Scalping

What Is Scalping in Trading?

Scalping is a short-term trading strategy that involves making numerous small trades throughout the day to capture tiny price movements. The goal is to profit from quick, small gains, often by taking advantage of market inefficiencies or high-frequency movements.

How It Works

• Frequent Trades: Traders using the scalping strategy aim to make dozens or even hundreds of trades in a single day. Each trade usually holds for just a few seconds to minutes.
• Small Profits, Big Volume: The profits per trade are often tiny, but when you make enough of them, they can add up to a significant return.

Example

If a trader buys a cryptocurrency at $1,000 and sells it just moments later when the price rises to $1,001, they’ve made a $1 profit. If the volume is higher, let’s say $100,000, they’ve made $100. Repeat that several times in a day, and you could accumulate a decent return. However, because the gains are small, the trader needs to trade frequently and manage transaction fees carefully.

The Sum Up

In short, scalping is about making quick, small profits on price movements by executing many trades in a short amount of time.