In the financial markets, scalping is a trade technique that is used to skim profits from the market by opening and closing positions within minutes. The scalper’s dream is to pick a few pips here and there, utilizing little drops of water to eventually make a mighty ocean. If practised well enough, a trader can easily master the art of scalping and become very successful at it. That is why many brokers hate scalpers with a passion, because a good scalper can easily beat a broker acting as a counterparty dealer.
In the same vein, binary options scalping can be described as a practice of opening and closing binary options contract positions within minutes. In order to do this, expiry times that terminate within minutes are used.
Scalping Trading Tip
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In order to achieve a good binary options scalping result, the trader must know which expiry times are available on the platform he is using. If he is using a SpotOption white label broker, the lowest expiry is 60 seconds (tradable with the 60 second option contract) followed by 15 minutes and 30 minutes for the classical Call/Put option contract (which is basically a High/Low or Up/Down contract type). Platforms such as BetonMarkets offer the Rise/Fall contract type with an expiry as low as 1 minute. Traders can also set expiries in multiples of seconds and minutes with this option type on the BetonMarkets platform. As such, traders can set expiries to 70 seconds, 90 seconds, 300 seconds, 2 minutes, 4 minutes, 7 minutes, 2 hours, etc.
Once you have an idea of the expiry that should be set, the next thing is to devise the scalping strategy. Strategies may involve the use of price action analysis, technical indicators or candlesticks. Chart patterns usually take too long to play out and may not deliver the required outcome within so short a time span. The trader may also decide to use a forex robot specifically tailored towards binary options scalping. The snapshot below shows the trade results for a forex robot that was built for this purpose.
Using this product, a trader can subsequently open a corresponding position for a binary options scalping contract on the binary options platform, and time the expiry accordingly.
Generally speaking, only charts as low as 1 minute and a maximum of 15 minutes should be used for binary options scalping. The essence of doing this is to ensure that whatever information that has been gleaned from the charts after technical analysis is something that will play out within the shortest time frame possible. You cannot for instance, use a four hour chart for analysing a trade that is expected to play out in 20 minutes.
Binary options scalping is a highly speculative method of trading and it must be thoroughly practised by the trader on a demo platform before being applied to the live market. If used by inexperienced traders, it will lead to more losses than wins. But if used after experience in the technique has been gained, the trader will be able to smile to the bank at the end of every trading day.