Overview
Scalpers take small, frequent profits from short-term imbalance. The approach depends on excellent execution, low costs and rigid loss limits.
How it works
The trader reads the tape at a level, enters when flow confirms, and exits within a tight band. Position management happens in seconds, so rules must be decided in advance.
Typical setup
- Highly liquid instrument with tight spread
- Defined level with visible resting liquidity
- Fixed small stop and fixed target
- Hard trade count and daily loss limit
Advantages
- No overnight exposure
- Fast feedback loop
- Small per-trade risk
Risks
- Costs compound quickly
- Mentally fatiguing
- Requires low-latency execution
Common mistakes
- Widening a scalp stop into a swing
- Trading illiquid names
- Ignoring commission drag
Risk management notes
Scalping only survives with a strict daily loss limit and honest accounting of fees and spread.
This guide is educational. It is not a signal service, a recommendation, or a claim that this strategy is profitable. Trading involves substantial risk of loss.