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What is Scalping in Day Trading?

Scalping is a Day Trading technique where a Day Trader tries to profit off of small price changes buying and selling stocks multiple times throughout a trading day. As opposed to several Intraday Trading Strategies where massive profit is the concern, the primary goal of Scalping is to make small profits over a bunch of little trades. In a nutshell, Scalping is a Day Trading technique that gives priority to making high volumes off small profits.

Though Scalping in Day Trading might be very profitable, it carries high levels of risk, especially for novice Day Traders, at times when trends don't resume after pullback, or a strong downtrend is preceded by a deceptive breakout that ends up in turning into a false breakout.

The theory behind Scalping Day Trading technique is the supposition that smaller price movements are more frequent, and accordingly easier to arrest them relative to larger ones. By promptly entering and exiting large-size positions, when market timing is appropriate, small gains add up to the same or even more profit than from a conventional Intraday Trade but in turn the risk associated with the repetitive trades tends to be higher.

Scalping assumes a solid trading strategy behind the actual trading relevant to both the Day Trade Stock Picking, and the enter/exit point. Each component of the scalping strategy has to be backed by proficient stock analysis, stock market research, and the aptitude to analyze stock charts with express rapidity, identifying chart patterns, spot price points, find support- and resistance levels that all help Day Traders to reduce the risk factor. As its name implies, Intraday Stock trader who is engaged in Scalping is called scalp-trader or scalper trader.

Scalp traders would either open long positions by buying low and selling high, or oppositely; would go short by selling high and buying low. Two options would leave scalper trader with more opportunities to make profit in either up- or downtrend.

Though Scalping is considered as a Day Trading Strategy specifically within this technique most commonly there are three types defined.

1. High-volume trading involves buying in large quantities to max out the profit off of a small price movement. This technique entails the criteria of having enough liquidity necessarily for the entire position to be opened and closed with a tight spread to boost profit.

2. Breakout trading is a popular trading strategy alone but in case of Scalping it a must as most of gains are ahead when breakouts occur.

3. Spread trading also referred to as market making, is a Day Trading technique where scalp trader expects profit from the spread by simultaneously buying and selling a particular stock. It assumes more or less stable market conditions. According to the rule of supply and demand, its difficulty lies in the fact that scalper trader will be trading against much larger institutions and market leaders.

Scalping Can Bring Big Profit In A Short Period Of Time

Battle Inflation Monster

Knowing The Latest News About A Stock Is Important For Scalping

Create From-Home Career

Traders Who Use Scalping Strategy Are Called Scalpers

Act for a Luxury Life

Should an investor 59 be committed to scalping, the first step is to find a reputable online stock broker that offers top-of-the-line stock trading platform with all the features and tools Day Traders (including Scalpers) need to exercise Scalping Strategy effectively. Here is a list of couple criteria that should meet.

» Make sure your brokerage's platform is capable to execute trades quickly and reliably even in volatile markets, otherwise your profit expected from rapid trades will shrink.

» Broker should offer transparent competitive fees and charges, because in Scalping profits can be diminished by high trading fees and commissions.

» Be assured they offer advanced charting software that provides multiple timeframes on charts including 1-, 5-, 15-minute charts and that technical indicators and drawings can be added to the chart. Using another platform for charting than your broker's will steal your attention. Also real-time stock market news and ticker news are of paramount importance that allows Scalper traders to be updated by hot news that often helps to exploit opportunities triggered by sudden price changes.

No Grueling Analysis

Success In Scalping Needs Strict Strategy About Exiting To Avoid Big Losses

Massive Profit Rate

Scalping Relies On Real Time Stock News And Technical Analysis

Lucrative Career

Trading platform must offer risk management tools as stops and limits.

Demo accounts, stock trading simulators or trial periods usually offered for free of charge will help you practice this profitable but risky Day Trading Strategy, before you consider trading in live markets.

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