Some Scalping Strategy steps

Many traders want to implement scalping strategies but don't know where to start. Actually scalping strategies can be started from 3 simple steps, namely: determine the direction of the trend, the entry around the retracement level or breakout and determine the amount of risk.

Determine the direction of the trend
The first simple step of a scalping strategy is to determine the direction of the trend. Knowing the direction of the trend is very vital to determine entry. The simplest way to find out the direction of the trend is to observe high levels and low levels. If a currency pair forms a series of higher high and higher low levels, or high levels higher than previous high levels, and low levels higher than previous low levels, then the price movement is called an uptrend, and the trader is just waiting for the opportunity to enter buy. Conversely, if you form a series of lower high and lower low levels, then the movement is a downtrend and traders are waiting for opportunities for sell entry.

Here's an example of a USD / CAD pair at the 30 minute time frame:

Determine the right entry momentum
The next step is to determine the most appropriate momentum for entry. In scalping, traders usually choose between using retracement strategies or breakout strategies. In an uptrend, the retracement strategy focuses on the pullback technique (when the price moves back towards the original trend after retrace), and the trader will enter buy at the lowest price level. While the trader breakout strategy will only buy when the market price has broken the resistance level and will form a new higher high level.

In the example above there are 2 levels that can be used as reference entries. First is the swing low level when the price movement forms a higher low level, traders can buy at that level (pullback technique), Second is the swing high level when the price has broken through that level and will form a new higher high level, traders can use the breakout technique with entry buy at that level.

Determine the amount of risk
This last point should be taken into account before the trader executes the trade, namely the stop loss level and also the target level (take profit). There are various ways to determine the stop loss level (risk). In accordance with the amount of risk agreed upon, the trader should determine in advance the value of risk in units of money (for example using the rule of 1% of balance), then determine the position size (size of trading volume) according to the size of the pip stop loss.

Also Read :Know the Three Line Strike Pattern?