What is Scalping?

Scalping - Scalp or Scalper in Trading are both terms used to denote methods of surfing to earn small profits on a regular basis, by entering and exiting orders many times a day.

Scalping is not the same as Day Trading, in which a Trader will open an order at a position and then close it in the current trading session, in other words, Scalping never holds an order through to the next trading session or holds an order overnight. 

While day traders can enter trades once or twice, or many times a day, scalpers will be more frenzied and try to surf quickly for small profits but many times in the same trading Translate.

And while a day trader can trade on the M5 and M30 charts, scalpers often trade the M1 chart, even using tick charts. Specifically, some scalpers want to try and capture the high-speed price movements that occur around economic news releases and other important economic events, such as news releases. NFP or GDP if that's what the meeting is about.

Why Traders choose Scalping?

Scalpers are people who try to take profit from 5 to 10 pips per trade and repeat this action throughout the trading session. They use high leverage and execute trades with only a few pips of profit at a time.
Remember, with a standard lot, the average value of a pip is about $10. So, for every 5 pips of profit, the trader can make $50 at a time. Ten times a day, this would equate to $500.

Note: Images are for illustration purposes only

Personality Traits of Scalpers

Scalping, of course, is not for everyone, and one thing is for sure: You must have the personality of a scalper to choose this trading method. These people will enjoy sitting at the computer all day during the trading session, and they need to enjoy extreme concentration when they are scalping.

You can't take your eyes off the screen because you have to trade small waves on low time frames, for example, you need to scalp 5 pips each time. Even if you think you can afford to sit and look at charts all day or look at charts all night if you are not a person suffering from sleep deprivation, you must be someone who can react quickly to each change small change in the market.

There will be no time for you to think. The ability to react quickly is an essential element for a Scalper. This is especially true in case the price moves against you even by just 2 to 3 pips.

Difference between Market Making and Scalping

Scalping is similar to what Market Makers (market makers) execute trades around the spread. When a market maker executes his trades, he makes a profit from the market spread. In contrast, scalpers are spread payers.

It is very important to distinguish Scalper from Market Maker. When the scalper buys at the asking price and sells at the bid price, he must wait for the market to move in his direction to overcome the spread paid to the Market Maker. Market Maker, on the other hand, makes profits immediately at the time Scalper places an order.

Therefore, the risk of Scalpers must be higher than that of Market Maker, even though both are looking for ways to enter and exit orders extremely quickly. Market Makers like Scalpers because Scalpers are spread payers, which means the more scalpers there are, the more Market Makers will make money from the spread.