Scalping Rules 

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The forex, stock, and futures are trading platforms where individuals invest their funds for the long-term. However, there are also different types of traders who enter these markets to make profits by just trading for some minutes or hours – the scalpers. They take the help of different rules that are also called scalping rules to make immediate profit. 

Scalping Rules in Trading 

While you use the scalping strategy in trading, you need to be aware about every single second as the price fluctuates very quickly. Moreover, for successful trading, scalping can be most profitable for you, but only when you follow some of the effective scalping rules.

In this blog, we will go through the five amazing scalping rules or tips one by one that will help you to make money.. You should stick to them so that you do not get puzzled in this super-intensive way to trade.


Cut Down – Usage Of Trading Indicators 

The first scalping rule is to minimize the application of multiple trading indicators. Trading indicators are plotted lines on the price charts that help the traders to recognize specific signals (buy or sell) and trends. 

They are produced by the changes in the price, volatility, and volume of a security or contract within the market. 

Relative Strength, Moving average – exponential and simple, Stochastic indicator, Bollinger bands, and Moving average convergence divergence (MACD) are some of the most practiced lagging and leading indicators. 

Technical analysts and advisors use trading Indicators (Technical Analysis Tools) to predict any opportunities and price movements in the near future. 

You can also use these Technical Analysis tools to determine the entry price and exit prices/points to get buy or sell signals. Not only this, but they also present you the information on-trend, momentum, volatility, and volume of your trade. 

Before using any indicator for scalping, check it twice; otherwise, you may end up using them and overloading with much information. Instead, use 1 or 2 indicators or 3 (maximum) that you have tried or tested.

And just use them effectively, and it will be easier for you to evaluate market situations. 

Traders prefer to apply such indicators. However, there are also some traders who make good profits even without using any indicators at all. 


Invest in Profitable Stocks

In order to make scalp trade, you should lessen the number of trades in a single day so that your margin requirement and risks are also reduced. 

Margin is the borrowed funds that brokers lend to the traders to buy securities and commodities more than they can afford. 

You should keep your risk not more than 2% of your total capital.


For example, if your initial deposit is 2,00,000, then your margin should be 20,000, not more than that. 


When you make small trades, your invested fund is also tiny, which means less margin. Therefore, try to involve in taking small stakes and keep trading even if there are few losses.

Otherwise, you would receive a margin call to liquidate your trade without your approval. 


Minimize Losses 

Reducing the losses is one of the most significant scalping rules that a trader should be attentive to. As a scalper, you indeed trade in many trades in a single day. Besides, it is also true the success rate of scalping is not 100%. 

Some scalpers earn good profits from it, while others lose the profits earned. This is why you must cut down the losses on every losing trade to make good profits in scalping. 

You will come across various rules to lessen the losses. However, the one that you should not forget is fixing a stop loss. As a scalper, you are not provided with this facility most of the time, so closing the position with inconsiderable losses is a great idea. 


Master Certain Strategies 

Except for swing trading and long term investment, you should not jump into a strategy to strategy. In scalp trading, you make multiple trades on a particular day. 

Imagine you made 10 trades and used various methods to execute them. Now you would get confused as to which system worked or which did not? 

So, sticking to just 2 or 3 effective strategies is enough. You can test them on a demo account provided by the broker and then apply them to trade.

The most used methods on which you should excel are candlesticks pattern, technical tools, and any major financial news and announcements. 

Financial news and announcements save your trade from the financial crisis. They provide you with an idea of which currency pairs, stocks, and commodities you should invest in.


For example, before trading in specific currency like USD it is good to consider all the data including the latest market news to make a smart trade decision. 


Selection Of Preferred Market 

Scalping is a kind of trading or short term trading strategy. It is not only limited to futures alone. You can even use it to trade in forex and stocks as well. Each of these instruments will have its pros and cons. You can select any one which goes best with your trading strategy. These market include; 

  • Scalping the forex market
  • Scalping the futures market 
  • Scalping stocks 

Scalping the Forex Market

The currency pairs (Dollar, Yen, Rupees) are bought, exchanged, sold, and speculated on for 24 hours in the forex market. You can place numerous trades in currencies simultaneously throughout this time frame. 

Besides, traders prefer to scalp currency pairs for 1 to 15 minutes (best time frame). However, 1 minute and 5-minute time frame are also standard in forex market strategies. That is why you should learn about How to do Scalping Forex?


Scalping Stock Market 

Scalping in the stock market allows you to place orders for stocks for short periods. You can earn small profits by taking appropriate and quick entries and exits after identifying the small changes in stock prices. 

The Stock Market remains open from 09:15 AM to 03:30 PM. You can trade within this time. 

To illustrate more, suppose you buy 1000 shares (stock) of any company @100 per share and exit the trade at @105, and again you buy at @110 and exit the business at @112 or @113. This way, you take small trades and small profits. Here, you take entry and exit very fast. 


Is scalping legal?

Scalping is adopted for short holding periods, like holding positions in multiple trades for a few seconds to minutes. It can be done in any securities and commodities as well. 

To make scalp trading profitable, you will require some master scalping rules, including minimizing the trading indicators, investing in lower stakes, minimizing your losses, mastering yourself in trading strategies, and selecting your kind of trade. 

When it comes to the point that whether it is legal or not then Yes!! Scalping is a legal strategy as there is no federal law against it. It is used by many traders legally in India.

However, an audit is compulsory if your annual turnover (generated by scalping) is increased by more than 1 crore. You need to pay tax on the exceeded amount.

So, here are the rules. Follow them wisely and make maximum out of the trade. 

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