What Is Scalping?
Scalping is the art of capturing tiny price movements—5-20 ticks—dozens to hundreds of times per day. Holding periods: seconds to minutes. Target: 0.1-0.5% per trade. Win rate: 60-70%+. Volume: insane.
You're not waiting for trends. You're exploiting bid-ask spreads, order imbalances, and micro-inefficiencies that last seconds. It's high-speed chess against algorithms, market makers, and other scalpers.
This is not for everyone. It requires focus, discipline, and execution speed. But for those who master it, scalping prints consistent daily income.
Scalping Math: The Power of Compounding
50 trades per day × 0.2% average win × 60% win rate = 6% daily gain
Start with $25,000. After commissions and losses, net 3-4% per day.
3% daily compounded = 25% monthly = 1,400% annually (theoretical max).
Reality check: Most pros target 1-2% per day. That's still 20-40% monthly. Not bad for minutes of work.
The Scalper's Setup
Scalping demands specific tools and market conditions. Here's the professional toolkit:
Required Infrastructure
- Direct market access (DMA): No retail brokers. You need sub-millisecond execution.
- Level 2 data: See order book depth. Know where bids and asks stack.
- Time & Sales (tape reading): Watch every transaction in real-time. Spot institutional flow.
- Low commissions: $0.005/share or less. At 50+ trades/day, commissions kill.
- Hotkeys: One-click execution. No mouse clicking—keyboard only.
- Fast internet + redundancy: 1 Gbps+ fiber. Backup connection. Latency = death.
Best Assets for Scalping
Not every stock/future works for scalping. You need specific characteristics:
- High volume: 10M+ shares/day. Liquid entry/exit.
- Tight spreads: $0.01 spreads max. Wide spreads kill scalping edge.
- Volatility: ATR > 1% daily. Dead stocks don't move enough.
- Clear patterns: Support/resistance respected intraday.
Scalper favorites: SPY, QQQ, AAPL, TSLA, NVDA, ES futures, NQ futures
Core Scalping Strategies
1. Support/Resistance Bounces
Setup: Price tests key level (yesterday's high/low, VWAP, round number).
Entry: Rejection candle forms. Buy the bounce (long) or sell the rejection (short).
Target: 5-15 cents. Exit fast.
Stop: 3-5 cents below entry.
Win rate: 65-70%
2. Breakout Momentum
Setup: Stock consolidates at resistance. Volume contracts.
Entry: Breakout on volume spike. Buy first 2-3 seconds.
Target: 0.3-0.5% (quick pop).
Stop: Break below breakout level.
Win rate: 55-60% (lower but bigger wins)
3. VWAP Reversion
Setup: Price extends 0.5-1% from VWAP. No major news.
Entry: Fade the extension. Short if above VWAP, long if below.
Target: Return to VWAP.
Stop: Extension continues (exit at -0.2%).
Win rate: 70%+ (institutional algos revert to VWAP)
4. Order Flow Imbalance
Setup: Level 2 shows massive bid stacking (or ask stacking).
Entry: Trade with the imbalance. If 10x more bids than asks, go long.
Target: Quick 5-10 tick pop.
Stop: Imbalance flips.
Win rate: 60-65% (requires Level 2 expertise)
Entry and Exit Discipline
Scalping is execution-driven. Hesitate for 2 seconds = missed opportunity. Here's the mental framework:
Entry Rules
- Instant decision: See setup → Execute in <1 second
- Limit orders: Set limit at bid (long) or ask (short). Get filled or move on.
- No chasing: If you miss entry by 2 cents, skip it. Next setup in 30 seconds.
- Size consistency: Same size every trade. No emotions.
Exit Rules
- Target hit = instant exit: Don't wait for "just 1 more cent."
- Stop hit = instant exit: No hoping. No averaging down. Gone.
- Time stop: If no movement in 20-30 seconds, exit at breakeven.
- Adverse setup: If setup invalidates (e.g., big seller appears), exit immediately.
Risk Management: The Iron Law
Scalpers die from two things: overtrading losses and one massive blowup. Avoid both:
Risk Framework
- Max risk per trade: 0.1-0.2% of account
- Daily loss limit: -2% of account = stop trading for the day
- Win goal: +1.5-2% = consider stopping (lock in gains)
- Max concurrent positions: 1-2 (no multi-tasking)
- No news events: Fed, earnings, data = sit out
Example: $50k account. Risk 0.15% = $75 per trade. If stop is 5 cents, position size = 1,500 shares.
The Daily Routine
Professional Scalper's Schedule
8:00 AM: Pre-Market Analysis
- Scan for news, earnings, economic calendar
- Identify key levels (yesterday's high/low, overnight range)
- Check SPY/QQQ pre-market action
9:30-10:30 AM: Power Hour
- Highest volume, most volatility
- Focus on breakouts and VWAP plays
- Take 20-30 scalps
10:30-11:30 AM: Mid-Morning Grind
- Volume slows, ranges tighten
- Support/resistance bounces only
- 10-15 scalps
11:30 AM-1:00 PM: Lunch Chop (Skip or Reduce)
- Lowest volume, most whipsaws
- Many pros take break
3:00-4:00 PM: Closing Hour
- Volume returns, institutional flows
- Focus on VWAP reversion and closing prints
- 15-20 scalps
Total: 45-65 trades. Target: 1.5-2% daily gain.
Psychology: The Scalper's Mindset
Scalping is mentally exhausting. You're making split-second decisions for hours. Here's how pros stay sharp:
- Zero emotions: Win = nothing. Loss = nothing. Next trade is all that matters.
- Accept losses: 30-40% of trades will lose. It's the cost of doing business.
- No revenge trading: Lost 3 in a row? Take a 10-minute break. Clear your head.
- Physical fitness: Exercise before trading. Tired = slow reactions = losses.
- Limit caffeine: One coffee max. Jitters = overtrading.
When Scalping Fails
Scalping doesn't work in all conditions. Avoid these environments:
- Low volume days: Summer Fridays, holidays. Spreads widen, setups fail.
- High VIX (>30): Too much randomness. Whipsaws everywhere.
- News events: Fed, NFP, earnings. Gaps blow through stops.
- Illiquid stocks: Spreads too wide. Can't scalp profitably.
Final Thoughts: Speed, Precision, Repetition
Scalping is not glamorous. It's not exciting. It's repetitive, demanding, and mentally exhausting. But it works.
You're not outsmarting the market. You're exploiting micro-inefficiencies that exist for seconds. You're faster than retail, sharper than algos (in specific setups), and more disciplined than gamblers.
Scalping rewards consistency, not genius. Do the same setups, 50 times a day, every day. Let the law of large numbers work for you.
Because in scalping, there are no home runs. Just 50 singles that add up to a grand slam.