Knowledge Centre

  • Knowledge is power
  • Information is liberating
  • Education is the premise of progress, in every society
Algo Trading | April 10, 2019

What is Scalping Strategy in Algo Trading Platform

What is scalping?

Traders use many peculiar strategies for generating risk-adjusted alpha in the market.


Scalping is a short-term trading strategy which involves a trader trying to beat the bid/offer spread (as with any currency, there are both bid and offer prices. The difference between these two prices is known as the bid/offer spread) and make some profit out of skimming a few points before closing the trades. In most cases, scalpers have an interest in downturns in the market and how they can take advantage of them and this is mostly reviewed through the order flow tool.


The main advantage of scalping is the ability to gain profit from small price changes within the shortest time frame possible, which is often augmented by a larger position size. This is an intra-day type of trading which means that positions are closed before the end of the trading day or session. Scalping is known for its pace and quick executions.


In the most maximal examples, trades are opened and closed within a few seconds, if a sufficient price movement has been made. Due to its high-speed nature, traders need to be precise with their timing and execution.


Scalpers will take many small profits, and not run any winners, in order to seize gains as and when they appear. The aim is for a successful trading algo trading strategy through a large number of winners, rather than a few successful trades with large winning sizes.


Scalping is about placing the right trades every day and trusting the process with the help of algo trading platform. Makeno mistake about it; the process is what is going to make you successful.

How to Create a Scalping Strategy?

If you decide that scalping is the trading style for you, you will need to define a set of rules or guidelines to follow that will create your trading plan. Furthermore, scalpers cannot have reliance for real-time market depth analysis to get the buy and sell signals they need to book multiple small profits in a typical trading day. They can tailor themselves to the modern electronic environment and use the technical indicators that are custom-tuned to very small time frames.


  • Time frame: Principally,1 minute or 5-minute time frame should be good. As a scalper, your entry and exit are extremely important. This is because you are only making 10 to 20 pips each trade and your stop loss for such trades are usually very tight. Scalping is one of the most challenging styles of trading to master. Many traders want to instrument a scalping strategy, but don’t know where to kickoff. The truth is, you can develop a simple scalping strategy in as little as three steps.
  • Find the trend: The first step to scalping is finding the trend. Finding the trend is important because it helps create our trading unfairness for a currency pair.
  • Time your entry: The next step in developing a scalping strategy is to decide on an entry mechanism.
  • Manage risks: The last step of any trading strategy is to manage risk. While there are a variety of ways to place stops, traders should also consider the told risk associated with their trade.


  • Trade length

Scalping- Ultrashort

Trading – Short


  • Time Span

Scalping- 5-15 minutes

Trading – 15-60 minutes, daily 


  • Trading Trait 

Scalping- Indicators

Trading- Price actions and indices


  • Number of Setups 

Scalping-More than 5 days

Trading- 1-3 per day


  • Account Size

Scalping- Big account size as they take high risk in the market

Trading- Average account size

  • Results

Scalping- Ultrafast result

Trading- In a day


  • Stress Level 

Scalping- Medium to High

Trading- Low to medium


  • Risk of Loss

Scalping- Risk of High losses

Trading- Large losses can be made


  • Trader Personality 

Scalping- Alert and precise

Trading- Patient


  • Profit taking mentality

Scalping- Small, multiple and fast

Trading- Fewer with longer holds


  • Trending Types

Scalping- Mostly Trend following

Trading- Varies from trader to trader



Scalping - Scalpers are the seasoned traders who know the market, understand trends, use a complex combination of tools and fundamental or technical analysis very fast, and can decide a matter of seconds.

Trading - While beginners in trading can take the middle approach, combining scalping with day trading strategies, the best scalpers have years of experience. On the other hand, even beginner day traders who have patience understand the market and aim for longer, but safer results can gain profits when they follow the more extended holds method.


Scalping has become one of the most popular short-term trading strategies algorithmic trading India used by both retail and institutional traders, provided with a pragmatic approach, open to fresh trading opportunities, alertness, vigilance, and fast decision-making skills. Furthermore, for good reason: it’s a relatively low-risk strategy that works in any market conditions.

However, when developing a strategy, it’s important to backtest and paper trade it to ensure that it produces the expected results and is the right fit for you.


Get Started with Algo Trading

Related Blogs

Frequently Asked Questions


Important Message The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

Attention Investors
  • 1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  • 2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  • 3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
  • 4. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.
  • 5.Investments in securities market are subject to market risks, read all the related documents carefully before investing.
  • 6.The securities are quoted as an example and not as a recommendation.
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries forrefund as the money remains in investors account.
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDLon thesame day.....issued in the interest of investors.
KYC is a one-time exercise while dealing in securities markets-once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary. | (As instructed by SEBI, We hereby declare that we do engage in proprietary trading in all segment across the exchange.)
Effective communication & Speedy redressal of the grievances a. Register on SCORES portal b. Mandatory details for filing complaints on SCORES: i. Name, PAN, Address, Mobile Number, Email ID c. Benefits: i. Effective communication ii. Speedy redressal of the grievances link:
In case of grievances for any of the services rendered by Findoc Investmart Pvt Ltd write an email to
Mandatory updation of certain attributes of KYC of clients - The advisory is also displayed on the Depository website at following link:
1. NSDL:IN-DP-469-2020 2. Findoc Finvest Pvt. LTD. CIN no:U65910CH1995PTC016409 RBI REGISTRATION NO. B-06.00267 3. Findoc Investmart Private Limited CIN no:U74992CH2010PTC035180 SEBI REGISTRATION NO. INZ000164436 4. Findoc Investmart IFSC PVT. LTD CIN no: U65999GJ2017PTC095984 SEBI REGISTRATION NO. INZ000200735 5. INVESTMENT ADVISOR SEBI Registration no. INA100012297

Member I'd | Nse- 14697 | BSE- 6529 | MCX- 55205 | NCDEX- 01152


Registered Office :

1210/1211/1212/1213,1213A, Exchange Plaza, Near Mercury Hotel, Opp. WTC Tower, Gift City, Gandhi Nagar- 382355, Gujarat, India

Corporate Office :

4th Floor, Kartar Bhawan, Near PAU Gate No.1, Ferozepur Road Ludhiana -141001.

Copyright © 2024 FINDOC INVESTMART PVT. LTD. All Rights Reserved.

Developed & Content Powered by Accord Fintech Pvt. Ltd.

Open a Demat Account