## Scalping: The Technique Every Trader Must Understand

Price volatility in trading markets creates numerous opportunities for those with sufficient skills. However, holding positions for extended periods carries risks that most traders prefer to avoid. Therefore, **Scalping** is the art of capturing opportunities from short-term price movements, aiming to make small profits frequently. Moreover, it is a method that retail investors can perform without requiring large capital or complex fundamental analysis. Next, we will explore the characteristics of Scalping and the correct practices to implement it.

## Scalping in the Trading Context: Definition and Mechanisms

**Scalping** is a trading technique focused on profiting from very small price changes, using extremely short holding periods—from a few seconds to several minutes. This approach relies on technical analysis to identify opportunities arising from short-term volatility.

According to existing theories, minor price changes occur more frequently than significant movements, meaning Scalping offers more entry and exit opportunities than other trading styles. This technique is based on accuracy and quick action, often utilizing higher position sizes or leverage to achieve reasonable profits.

Unlike Day Trading, which closes positions by the end of the day, Scalping typically closes within a single session or within 2-4 hours to reduce risks associated with market opening.

## Key Factors Supporting Scalping Success

Success in Scalping depends not only on skill but also on several market conditions:

**Market Liquidity (Liquidity)**
Liquidity plays a crucial role in entering and exiting positions. When scalping, even slight deviations in the spread (Spread) can significantly impact profits. Choosing highly liquid markets is therefore a primary condition for success.

**Price Volatility (Volatility)**
Scalping profits from sufficient volatility, but not too much. The ideal volatility level provides opportunities without creating excessive risk. For very high volatility, other strategies like Momentum Trading may be more suitable.

**Trading Costs (Trading Cost)**
Since scalping involves frequent trades, trading costs accumulate. High costs can erode profits per position. Selecting trading platforms with fair fees is essential.

**Risk Management (Risk Management)**
This involves setting precise entry and exit points and calculating position sizes carefully. It is the foundation of long-term survival in trading.

## Tools (Tools) Traders Must Learn for Scalping

Tools used in Scalping are often technical indicators that help forecast near-term price movements:

**Price Action**
This technique involves studying recurring price movement patterns to predict potential trends.

**Moving Averages**
Trend indicators that help identify support and resistance levels, as well as trend reversal points.

**RSI (Relative Strength Index)**
A momentum indicator that assesses trend strength and the likelihood of reversals.

Notably, the uniqueness of Scalping lies in using very short timeframes, such as 5-3 minutes or even shorter if the market is highly liquid. The idea is to use indicators to quickly capture signals and correct directions rather than waiting for small retracements.

## Scalping Strategies Thai Traders Can Apply

**Breakout Scalping**
This involves waiting for the price to "squeeze" and then choosing a direction. It is highly accurate but occurs less frequently.

**Range Trading Scalping**
This strategy involves trading within a stable price zone (Consolidation Zone). It is common in markets and frequently used by traders.

## Steps to Start Scalping Trading

**Step 1: Fundamental Technical Analysis Skills**
Knowledge of price analysis and indicators is essential. Understanding what price patterns mean is crucial.

**Step 2: Identify Suitable Markets and Instruments**
Choose markets with high liquidity, such as Forex, indices, or metals, which meet Scalping conditions.

**Step 3: Develop a Trading Strategy**
Decide on your approach. Thai traders may focus on bullish (Long) or bearish (Short) scenarios based on market conditions.

**Step 4: Design Risk Control Systems**
Set entry and exit points, stop-loss levels, and position sizes. This step helps forecast potential profits and losses.

**Step 5: Execute the Plan**
After thorough planning, start with small positions to test the system.

## Advantages of Scalping Trading

- **Low Initial Capital Requirement**: Focuses on repeated small trades rather than large bets, allowing traders with limited funds to accumulate profits.
- **Reduced Risk**: Short holding periods help avoid risks from unexpected events.
- **No Overnight Fees**: Positions are closed quickly, avoiding overnight costs.
- **No Need for Fundamental Analysis**: Focuses on price action without studying financial reports.

## Disadvantages and Challenges of Scalping

- **Time-Intensive**: Requires constant monitoring, as seconds can change outcomes.
- **High Stress**: Repeated decision-making hundreds of times daily can be mentally exhausting.
- **Discipline Required**: Strict adherence to the plan is necessary; otherwise, risks increase.

## Summary of Scalping

**Scalping** is an effective strategy for highly liquid markets such as Forex, indices, and metals. Although each trade yields small profits, frequent repetitions can accumulate significant long-term returns. For skilled and disciplined traders, Scalping is a viable option to steadily grow their portfolios.