Seconds in and seconds out:small moves, many, are what it's about.
A trading strategy that aims to profit from very small price movements, typically holding positions for seconds or minutes.
Scalpers make many trades per day, targeting a few pips of profit each time.
In plain words
Scalping is a style of trading that opens and closes positions within seconds or minutes, aiming for a gain of a few pips each time and repeating this many times a day.
See it move
Spread cost is about a fifth of Target (as in the lesson)
Why it matters
Because each target is so small, trading costs take a large share of it, and a single loss can cancel several gains. Scalping also depends heavily on execution: a fill one pip worse than expected matters far more than it would on a longer trade.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A scalper aims for 5 pips a trade on one standard lot, in a pair with a spread of 1 pip.
- 1A gain of 5 pips on one standard lot is 5 × 10 = 50 US dollars.
- 2The spread of 1 pip costs 1 × 10 = 10 US dollars on each trade.
- 3Share of the target10 ÷ 50 = 20%.
- 4Over 20 trades the spread alone costs 20 × 10 = 200 US dollars.
The spread equals 20% of each 5 pip target; against a 100 pip target the same 1 pip spread would be 1%.
A common mistake
Small targets do not mean small risk. Scalpers often use large positions to make a few pips worthwhile, so a sudden move or a poor fill can produce a loss many times the usual gain.
Check yourself
Educational information, not investment advice or a recommendation to trade.