Trading
Scalping
A strategy of making many quick trades for small profits.
Full Definition
Scalping is a trading strategy that aims to profit from small price changes through frequent, short-duration trades. Scalpers may make dozens or hundreds of trades per day, each targeting just a few pips profit. It requires tight spreads, fast execution, intense focus, and strict discipline. The high trading frequency means commission costs are a significant factor.
Example
A scalper enters EUR/USD targeting 5 pips profit with a 3 pip stop loss. They execute 50 trades in a day, winning 30 and losing 20. Gross profit: 30×5 = 150 pips. Gross loss: 20×3 = 60 pips. Net: +90 pips.
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