scalping

Scalping is a trading strategy that seeks to profit from small, short-term price moves in highly liquid markets. Scalpers typically hold positions for seconds to minutes and aim to accumulate numerous small gains that add up over the course of a trading session. The approach emphasizes speed, discipline, and tight risk controls rather than large single trades.

Practitioners trade a variety of instruments, including equities, foreign exchange, futures, and options, with emphasis on liquid assets where bid-ask spreads are narrow. Trades often rely on rapid order execution, with market or limit orders and small profit targets. Many scalpers also use level II quotes, direct market access, and automated systems to improve timing.

Risk management is central. Because profits per trade are small, transaction costs, slippage, and latency can erase gains. Traders typically limit exposure per trade, use tight stop losses or time-based exits, and require robust infrastructure. Scalping can be demanding and may require monitoring screens for extended periods.

Regulation and market structure influence scalping. Some brokers or exchanges impose rules or penalties on certain forms of rapid trading, and liquidity conditions affect feasibility. Scalping is generally legal where markets operate, but traders must comply with local laws and exchange rules, including anti-manipulation provisions.

Critics note that sustained profitability depends on speed, cost efficiency, and access to favorable terms, and that it may not suit traders without significant resources. The strategy is distinct from longer-term trading and from illegal practices such as spoofing or market manipulation.