Trading Jobs Day Trading Strategy 3 — Questions and Answers
Question 1: What is scalping in day trading?
- Taking many small, quick trades to capture tiny price moves (Correct answer)
- Holding positions for several days
- Investing in long-term index funds
- Trading only at the closing bell
Correct answer: Taking many small, quick trades to capture tiny price moves
Scalping involves rapid trades aiming for small gains repeated many times throughout the session.
Question 2: Why is a high win rate especially important for scalpers?
- Because their small profit targets leave little room for losses (Correct answer)
- Because they hold trades overnight
- Because they ignore commissions
- Because they use only weekly charts
Correct answer: Because their small profit targets leave little room for losses
With tiny per-trade gains, scalpers need frequent wins so losses don't erase accumulated profits.
Question 3: What is a key requirement for effective scalping?
- High liquidity and tight spreads (Correct answer)
- Low trading volume
- Wide bid-ask spreads
- Markets that are closed
Correct answer: High liquidity and tight spreads
Scalpers depend on liquid markets with tight spreads to enter and exit quickly at favorable prices.
Question 4: In a reversal (counter-trend) strategy, traders attempt to do what?
- Enter as an extended move exhausts and changes direction (Correct answer)
- Always trade with the dominant trend
- Hold positions for weeks
- Buy only at the opening gap
Correct answer: Enter as an extended move exhausts and changes direction
Reversal traders look for signs of exhaustion to enter as price turns against the prior move.
Question 5: Which candlestick pattern often signals a potential bullish reversal at support?
- Hammer (Correct answer)
- Shooting star
- Bearish engulfing at resistance
- Long red marubozu
Correct answer: Hammer
A hammer, with its long lower wick, suggests buyers rejected lower prices and may signal a bullish reversal.
Question 6: What role does the VWAP (Volume Weighted Average Price) play in intraday strategy?
- It acts as a dynamic support/resistance and fair-value benchmark (Correct answer)
- It predicts next year's earnings
- It replaces the need for stop losses
- It measures dividend payouts
Correct answer: It acts as a dynamic support/resistance and fair-value benchmark
VWAP reflects the average price weighted by volume and is widely used as an intraday reference for value and trend bias.
Question 7: Trading above VWAP generally suggests what intraday bias?
- Bullish bias, with buyers in control (Correct answer)
- Bearish bias, with sellers in control
- No bias at all
- A guaranteed reversal
Correct answer: Bullish bias, with buyers in control
Price holding above VWAP indicates buyers are paying above the average, reflecting bullish control.
Trading Jobs Day Trading Strategy 3
What is scalping in day trading?