What is the 1-minute scalping method? Advantages and disadvantages (and tips!)
In financial trading such as FX and the stock market, one-minute scalping is gaining attention as a trading technique to pursue quick profits in a short period of time. This method is distinct from general day trading and swing trading, and specializes in trading within a short time frame of one minute. You may also be interested in the 1-minute scalping method.
This article first explains the basics of the one-minute scalping method. Scalping requires speed and precision in trading, and it is essential to develop a keen eye to respond to instantaneous market fluctuations. We will also focus on the advantages and disadvantages of this method and explain its advantages and cautions in detail.
We will also touch on tips for success with the 1-minute scalping method. We will explain how to keep spreads low, set effective stop-losses, and other important aspects of your trading strategy. These tips will help you trade more efficiently and minimize risk.
By the end of this article, you will have the knowledge and skills to understand the whole picture of the 1-minute scalping technique and to approach success. This is a must-read for anyone interested in improving their skills as a trader and mastering the scalping technique.
First, we will explain how the 1-minute scalping method works.
What is the 1-minute scalping method?
The one-minute scalping technique is a trading method that uses a one-minute chart to trade within a short period of time, pursuing profits even with small price ranges.
The one-minute scalping method is known as one of the fastest and most effective methods in the trading world. It is a trading technique that responds to instantaneous market fluctuations and aims to accumulate profits even in small price ranges.
This section explains in detail how the 1-minute scalping method works and how to use it.
How the 1-minute scalping method works
One-minute scalping has gained attention as a trading technique for capturing short-term price movements. Most traders commonly use 1-minute charts, but some traders prefer 3-minute charts.
In this method, short-term trades are repeated based on the shape of the candlestick, the relationship between the moving average and the candlestick, and a technique called "price action".
How to use the 1-minute scalping method
Concentration is extremely important for successful one-minute scalping. This is because the high frequency of trades over a short period of time makes it impossible to miss even the slightest movement. However, one of the major advantages of this method is that it allows you to minimize the amount of time you are exposing your capital to risk.
This means that trades are less susceptible to sudden market fluctuations or from unexpected news, since the time to hold a position is shorter than in longer-term trades. This feature also reduces stress for traders. In addition, many traders trade on simple charts rather than complex ones.
Advantages of the 1-minute scalping method
The one-minute scalping method has many attractive advantages for traders.
First of all, it is easy to make a profit in a short period of time; the number of trades on the one-minute chart is very high because price movements are fast and profits are taken quickly, even at small price ranges.
Secondly, there is the advantage of having many trading opportunities: with one-minute trading, numerous trading opportunities occur during the course of the day. Because of the ability to capture minor market fluctuations, there are trading opportunities at all hours of the day.
Another important advantage is that it is less susceptible to market fluctuations: since one-minute charts focus on short-term price movements rather than long-term market trends, they tend to be less susceptible to temporary market fluctuations. This makes it easier to adjust to short-term market movements.
Let's take a closer look at the benefits of each.
Easy to make a profit in a short time
One-minute scalping is a trading style that focuses on short-term market movements and quickly enters and exits the market. The great appeal of this technique is that there is a limited amount of time to risk funds.
As a result, the risk of moving large amounts of money can be taken in a short period of time, allowing for larger positions compared to other trading styles. By taking a number of small profits in a short period of time, you can earn a solid profit at the end of the day.
Many trading opportunities
Other trading styles, such as trend-following, breakout, and range trading, often have limited optimal trading times and stocks. One-minute scalping, however, is not tied to a specific time zone or stock, and trading opportunities exist at any time when the market is open.
Even during periods of low volatility, small fluctuations in price can be traded frequently by not missing them. This is one of the most attractive aspects of scalping.
Less susceptible to market fluctuations
Scalping is unique in that it focuses on short-term market movements. At times when the market is expected to move significantly, such as around major economic events or news announcements, scalping traders often dare to avoid trading. This decision is very important due to the nature of scalping, which avoids unnecessary risk and emphasizes certainty.
The stance of reducing the risk of being swallowed by large movements and pursuing stable, small profits is the appeal of scalping.
Disadvantages of the 1-minute scalping method
While the one-minute scalping method can be highly efficient and profitable, there are some disadvantages that should be noted. In this section, we will discuss the three main disadvantages of one-minute scalping. We will also introduce countermeasures.
The first disadvantage is that margins tend to be small: price movements on a one-minute chart are small and may not be wide enough to lock in a profit.
Secondly, the short-time charts have the issue that there is a high possibility of suffering from damashi (price manipulation) due to sudden price changes.
Finally, there is the disadvantage of risk of loss due to spreads: in one-minute trading, the spread can reduce profits, so it is important to choose an exchange or broker with a low spread.
Let's take a closer look at the disadvantages and countermeasures for each.
Margins tend to be smaller
In one-minute scalping, the time frame for trading is very short, making it difficult to aim for large profit margins. This increases the likelihood of a "lose-lose" situation, where the reward for risk is very small. Because of this characteristic, scalping traders need to be especially conscious of high win rates.
Counter-measure
In addition to taking a method to accumulate small profits by increasing the frequency of trading, it is important to maintain a high winning rate to earn a stable profit even with small margins. Since it is difficult for beginners to cut losses, practice with a demo account to get used to trading.
There is a high possibility of getting hit by a damashi.
A problem unique to short-time charts is the frequent occurrence of damashi or abrupt price fluctuations. Such fluctuations are often the result of temporary changes in the balance of supply and demand or intentional manipulation by certain players.
Counter-measure
It is important to devise strategies such as not reacting immediately to sudden price movements, improving real-time analysis, and avoiding trading at certain price points.
Risk of loss due to spread
Spreads are incurred as a transaction cost when trading one-minute pairs. Currency pairs with particularly wide spreads are not suitable for scalping. The trading environment of brokers, such as execution power and slippage, can also have a significant impact.
Counter-measure
Selecting a broker that offers low spreads is a basic measure. In addition, there are ways to minimize the impact of spreads by being creative in the timing of your trades and by not hesitating to cut your losses quickly.
Tips for 1-minute scalping method
One-minute scalping is a method of pursuing small profits through quick trades, but it is important to follow certain tips to be successful. In this section, we will discuss three tips for effective trading with the 1-minute scalping technique.
Choose an account with narrow spreads
Scalping involves a high number of trades, so even a small difference in spread can have a significant impact on the outcome of a trade. Therefore, choosing a broker and account type with narrow spreads is the first step to effective trading.
In particular, ECN accounts tend to have narrower spreads, but in many cases, transaction fees are set, so you should carefully check the total cost, taking transaction fees into account. Another point to consider is high deposit requirements such as VIP accounts.
The Raw Spread account offered by ThreeTrader is suitable for scalping traders with a minimum initial deposit of 100,000 yen, no restrictions on second and subsequent deposits, and trading fees of $2 (0.2 pips) one way and $4 round trip.
Click here to open a live account
Choose a currency pair with a narrow spread
In scalping, the choice of currency pairs to trade is also a major factor. Major pairs and major cross pairs tend to be more liquid and have narrower spreads, so by focusing on these currency pairs, you can expect to trade more efficiently.
For example, straight dollar currency pairs such as the dollar-yen (USD/JPY) and euro-dollar (EUR/USD) are characterized by stable liquidity and narrow spreads. Gold trading is also popular, and many brokers focus on spreads.
Set stop-loss orders
In scalping, setting stop-loss orders is essential because it takes advantage of market movements over a short period of time. If the market moves in the opposite direction of your expectation, you can avoid large losses by promptly setting an order to limit your losses.
Loss orders are an important tool in ensuring the safety of trades, especially in dynamic markets where price volatility can be extreme.
Utilize 1-minute scalping technique with Threetrader
ThreeTrader's platform offers high execution power and extremely narrow spreads to accommodate the speed of trading. This creates an environment for effective one-minute scalping.
Case Study of One Minute Scalping in ThreeTrader
As an example, we will take the one-minute chart of the dollar-yen.
At 9:00 a.m., just after the start of the Tokyo market, a sharp price increase occurred.
The chart above depicts the 3σ line of the Bollinger Band; a move above or below the 3σ line is likely to result in a stochastic momentary reversal/reversal. (Red area)
You can take advantage of TreeTrader's high execution power to enter quickly and close early on small price reversals in a few tens of seconds to secure profits in a short period of time.
In addition, since an uptrend is developing in the dollar-yen, we will consider a buy entry when the price approaches the central line of the Bollinger Band. Observe the shape of the candlestick, and when a rising shape appears, make a buy entry. (light blue area) Although it is only less than one hour, there are a great many trading opportunities.
Thus, the broker's execution ability is very important to catch price fluctuations over a short period of time.
Grid Trading with ThreeTrader
Grid Trading is a trading strategy in which buy and sell orders are placed based on certain rules at specific price intervals (grids). The main feature of this strategy is that it can be profitable whether the market is rising or falling.
The basic flow of a grid transaction is as follows
- Places a series of buy and sell orders at predetermined price intervals.
- When the market rises, the buy order is executed and then sold, waiting for the market to fall.
- When the market falls, the sell order is executed, and the market waits for a subsequent rise to buy back.
- By repeating transactions at each defined price interval, regardless of market movements, the trader accumulates small profits.
This strategy is particularly effective when the market does not move significantly in a particular direction, i.e., during a range market. It is effective during times when a range market is likely to occur, such as the Tokyo market.
Above is a 1-minute chart of USD/JPY from 10:30 a.m. to 12:30 a.m. after the end of the Tokyo time midday trading session. We will use the characteristic that the market tends to be in a range. The range is assumed to be around 147.30-147.45 yen.
This is a method of setting limit orders at regular intervals and closing them as soon as a profit is made. Although a stop loss must be set, it is possible to accumulate small profits in small increments, and once the order is placed, there is no need to stay in touch with the market.
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Summary｜One-minute Scalping Method
The one-minute scalping technique has attracted attention as a method for efficient trading in a short period of time and pursuing profits even with small price ranges. In this article, we have explained the overall picture of the 1-minute scalping method in detail, so let's look back at the key points as a summary.
The one-minute scalping technique is a trading method that utilizes a one-minute chart and requires quick decision-making and execution. It is characterized by taking advantage of trading speed and pursuing profits in a short period of time.
The advantages of this technique include the ability to lock in profits in a short period of time and the many trading opportunities that occur in a single day due to the fast price movements on the one-minute chart.
On the other hand, disadvantages include the tendency for margins to be small and the possibility of suffering from damashi (price manipulation). Also, the risk of loss due to spreads must be taken into account, but appropriate measures can be taken to minimize the risk.
The key to success is to choose accounts and currency pairs with narrow spreads and to set stop-loss orders. These tips will improve your trading efficiency and risk management.
The one-minute scalping technique is a challenging method, but by acquiring the knowledge and skills to trade effectively, you can take advantage of minor market fluctuations and consistently make a profit. Calm judgment is always required in trading, so find a trading strategy that fits your own trading style and improve your skills.
