Scalping

Scalping is a trading style where you catch small price moves and hold a trade from seconds to a few minutes. There are many trades, and profit and loss on each one are small.

How it works

A scalper does not wait for a big trend. They enter many times a day and take a few pips (a pip is a small standard price step) or fractions of a percent. Most scalpers work on low timeframes such as 1-minute and 5-minute charts.

So the main price here is not the idea but the costs: spread, commission and slippage. Over such short moves they eat a visible part of the result. Scalping only makes sense on liquid instruments with a tight spread and during active market hours.

The style needs discipline: a hard stop-loss on every trade, a daily loss limit set in advance and full focus. It is tiring, and mistakes made from fatigue are expensive here.

Example with numbers 1

You take 5 pips of profit and the spread on the pair is 1.5 pips. A slice of the move is gone before you even enter. Do 40 trades like that in a day and the costs add up to a big sum.

Example with numbers 2

At 0.1 lot on EUR/USD one pip is worth about $1. 40 trades × 1.5 pips of spread = 60 pips, or about $60 in costs per day before commission. Your trades have to earn more than that just to break even.

Common mistake

A common mistake is scalping during news releases with a wide spread, then raising leverage to squeeze more out of a small move. One sharp candle can then wipe out dozens of small wins. Trade in calm but active hours, count your costs before you enter, and after a losing streak stop for the day instead of trying to win it back.

Questions and answers

What is scalping in simple terms?

It means very short trades: you get in, take a small price move and get out within seconds or minutes. Profit comes from many small trades added together.

Is scalping good for beginners?

Usually not. It needs fast decisions, low costs and strict discipline, and mistakes pile up quickly. Beginners usually do better starting with longer trades and small risk.

What is the difference between scalping and swing trading?

A scalper holds for minutes, a swing trader for days to weeks. Scalping means more trades and a bigger share lost to costs, swing trading means fewer trades with wider stops.

Scalping

How it works

Questions and answers

Related terms

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