Here are some of my thoughts on scalping. I am sure other traders have different criteria regarding
entries and exits. Scalping is extremely advanced form of trading in which one must be able to execute in a blink of an eye and be very good at "feeling" momentum of price action, reading order flow whether it be tape or Level 2.
In my scalping, entries are purely made on momentum and as the ask or bid starts to get thin. If I am going long, I want to hit the ask before it disapears and becomes the bid. This 1 tick is critical to my profit target as I am only looking to get 2-3 ticks of a trade. (Nikkei tick is huge)
The entry is the easiest part in my opinion. The exit is the hardest. This is because a scalper must exit based on his entry. In other words, a 3-5 tick stop for a 2-3 tick profit target does not make any sense. Which is why if Im scalping there are no hard stops in place. If momentum drops instantly I am out at break even or even -1 tick. This is why I want to get in on the ask as it thins out so if I sense that Im wrong, I can hit the bid (formerly the ask) and get out at break even. Now for those who are still new to trading, intraday position trading is a much easier technique. Of course, there is not guaranatee of a good intraday swing as the markets may just chop or reverse, etc... Most new traders will never be able to pull the trigger to cut their losses when scalping and will bigger losses compared to their scalp wins.
So how do you know when youre wrong? The best I can describe this is experience in the market you trade. Understanding how fast price tends to move in momentum, what you would consider large lots, tape, etc...