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What Is Scalp Trading


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Scalp trading is a way of profiting from price fluctuations in the stock market. These trades are usually fast and sometimes difficult to judge, lasting from seconds to mere minutes with only 0.125 to 0.5 point gains. When just beginning, trade with small shares to reduce the cost of learning as you gain experience.

Whether you plan to scalp as a day trader full-time or part-time, use the following considerations to play your game:

  • Profit Objective - Gaining small profits on temporary price fluctuations that occur throughout the trading day. Scalpers must have the ability to recognize the momentum of order flows, jumping in the trade right as the price fluctuates and risking no more than the intended gain and then getting out fairly quickly. Otherwise, you risk prices moving against you.

  • Frequency - Since the profits in scalping tend to be smaller, the frequency of such trades are higher. This means that scalpers increase their commissions by performing more trades. Resist the temptation to over trade, especially if you aren't 99.9% sure of making a consistent profit.

  • Time Intervals - Generally, scalp trades only last from a few seconds to a few mere minutes. They can last as long as a couple of hours at the most, but this is more rare.

  • Order Placement - The success of scalping tends to evolve around placing the orders. Because scalping is a very fast process, your ability to get in and out of a trade is detrimental for making a profit. You must be able to think quickly and act with speed.

  • Software & Network Connection - Again, speed is of the essence. If you don't have a fast enough connection to the Internet to gain access, expedite orders, and receive timely information in real-time, you are defeating your purpose of scalping and probably losing money, or else you could be profiting more. Likewise, your software program should be efficient and fast in making calculations, producing charts for viewing and toggling to screens without delay. You can't make fast, effective decisions if you don't have timely access to the information on which you are making decisions.

  • Competition- Specialists and market makers representing themselves and huge multi-million dollar corporations are not only equipped with the latest cutting-edge technology, but they are very intelligent, savvy individuals who happen to be your competition. Sometimes an overcrowded market leaves very few slices of the pie.

    As there are a few favorable conditions to look for when scalping, adhere to the don'ts below:

  • Don't be Biased - Refrain from making market determinations without sufficient evidence. Let the market show you what it's going to do. Analyze the factors that may or may not prevent a stock from going in one direction or the other. Stay neutral and watch things closely so that you will be prepared to take action as soon as the direction of the market becomes clear.

  • Don't Chase - Tracking the progress of moving prices is not the same thing as chasing it. Keep your position if a stock suddenly moves several levels. The larger a leap, likelier the fall. You don't want to be caught in this thunder twist.

  • Don't Bring Home a Scalp Trade - Scalping is too quick and over night changes completely unpredictable. Before the end of the day, take your profits and cut your losses where they are. Tomorrow is a different day, and a different game.

    Articles on stock market trading , finance, investing tips and many more stock trading related. Check the stock market strategy on

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