Traders employ a variety of strategies in order to be able to consistently beat the markets and profit – however, there are few methods of trading as effective as scalping. Scalping refers to a form of trading that relies on making a series of small profitable trades, focussing on quantity rather than quality in order to boost profits. The primary focus of such strategies is to utilise trading volumes rather than performing a lot of complex technical analysis. There are several such trading strategies, and one of them has been discussed in this article. Read on to find out more.
ABC Trading Explained
Before we look at the indicators, it is important to understand how the market structure works. In a bullish market, there are a series of higher highs and higher lows, whereas a bearish market is characterised by a series of lower highs and lower lows. In a bullish market, the task of a swing low is to set the stage for the next higher high, and the same is the case with the bearish market too, where a swing high sets the stage for a lower low.
A Break of Structure happens in a bullish market whenever a swing high after a low crosses the previous high, and the same applies to the bearish market but the other way round.
A Strong High creates a Lower Low, and a Strong Low creates a Higher High.
Long positions can be taken whenever the price moves above A after touching C.
A Change of Character can be used to identify when the trend is getting weaker, and this happens when there is a BoS in the wrong direction over a smaller time frame than the one we are trading on. This is an indicator of the trend getting weaker.
A short can be taken here as soon as the price touches C and crosses A when coming back down.
Scalping has been proven to be one of the most profitable trading strategies out there, however, even when you’re scalping, you need to ensure that you have a high win rate so that the strategy is fruitful and profitable. Using the strategy discussed above, you will be able to profit in both bull and bear markets consistently. You can even tweak the settings to suit your level of risk and trading style, finding the right balance between the win rate and the net profit.