What is Scalping in Trading? Is it better than swing trading?

When it comes to trading strategies, Scaling and Swing trading come very close and to lots of new trader they might find it quite similar to each other. In this article we will discuss about Scalping.

Simply put, Scalping is when a trader tries to make small profits by investing in small time gaps. Scalping strategy can be utilized in various trading platforms and market. Generally, traders who follows scalping trading strategy believes that one can make more profits from smaller trades and quick price fluctuations in the market, basically “quantity over quality”.  And sometimes, they might be true, if scalping is used with perfect exit strategy, one can make huge gains from multiple small trades. It is totally opposite from what long-term traders follow which leans more into traditional trading.

Scalping also follows the same basic principle and method as any other trading and that is finding and grabbing the perfect opportunity in a never ending fluctuating market. The only difference is that scalpers are tend have less patient and they are always looking out for instant gratification. It makes sense also given that scalpers have to recognize any coming risk or slippage which might harm their trade, with action is taken swiftly then they might end up with huge profit margin.

To stay relevant and optimize the strategy at any given time, scalpers have to keep focus and updated on latest market trends, have proper analytics and appropriate orders. Which will make them ever ready for any kind of challenge to avoid major loses.

In the previous article we have covered Swing trading, you can check it out by following the link below:

What is swing trading strategy? What are the various types of swing trading?

Followings are few characteristics which are different from each other.

For a seasoned trader, scalping trading could be profitable strategy to work with. Since the current market has been liquid and volatile lately, the opportunity has increased for traders to expand their portfolio and try various markets which they have not tried before. Following are some markets where scalping could bring good returns:

1) Forex

With current geo-political situation around the globe, currency derivative has been of the chart. Major currency pairs like EUR/USD, GBP/USD, USD/JYP are of the most popular currency among scalpers. In forex trading, the major currency pairings tend to be popular among scalpers due to their high liquidity. Specifically, the EUR/USD, GBP/USD and other major currency pairs.

2) Commodity

Considering the increase in gas price, and other value commodities, it could be a good market for scalpers to dig right in.  

3) Equities

Companies like Tesla, Apple, Alphabet, Nike has good liquid shares which very friendly for scalpers.

4) Cryptocurrency

 Since the invention of crypto currency, the value has been ever been growing non stop, with small fluctuation here and there. It is another best options for scalpers to explore more.

With scalping, one thing is for sure that if implemented rightly, it could be a deal breaker for most of the traders. Even though the profit is comparatively lesser, but at the same time it decreases your chance of loosing and increases the opportunity for more successful trades. However, if you’re looking to get rich overnight, you probably won’t be amongst those success stories. Scalpers need to be okay with taking small wins and think only about the next trade.

Scalping may sound easy theoretically, but it could be extremely hard on your emotions particularly if you are getting your hands on it for the first time. With right tool and guidance, it could be lot better, that’s why you need to choose the right broker and platform to start your scalping journey with. With trading you will never know until you actually try it.