Scalping: Let’s Make It Clear

Do you know what the word scalping means? Have you ever run into it when trading cryptos? Scalping is a trading method used to maximize the gains during a daily trade. In this article, you will learn how scalping is used in trading to get the most out of it.

What is scalping?

Scalping is a strategy focused on making profits out of small price changes, prioritizing high volumes off small profits. It usually requires a trader who has an exit strategy, because of the risks one large loss could make.

Scalping means having a strong belief that making small moves in stock prices is less risky than making large price moves. Instead of waiting to discover if they can profit more from a trade, scalpers usually set a precise profit target, and once it has been hit, they get out of trades.

Scalpers usually implement technical analysis rather than fundamental analysis. This method is extremely useful in monitoring small time frames data and indicators. For example, multiple chart scalping or relative strength/weakness exit strategy.

As a scalper gets a strict exit strategy, chances are big they will profit a lot from a trade. They can leverage small changes in the price of a certain stock within a short timeframe. What is leverage? It’s a method of trading with borrowed capital from a broker, in order to enhance one’s buying power.

A common scalping technique

One of the most common scalping techniques is to predict all the changes that could occur in a market moving at a horizontal level. Such technique requires very good analytical skills.

To sum up

Scalping is a trading strategy focused on making several small-profit trades instead of fewer large-profit trades. It is one of the shortest-term trading methods, with positions that can only last seconds! It is a strategy that requires constant discipline because, once a profit target is reached, scalpers need to get out of the trade.

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