Scalping is one of those trading styles that may or may not appeal to some traders, depending on their type of preferences when it comes to making money on the market. This trading method is usually more common among day traders that does business on a daily basis. This type of trading style involves making profits on a security, commodity or currency through their difference in buying and selling price, all done on the same day.

Trading Style Characteristics

Scalping as a trading style does benefit day traders who look to profit in trades almost on a daily basis. Scalpers rely on the small price changes during the day. They try to buy at a lower price and then sell once the price improves during the day. Although the profit margins for each sale are relatively small, scalpers usually make hundreds of such trades

in a day. The profits made collectively from these trades amount to quite a sizable amount for an experienced scalper.

Strict Exit Strategy

Scalping as a trading style may require a very strict exit strategy. Since everything moves quickly in terms of trading, a scalper knows exactly when to exit at the first sign of making a profit. Holding on to a certain security or asset does not really work in this type of trading style.

Main Premises

Scalping may be the style of choice for day traders who believe on certain trading premises. One of them is that the lesser the exposure of the trader in the market, the lesser the risk. A day trader holding a position in the briefest of moments only after it gains will be exposed to lesser risk than a trader who holds on to it longer.

Another thing that scalpers get going for them is that smaller moves are easier to get in the market. Smaller price gains are easier to expect than the higher ones. On the same note, traders may see smaller moves more frequently in the market than the larger ones. This presents many opportunities to exploit for scalpers that other traders may not even think of taking.