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Scalping definition
Scalping is a short-term trading strategy that aims to profit from small price moves by opening and closing positions very quickly. A trader who works this way is a scalper, holding each position for seconds or minutes rather than hours or days.
A scalper places many trades in a session, each targeting only a few pips or points of profit. The approach depends on high liquidity and tight spreads, because the profit per trade is small and the spread is a cost on every entry and exit. Major forex pairs, large-cap shares, major indices, and actively traded futures suit it for that reason, and fast order execution matters as much as a tight spread.
Scalping sits at the shortest end of the trading spectrum, below day trading, which also closes positions within a day but holds them far longer than a scalper does. Because a scalper trades so often, costs and slippage add up quickly and can erode the thin margins, so scalpers lean on strict stop-losses, fixed position sizes, and daily loss limits.
Scalping Example
You scalp EUR/USD during a high-liquidity session.
You buy at 1.0850 and close a few minutes later at 1.0853, a 3-pip gain.
The target is small, so you may repeat similar trades many times while spreads stay tight. A single wide spread or a few pips of slippage can wipe out one trade's profit.
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