So many factors affect the financial markets that it's often impossible to correctly predict where the prices will move next. Many traders lose their hard-earned money because of unexpected price swings. Some shift to smaller time frames and turn to scalp trading to reduce the risk of exposure to significant price fluctuations.
In this article, you'll learn what scalping is, what indicators scalpers use, and how to apply these indicators in a scalping trading strategy.
What is scalping?
Scalping is a very short-term day trading strategy that involves making profits from minuscule price changes. Traders that use this strategy are called scalpers, and their main goal is to earn money from a large number of small winning trades instead of relying on a few larger and longer-lasting ones. Each trade lasts between a couple of seconds to one hour, and the number of trades a scalper makes within one day can range from 10 to a few hundred, depending on whether a scalper trades manually or uses automated trading software.
The main thing that attracts traders to this strategy is that it is much easier to catch and profit from small price moves than larger ones. Minor price changes occur more frequently, and since each trade lasts for a short time, there's significantly less risk of encountering adverse events that can lead to undesirable price moves.