Scalping refers to buying and selling an underlying multiple times in the same day for a small profit. We locate scalping opportunities by looking for price extremes in the market. When we scalp we can either buy at a lower price and sell it for a higher price, or vice versa. We prefer to primarily sell premium, but we may scalp futures in low IV environments to stay active.
The most important aspect of scalping is liquidity. We would not scalp an underlying that is not liquid, since we are getting in and out of our trades multiple times within a day. Ensuring liquidity also ensures that we are getting the best price we can when entering and exiting the trades. Scalping is purely subjective, and there is no guideline in terms of when to get in and out of the trade. We trade very small when scalping, and accept profits when they come. We believe that trading too big and getting greedy are both easy ways to lose money quickly when scalping.
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