Scalping in the stock market: secrets of using short-term trading
Most supporters of trading currency pairs on Forex are convinced that significant investments will be required to make money on the stock exchange.
This opinion was formed mainly under the influence of the popularity of the “Buy and Hold” strategy .
By which long-term transactions are opened and a small leverage is used, since market noise simply will not allow you to work differently.
The essence of this trading system is to buy from 3 to 10 of the most liquid assets, that is, shares of companies with large capitalization - blue chips, and sell them at a more favorable price.
Sberbank;
Gazprom;
Lukoil;
Rosneft;
VTB 24 and others.
The advantages of this type of scalping on the stock market:
• low broker commission costs;
• simple logic of the strategy;
• potential profitability from 2.5 to 10% per month, depending on the composition of the investment portfolio;
• the opportunity to earn money with capital from 50,000 RUR without leverage;
• effective risk diversification.
However, before you start trading, you should pay attention to some disadvantages:
• relatively low returns compared to effective short-term earning strategies;
• It will really take time to make a tangible profit.
Beginner traders should understand that the stock market profit strategy discussed above is not the only one.
It's recommended to consider several successful and personally proven trading strategies with potential returns of up to 60% per month.
Of course, applying these strategies in practice will require some experience, and opening a demo account is recommended to gain this experience.
Peculiarities of scalping in the stock market
One of the main advantages of the stock exchange compared to Forex is low or no leverage.
This significantly reduces trading risks. Another attractive feature of making money on stocks is the relative predictability of these assets.
By studying the quarterly reports of a given company, which are publicly available, and comparing this information with the price dynamics of the RTS index, it is possible to make an accurate forecast.
The stock market also differs from the over-the-counter market in its transparent spread formation. In the QUIK terminal, the developers have provided a "depth of market" display, which displays the number of buy/sell orders.
The extreme values should be interpreted as the spread. The wider the price range, the more attractive the asset is for intraday trading, as this creates all the conditions for maneuvering.
Traders call this trading approach "trading within the spread."
Scalping trading in the stock market using correlation
Proper application of correlation-based trading systems virtually guarantees success in online trading.
Effective use of correlation in Forex has been discussed in detail here .
Now let's discuss a simple way to apply this method to stock trading.
The algorithm is simple:
When the RTS index rises, open 3-5 charts of stocks from companies within its structure. Beginner traders are advised to consider only blue-chip stocks.
The profit potential for these stocks is insignificant, but the virtually complete absence of trading risks fully justifies their selection.
A rising RTS index indirectly indicates positive growth dynamics in the value of stocks issued by highly capitalized companies. From the 3-5 open charts, select the asset that is lagging behind the others in growth.
These are the stocks you should buy, investing more than 10% of your capital in them.
Close the trade either when the RTS index chart reaches a local level or one hour before the end of the trading session.
The potential profit of this strategy ranges from 0.2 to 0.6% per day, with an average RTS growth of 1.5-2%. By increasing leverage , you can correspondingly increase your profits severalfold.
Conclusion:
Scalping on the stock market is possible. Moreover, this method of earning money in financial markets can compete with currency trading in terms of profitability.
The main advantage is low trading risks and a complete absence of non-trading risks.
