A scalper is well known trading strategy in which traders aim to profit with very small price changes. This strategy often correlates with very fast-paced trading sessions in which traders will often place over 10 trades.
Small gains will add up fast as scalpers will head into a trade with large position sizes but with the intention of holding for only a very small amount of time (the time frame can be of minutes or even just seconds).
Positions are closed at the end of the trading session, making scalping an intraday activity.
In order to perform a scalping strategy well, a trader will require rigor, discipline, deep knowledge of technical analysis, and absolute precision in his or her execution due to the focus on short-time price fluctuations.
As scalping requires a set profit or loss to exit a trade, some scalpers may go to the extent of creating or using computer software in which they can program it to automatically employ their strategies.
Risks of Scalping
Some may say that the Lower the exposure, the lower the risks but scalping is considered to be a high-risk strategy as mistakes such as poor execution and over-leveraging tend to pile on others such late entries and late exits or, worse, a bad strategy.
In order to minimize risks, the trader must have clear and precise entry and exit points as well as strict rules to which he adheres to.
