally 10 pips above or below the previous highs. I generally believe that stop-loss depends on your own risk-taking ability and your ability to lose up to some point. Therefore, stop loss defers for different people but normally it is 10 pips up or down.

• Do not forget to trail your stop loss 1, 2pips when the price goes higher or lower according to your trade.

• Know the trend from a large time graph like 1hour and take good entry with low time charts like 1min,3min,5min.

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Steps involve during process

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• Search for the required asset on which you want to trade and select the EMA function from the functions option. Set it at 8-period and 34-period with different color lines so that you do not get confused.

• Choose 1 hour(large time) frame to identify the trend.

• After identifying the trend go to small time frames( 1min, 3min, 5min) for taking good entry points.

• After you get some signal initiate a trade with the stop loss ( depends on your risk normally 10 pips up or down the previous swing high or swing low). Always remember to trail your stop loss.

• Exit your position when your desired target is hit and do not greed otherwise, it will cost you heavily.

These are the steps involved in the finger trap scalp trading style. Let's see some examples.

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1. I used ETHUSD asset

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I use the trading view platform in examples as it is very easy to use.

• I searched for my desired asset and apply EMA function. Here blue line shows 8-EMA and the red is 34-EMA.

• I selected a 1-hour candlestick chart to identify the trend.

• As you can see from the chart I circled some of the upward trends( first 3) and some downward trend(last).

• Now I have gone for the small time frame so, I go for a 5min chart for looking good entry points.

• Good entry points as I already discussed are identified by EMA lines when the price is above both the line a good upward move and when the price is below both EMA lines a downward move.

• Here I circled many good entry points where the price is above or below the EMA line. In my trade, as you see price is below both EMA lines so I IMMEDIATELY initiate my trade, and when I am making some profit I exit IMMEDIATELY without any greed.

• I immediately exits from my position after making some amount of profit.

So, this is the basic rule of finger trap scalp trading execute your trades swiftly.

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2. I used BTCUSD asset for another example

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• First search for an asset and apply the EMA function. 8-period and 34-period.

• Open a large time frame to identify the trend. Here I am not getting a clear trend.

• So, there I used other indicators( as you can't depend on only one indicator for your trade). Here, I am getting a signal from the support and resistance line as you can see in the chart asset price just touch the previous low, and now taking support and price is going in an upward trend.

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• So, to confirm my trade I opened one minute chart and see that price of the asset is above the EMA lines and sustains there for some time, indicating a clear buying signal. So, I initiate my trade.

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• Always make sure to trade with stop loss. It has a default value of 15 pips. I choose 25 pips here.

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• When you make some profit exit from your positions as this is Scalp trading make profit in small intervals of time.

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I here used the trading view platform and all screenshots are from the trading view.

I used a demo account I hope it may my real account and I am making a huge profit of around $5600 today in just 2 minutes.

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Conclusion

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As everything comes with pros and cons so as the Scalp trading style. It is a high-risk and high reward-giving trading style in just a couple of minutes.

One must know about the risk involved in Scalp trading and should know about how to manage their risks.

I personally never used scalp trading before as it is very new to me when I learn from professor @yohan2on.
But, now I want to try the Scalp trading style.

I learned about it from the professor and do my own research and this a great learning homework given by the professor.

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Thank you professor for such a great homework and for reading my homework. Waiting for your feedback.

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cc:

@yohan2on
@kouba01