Scalping

What is 'Scalping'

Scalping is a trading strategy that attempts to make many profits on small price changes. Traders who implement this strategy will place anywhere from 10 to a couple hundred trades in a single day in the belief that small moves in stock price are easier to catch than large ones.

BREAKING DOWN 'Scalping'

Traders who implement this strategy are known as scalpers. The main goal is to buy (or sell) a number of shares at the bid (or ask) price and then quickly sell them a few cents higher (or lower) for a profit. Many small profits can easily compound into large gains if a strict exit strategy is used to prevent large losses.

RELATED TERMS
  1. Forex Scalping

    A trading strategy used by forex traders to buy a currency pair ...
  2. Scalper

    A person trading in the equities or options and futures market ...
  3. In And Out

    A trading strategy in which shares of a single security are bought ...
  4. Day Trader

    A investor who attempts to profit by making rapid trades intraday. ...
  5. Profit Target

    A predetermined point at which an investor will exit a trade ...
  6. Profit Range

    A range of prices that an underlying security can possess in ...
Related Articles
  1. Trading Strategies

    Scalping: Small Quick Profits Can Add Up

    Scalping entails taking profits on small price changes shortly after a trade is entered.
  2. Trading Strategies

    4 Common Active Trading Strategies

    Learn four of the most popular active trading strategies and why active trading isn't limited to professional traders anymore.
  3. Investing Basics

    Day Trading Strategies

    Day trading is the term often used for buying and selling stocks within the same day. Day traders seek to make a profit by leveraging large amounts of capital in order to take advantage of small ...
  4. Trading Strategies

    Introduction To Trading: Scalpers

    This type of trader makes many trades per day to "scalp" a small profit from each trade. Find out how it works.
  5. Forex Education

    A Beginner's Guide To Scalping In The Forex Markets

    We look at what scalping is, how to do it and the characteristics of a successful forex scalper.
  6. Active Trading Fundamentals

    How To Start Trading: Trading Styles

    While investments can be held for years or decades, the four primary trading styles can be held from months to years, or only for minutes or seconds. These styles are: position trading, swing ...
  7. Forex Education

    No Forex Strategy Of Your Own? Try Mirror Trading

    There are many advantages to trading a mirror strategy, yet markets are dynamic, and regardless there is always a risk of losses.
  8. Trading Strategies

    Does Your Personality Match Your Trading Methods?

    Investing has ways to successfully accommodate a variety of personalities. Learn how to align your trading with your traits.
  9. Active Trading Fundamentals

    Minute-to-Minute Trade Signals for Today's Scalper

    Scalpers can profit in today's modern environment by using technical indicators—outlined here—that are custom-tuned to very small time frames.
  10. Day Traders

    Day traders enter into and exit positions several times per day. The critical feature is that they never hold a position “overnight.”
RELATED FAQS
  1. Is scalping a viable forex trading strategy?

    Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is ... Read Answer >>
  2. How do day traders capture profits from the difference between bid and ask prices?

    Discover how day traders capture profits from the difference between bid and ask spreads. These spreads blow out during volatile ... Read Answer >>
  3. If I believe retail sector companies are overvalued how can I profit from a fall ...

    Examine the various trading strategies that can be employed by an investor who anticipates a decline in stock prices in the ... Read Answer >>
  4. How do you use put options to profit from a bear market?

    Learn how traders use put options in their trading strategies to remain profitable, even in a bear market. Everyday investors ... Read Answer >>
  5. How can a company trade more shares in one day than there are shares outstanding? ...

    The number of shares traded in a single day can be greater than the number of a company's outstanding shares, but this is ... Read Answer >>
  6. How do I implement a Forex Signal System into a forex trading strategy?

    Learn how traders use different types of forex signal systems such as trend-based or range-based to create or supplement ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center