Copyright © 2016
Copyright © 2016
Scalping in trading is a term used to describe the skill of take several small profits on a regular basis, buying and/or selling several times per day. Scalpers like to try and scalp a few pips from each trade (3 up to 10 pips) and then repeat this process over and over throughout the day. Using high leverage and making trades with just a few pips profit at a time can add up, especially if your trades are profitable and can be repeated many times over the course of the day.
We can also say that scalping is a variation of day trading. A "day trader" opens a position and then close it again during the current trading session; in other words he/she never carries a position overnight. A day trader may look to take a position once or twice, or even a few times a day, but scalpers are much more dynamic and try to take really small profits multiple times in a trading session. In particular, some scalpers like to try and catch the high-velocity moves that occur around the time of the release of economic data and other important news events, such as the release of the employment statistics or GDP releases if that is what is high on the economic agenda. And, for sure, As a scalper you only want to trade the most liquid markets. It is, in my honest opinion, almost impossible to scalp in the stock market. The best market to do it is Forex. We are talking about a key factor that is liquidity, and the Forex Market is by far the most liquidy one in the world. Also, we are usually talking about the major currency pairs, such as EUR/USD or USD/JPY.
The Scalper's way of living
One may think tha scalping is not a good way to trade. Yes, for sure it is for a minority, but still can be profitable. What you must have in mind is that a scalper will be in front of a computer for several ours, and they need to enjoy the intense concentration that it takes to scalp. You cannot take your eye off the screen. You must be the kind of person who can react very quickly because there is no time to think. Being able to "pull the trigger" is a necessary key quality for a scalper. This is especially true in order to cut a position if it should move against you - you have no time for the market take you out some few pips.
Saying it once more, scaping is a very fast paced way of trading. If you like the action and like to really focus, then scalping may be for you. If you have the temperament to react quickly, and have no shame in taking quick losses, then scalping may be for you. But if you like to analyze and think through each decision you make, perhaps you are not suited to scalp. There are lots of other ways to trade. Pick up the one that fits for you and dont worry about any buzz that may bother you when you are trading the markets!