Scalping trading is a type of trading method in which you buy stocks in high volumes and sell them within a short period like one minute. In this strategy, you have to keep an eye on small price movements in order to earn big by trading in huge volumes.
In this article, you’ll learn scalping trading indicators and you can also learn how to use them to analyze price movements of stock.
4 Best Scalping Indicators
Here are the top four scalping indicators that can help you take the right position. If you wish to learn scalping trading in detail, you can also enrol in Upsurge online courses.
The simple moving average indicator will help you analyze the average price of a stock over a certain period and is calculated like any other simple average. You need to add the closing prices of a stock and then divide the sum by the total number of days that are taken into consideration.
You can calculate short-period SMAs like 10-day SMA or a long period like 200-day SMA. If today’s stock price is above the SMA, then it is showing a bullish nature. In this scenario, you can buy the stock. Otherwise, you can book the profit by selling the stock if you have already purchased it.
The exponential moving average indicator is a variation of SMA but here you will give more preference to the latest price data. This indicator will attach more weightage to the current price of a stock thereby giving a more accurate picture of the price trend.
The EMA will help you understand the support and resistance levels of the stock. If the stock is trading below the EMA and the indicator is increasing, you can consider buying it. However, if the current price of the stock rises over the EMA, you can sell the stock.
MACD (Moving Average Convergence Divergence) indicator describes the relationship between the two moving averages of stock price. The MACD line is calculated by subtracting a 26-day EMA from a 12-day EMA. There is one signal line which is the MACD line’s 9-day EMA.
You can buy the stock when the MACD line crosses from below to above the signal line because it is a bullish signal. You can sell the stock if the MACD line is crossing from above to below the signal line.
4.Stochastic Oscillator Indicator
This indicator will help you analyze whether a stock is excessively bought or excessively sold. The value of the stochastic oscillator indicator always comes between 0 and 100. If the value comes to more than 80, then the stock is excessively bought and if it is less than 20, then the stock is in the excessively sold region.
There are two stochastic lines where the %K line is the fast one and %D is the slow one. When the %K line of stock cuts the %D line and moves above it, then you can buy that stock. Otherwise, if the %K line of any stock cuts the %D line and moves below it, then you can sell that stock.
In scalping trading, you have to continuously analyze the shortest price movements to buy and sell the stocks in high volumes and book huge profits. To analyze these price fluctuations, you can use some technical indicators such as MACD, SMA, EMA, and stochastic oscillators. You can decide whether to take a buy or sell position by using these indicators.
You can access the complete course on this trading strategy on Upsurge.club where you will also learn scalping trading indicators in detail.