Intraday Scalping

1. Introduction to Intraday Scalping

Trading in financial markets has evolved into many styles—long-term investing, swing trading, positional trading, and intraday trading. Among these, scalping is one of the most intense and fast-paced strategies.

Scalping refers to a method where traders aim to capture small price movements within seconds or minutes. Unlike swing or positional traders who hold positions for days or months, scalpers aim to enter and exit quickly, sometimes executing dozens or even hundreds of trades a day.

In Indian stock markets, where NSE and BSE see high liquidity, scalping is a popular strategy in indices (like Nifty, Bank Nifty), liquid stocks (Reliance, HDFC Bank, TCS), and even commodities (gold, crude oil).

Scalping is best suited for traders who:

Can stay focused for long hours.

Handle pressure and speed well.

Prefer small but consistent gains.

2. Core Principles of Scalping

Before diving into strategies, it’s important to understand the fundamentals of scalping:

Liquidity is King – Scalpers need high-volume stocks or indices to enter and exit trades instantly without slippage.

Speed Matters – Since targets are small (0.1% to 0.3% per trade), execution speed is critical.

Risk Management – A single large loss can wipe out the gains from many small trades.

Consistency Over Jackpot – Scalpers don’t wait for “big moves.” Instead, they profit from many small moves.

Discipline – Sticking to pre-defined stop-loss and target levels is crucial.

3. Scalping vs. Other Trading Styles
Feature Scalping Intraday Trading Swing Trading Investing
Holding Time Seconds to Minutes Few Hours Days to Weeks Months to Years
Profit per Trade Very Small (0.1%-0.5%) Moderate Larger Long-term growth
Number of Trades Dozens to Hundreds Few trades daily Few trades monthly Very few
Tools Used Level 2 data, tick charts Candlestick charts Technical + Fundamental Fundamental
Psychology Fast, disciplined Patient, tactical Balanced Long-term vision

Scalping is the most active and demanding form of trading, but it also offers the most immediate results.

4. Psychology of a Scalper

Scalping requires a unique psychological edge:

Patience for small wins: Many traders struggle because they seek “big moves.” A scalper must be satisfied with tiny but frequent gains.

Emotional control: Fear and greed must be controlled at a micro level. One wrong emotional trade can ruin the day.

Focus & speed: Scalping is like a high-speed chess game; hesitation means missed opportunities.

Discipline: Pre-defined rules must be followed strictly—no chasing trades.

5. Tools & Setup for Scalping

Scalping success depends heavily on the trader’s setup:

a. Hardware Requirements

A fast computer with at least 8GB RAM.

Dual monitor setup for watching charts and order books simultaneously.

High-speed internet (fiber or 5G).

b. Trading Platform & Broker

A broker offering low transaction costs and fast execution (e.g., Zerodha, Upstox, ICICI Direct Neo).

Access to Level 2 market depth (bid/ask book).

c. Indicators & Charts

1-min and tick charts.

Indicators commonly used:

VWAP (Volume Weighted Average Price)

EMA (Exponential Moving Average) – 9 & 20 period

MACD (for momentum shifts)

RSI (for overbought/oversold)

Volume Profile

6. Scalping Strategies

Here are the most popular scalping strategies used in Indian markets:

a. VWAP Strategy

VWAP acts as a magnet for intraday price action.

Buy when price crosses above VWAP with strong volume.

Sell when price falls below VWAP.

Example: Reliance trading at ₹2500; price bounces above VWAP at ₹2496 → scalper buys with ₹4 target and ₹2 stop-loss.

b. Moving Average Crossover (EMA 9 & 20)

When EMA 9 crosses above EMA 20, buy.

When EMA 9 crosses below EMA 20, sell.

Works best in trending markets.

c. Breakout Scalping

Identify support & resistance zones on 5-min charts.

Enter when price breaks with volume.

Exit quickly with small profit before reversal.

Example: Nifty at 22,000 resistance → breaks to 22,015 with volume → scalper buys for 15–20 point move.

d. Range Scalping

Works in sideways markets.

Buy near support, sell near resistance.

Keep very tight stop-loss.

e. Order Book Scalping

Watch Level 2 bid/ask orders.

If strong buy orders keep absorbing sellers, scalp long.

If sell orders dominate, scalp short.

7. Risk Management in Scalping

Since profits per trade are small, risk management is everything:

Stop-Loss Rule – Always use fixed stop-loss (e.g., ₹2-3 in stocks, 5-10 points in Nifty).

Position Sizing – Keep lot size small initially; scale up only when consistent.

Daily Loss Limit – Stop trading after reaching max daily loss (e.g., 2% of capital).

Risk/Reward Ratio – At least 1:1 (better 1:2).

Avoid Overtrading – Don’t trade just to recover losses.

8. Advantages of Scalping

Quick Profits – No overnight risk.

Many Opportunities – Even in flat markets, scalpers can profit.

Low exposure – Minimal time in the market reduces big event risks.

Compounding Effect – Small gains add up.

9. Disadvantages of Scalping

High Stress – Demands total concentration.

Brokerage Costs – Frequent trades mean high charges.

Slippage – Sudden moves may hit stop-loss before exit.

Not for Everyone – Requires speed and mental stamina.

10. Scalping in Indian Markets
Best Instruments for Scalping

Indices: Nifty 50, Bank Nifty.

High-volume stocks: Reliance, HDFC Bank, ICICI Bank, TCS, Infosys.

Commodities: Crude oil, Gold.

Market Timings for Scalping

9:15 – 11:00 AM: Best volatility, fresh moves.

1:30 – 2:30 PM: Post-lunch breakouts.

Avoid last 15 minutes (too erratic).

11. Common Mistakes by Scalpers

Overtrading after a loss.

Ignoring transaction costs (brokerage, STT, GST).

Trading illiquid stocks → slippage.

No fixed stop-loss → one big loss wipes gains.

Chasing trades late instead of waiting for setup.

12. Conclusion

Scalping is like Formula 1 racing in trading: high speed, high skill, high risk. It demands:

Focus on liquidity and small profits.

Discipline in following stop-loss.

Consistent practice with risk management.

For Indian traders, Nifty and Bank Nifty offer the best playground for scalping. While challenging, a disciplined scalper can grow wealth consistently, turning small daily gains into a powerful compounding engine.