A scalping strategy is a set of rules for taking many small price moves, holding each trade for seconds to a few minutes. It fixes the market, the session, the entry trigger, a stop of a few pips or points and a target close to it. With targets that small, trading costs take a large share of every trade.
In short
- Scalping is the shortest form of day trading. Trades last seconds to minutes on 1-minute or tick charts, with stops of a few pips.
- On a 5-pip stop, an illustrative 1-pip cost per round trip is 20% of the risk, and the win rate needed to break even at 1:1 rises from 50% to 60%.
- Scalping needs liquid markets at active hours, such as EUR/USD in the London session and the London and New York overlap.
- On a $25,000 Classic account, 20 scalps at 1.00 lot with that illustrative cost add up to $200 in costs, 16% of the $1,250 daily loss limit, whether the trades win or lose.
What is scalping in trading?
Scalping in trading means opening and closing positions within seconds to a few minutes to take small moves, often 3 to 10 pips on a currency pair or a few points on an index. A scalper may take a handful of trades a session or several dozen, each with a tight stop and a target close to it.
The name comes from taking a thin slice of each move. The word has unrelated meanings too, such as reselling event tickets above face value, which have nothing to do with charts.
Scalpers work on 1-minute charts or tick charts (a new candle every set number of price updates), with a 5-minute or 15-minute chart for direction and levels. Each move is small, so the position has to be large for the trade to matter, which makes scalping trading sensitive to costs, spreads and the quality of each fill.
Scalping vs day trading
Every scalp closes within the session, so scalping is a subset of day trading. It differs in holding time, stop size and the number of trades, and each of those makes costs weigh more. The day trading strategies guide covers setups held for longer.
| Scalping | Day trading | |
|---|---|---|
| Holding time | Seconds to a few minutes | Minutes to hours |
| Entry chart | 1-minute or tick | 5 to 15-minute |
| Example stop on EUR/USD | 3 to 6 pips | 10 to 20 pips |
| Example trades per session | 10 to 40 | 1 to 4 |
| Illustrative 1-pip cost as a share of the stop | 17% to 33% | 5% to 10% |
| Where it usually goes wrong | Costs and fast runs of small losses | Holding a losing trade too long |
Why do costs matter most in a scalping strategy?
Costs matter most in scalping because they are a fixed amount per trade while the stop and target are tiny. A cost that is under 2% of the risk on a 60-pip swing trade can be a fifth or a third of the risk on a 3 to 5-pip scalp, and a scalper pays it many times a day.
Simulated trades carry trading costs, as they would on a live account: a commission when a trade opens and when it closes, a price markup on some symbols, and holding costs on positions kept overnight. Scalps close within minutes, so the commission and any markup are the costs that count.
The table uses an illustrative cost of 1 pip per round trip, not a CMC Funded rate, with the target equal to the stop (1:1). A winner nets the target minus the cost; a loser costs the stop plus the cost.
| Stop and target | Cost as a share of the stop | Net win | Net loss | Win rate to break even |
|---|---|---|---|---|
| 3 pips | 33% | 2 pips | 4 pips | 66.7% |
| 5 pips | 20% | 4 pips | 6 pips | 60% |
| 10 pips | 10% | 9 pips | 11 pips | 55% |
| 20 pips | 5% | 19 pips | 21 pips | 52.5% |
Without costs, every row would break even at 50%. With them, a 3-pip scalper must win two trades in three just to stand still. Slippage, a fill worse than the stop level, adds to it: if the 5-pip stop fills half a pip worse, the net loss becomes 6.5 pips and the break-even rate 61.9%.
Two things improve the maths. One is a target larger than the stop: with a 5-pip stop and an 8-pip target, a winner nets 7 pips, a loser costs 6, and the break-even rate falls to 46.2%. The other is trading only when the move on offer is large compared with the cost, which is what choosing the session is for.
What are three common scalping setups?
Most scalping methods are versions of three setups: a pullback in a fast trend on the 1-minute chart, a break and retest of a key level, and a fade at the edge of a tight range. Each needs a stop that normal noise will not reach and a target that still pays after costs.
1. The 1-minute EMA pullback
This 1 minute scalping strategy trades in the direction of the 5-minute trend. When the 5-minute chart is making higher highs and higher lows, wait on the 1-minute chart for price to pull back to the 20-period exponential moving average (EMA), a moving average that weights recent prices more. Enter when a 1-minute candle closes back in the trend direction.
The stop goes 1 to 2 pips beyond the pullback's low (for a long). The target is the recent high or 1.2R to 1.5R, where R is the amount you risk.
It fails when the 5-minute trend stalls. The 1-minute EMA flattens and price crosses it every few candles. Stop trading the move after two losses on it.
2. Break and retest of a key level
Mark the levels many traders watch: the previous day's high and low, the session high and low, and round numbers such as 1.0900. When price breaks a level and comes back to test it from the other side, buy the retest of an upside break once a 1-minute candle rejects the level, or sell the retest of a downside break.
The stop goes a couple of pips back through the level. The target is the high (or low) made after the break, or 1.5R.
It fails when the break was false and price falls back through the level and keeps going. If the retest candle closes back through the level, skip the trade.
3. Range-edge scalp
In a tight range with at least two touches on each edge, sell rejections at the top and buy them at the bottom. The stop goes 1 to 2 pips beyond the edge, and the target is the middle of the range.
It fails when the range breaks, which is most likely at a session open or a data release. Narrow ranges also leave little after costs. In an 8-pip range, a trade from the edge to the middle is 4 pips. With a 3-pip stop and the illustrative 1-pip cost, a winner nets 3 pips and a loser costs 4, so you need to win 57.1% of these trades to break even.
Which session is good for scalping?
Scalping needs movement and plenty of trading, so the London session and the hours when London and New York are both open suit most forex scalping. For US index CFDs, the first hour after the 09:30 New York cash open is usually the most active. Quiet hours leave small ranges that a fixed cost eats into.
No exchange sets FX session hours, so the times below are conventions, and they shift by an hour in the weeks when US and UK clocks change on different dates. The trading sessions lesson explains why the overlap moves the most.
| Session | UK time, most of the year | What it means for scalping |
|---|---|---|
| Asian | Overnight until about 08:00 | Small ranges on EUR and GBP pairs, so costs take a bigger share; yen pairs move more |
| London | 08:00 to about 17:00 | The busiest FX hours; EUR/USD and GBP/USD are active from the open |
| London and New York overlap | About 13:00 to 17:00 | Both centres open; US data at 13:30 can jump price past a stop |
| US index cash session | 14:30 to 21:00 | The first hour is busiest; the middle of the New York day is quieter |
| Daily rollover | Around 22:00 | Spreads often widen; most scalpers stop well before |
Whatever the session, stand aside in the minutes around scheduled releases. Spreads can widen as the number comes out and a 5-pip stop can fill several pips away.
Worked example: scalping EUR/USD on a $25,000 Classic account
The account is a $25,000 Classic, with a daily loss limit of $1,250 and a maximum loss floor of $22,500. The plan trades the 1-minute EMA pullback on EUR/USD from 14:00 to 16:00 UK time, after any 13:30 US data. It risks $50 (0.2%) per trade with a 5-pip stop and a 6-pip target, takes at most 12 trades, and stops for the session after four losses in a row.
Prices are for illustration. EUR/USD is worth $10 per pip per standard lot. The cost is an illustrative 1 pip per round trip, $10 per lot, not a CMC Funded rate.
- Size: $50 ÷ (5 pips × $10) = 1.00 lot. A typical long buys at 1.0862 with the stop at 1.0857 and the target at 1.0868.
- Per trade, a winner nets (6 − 1) × $10 = $50 and a loser costs (5 + 1) × $10 = $60.
- The break-even win rate is $60 ÷ ($50 + $60) = 54.5%. Before costs it would be 5 ÷ 11 = 45.5%.
- Session A: 12 trades, 7 winners and 5 losers. Before costs that is 7 × $60 − 5 × $50 = $170. Costs are 12 × $10 = $120, so the session nets $50. Costs took 70.6% of the result.
- Session B: 12 trades, 6 winners and 6 losers. Before costs that is 6 × $60 − 6 × $50 = $60. After $120 of costs the session loses $60. The setup was ahead before costs and behind after them.
- Session C: four losses in a row cost 4 × $60 = $240, 19.2% of the daily limit, and the plan ends the session. Doubling to 2.00 lots to win it back would make the next loss cost $120, taking the session to $360, or 28.8% of the limit.
On a $25,000 Direct account, with a $1,000 daily limit, the $240 from session C is 24% of the limit and the $360 is 36%.
How a scalping strategy works on CMC Funded
Before you plan a scalping strategy, read the Classic and Direct rules for anything that applies to very short trades.
The daily loss limit is 5% (Classic) or 4% (Direct) of your equity at the start of each day, so it moves with your account. It is measured on equity, so if you hold two or three scalps at once their floating losses count together, and reaching the limit ends the account with no warning stage. Costs are charged whether a trade wins or loses, so a busy session that breaks even before costs still ends the day down.
| Trades in a day at 1.00 lot | Illustrative costs at 1 pip | Share of the Classic $25K limit ($1,250) | Share of the Direct $25K limit ($1,000) |
|---|---|---|---|
| 10 | $100 | 8% | 10% |
| 20 | $200 | 16% | 20% |
| 40 | $400 | 32% | 40% |
Tight stops also mean large positions, and large positions need margin. Leverage is chosen at purchase, from 1:10 to 1:500. At EUR/USD 1.0862, 1.00 lot is a position of about $108,620. At 1:10 its margin is about $10,862, or 43% of a $25,000 account, so a third position at once would need more margin than the account holds. At 1:100 it is about $1,086. Higher leverage magnifies both gains and losses. Margin can differ by symbol, so check it with the margin calculator before you trade.
News trading is allowed, but a slipped stop at a release counts at its fill price. Neither route has a time limit, and the minimum is 3 trading days in each Classic phase and 3 on Direct, which a scalper usually meets in the first week.
Common mistakes
- Judging a scalping strategy on its results before costs. Session B above was ahead by $60 before costs and behind by $60 after them.
- Scalping quiet hours, where the move on offer is small compared with a fixed cost.
- Moving a 5-pip stop out by 2 pips "to give it room". That adds 40% to the risk of the trade.
- Raising size after a run of losses to win them back quickly.
- Placing market orders in the seconds around a release, when the spread and the fill are least predictable.
- Trading because the 1-minute chart always shows something. Set a cap on trades per session.
Questions traders ask
Is scalping profitable?
No reliable figure shows how many scalpers come out ahead, and published claims are hard to check. Whether a scalping strategy works for you depends on its edge after costs, because costs take a bigger share of each trade than in slower styles. Test at least 100 trades with costs included before you judge it.
How many trades do scalpers take a day?
There is no fixed number. Some take five to ten trades in a session and others take dozens. Every extra trade adds a cost: at an illustrative $10 per round trip, 40 trades cost $400 whether they win or lose. A daily cap on trades keeps both costs and fatigue under control.
What time frame do scalpers use?
Most use the 1-minute chart or a tick chart to time entries, with a 5-minute or 15-minute chart for the trend and the key levels. Charts faster than one minute give more signals, along with more noise and bigger swings relative to a small stop. Choose one entry chart and stay with it.
Is scalping riskier than day trading?
Each trade risks less, but scalping packs many decisions into a short time, so small losses, slippage and costs can add up quickly. It also tempts traders to raise size after losses. With a fixed risk per trade and a session stop, the most you can lose in a day can match a day trader's.
Why do people say scalping is illegal?
The word has several meanings. Reselling event tickets above face value is called scalping, and so is a form of market abuse in which someone recommends a share they hold, then sells into the buying they cause. Short-term chart trading is neither. Brokers and prop firms set their own rules on very short trades, so read them first.
Next steps
The scalping lesson in the trading strategies course builds a scalping plan step by step, and the spreads and trading costs lesson breaks down each charge so you can put real numbers into the tables above.
Both routes and every account size are on the challenges page.