What is Scalping in the Stock Market?

Scalp trading, also known as scalping, is a popular stock trading strategy characterised by super short time periods between the opening and closing of a trade. Or in other words, Scalpers trade with the intention to make profits from short term share volatility,

It is like the thrillers that are full of action and keep you on the edge of your seat the full time.

It’s exciting, fast-paced, and mind-rattling, all at once.

How Does Scalping Work?

The main objective of the scalping strategy is to benefit from the small changes within stock price movements throughout the same day.

Scalpers only hold onto their trades a few seconds, or at most a few minutes and usually follow short period charts, such as 1-minute charts, 5-minute charts, or 15 minutes top.  

Fun Fact: The name ’Scalping’ is derived from the way its goals are achieved. Traders can literally place up to a few hundred trades in a single day trying to “scalp” lots of small profits from a huge number of trades.

Because scalpers have to be glued to the charts, it is best suited for people who can dedicate hours of undivided attention to their trading. It requires focus and quick thinking in order to be successful. Not everyone can handle such fast and demanding trading.

Smaller Trades Add Up to Big Gains

Scalping is not for those looking to make big wins all the time, but rather investors who prefer a number of small profits over one long-term trade.

The objective behind this is that the risk per trade is limited. This means that investors set tight trading windows, both in terms of price movement and timeframe.

🙂 You might be a Stock Scalper if:

  • You like a fast-paced environment and excitement.
  • You like to constantly monitor your Stocks 
  • You are a fast thinker with fast fingers.
  • You are impatient and don’t want to wait for long trades.

☹️ You might not be a Stock Scalper if:

  • You get easily stressed in a fast-paced environment.
  • You like to take your time to analyse the overall market before placing a trade.
  • You’d rather place fewer trades with higher profit gains.
  • You have a slow internet connection