Scalping in day trading
This article is about trading in securities or commodities. For other uses, see Scalping disambiguation. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. August Learn how and when to remove this template message. This section does not cite any sources. Please help improve this section by adding citations to reliable sources.
March Learn how and when to remove this template message. Capital Gains Research Bureau, U. Yun Soo Oh Park, 99 F. Retrieved from " https: Articles needing additional references from August All articles needing additional references Articles needing additional references from March Scalping is the shortest time frame in trading and it exploits small changes in currency prices.
This procedure allows for profit even when the bid and ask don't move at all, as long as there are traders who are willing to take market prices. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. The role of a scalper is actually the role of market makers or specialists who are to maintain the liquidity and order flow of a product of a market.
The profit for each transaction is based only on a few pips basis points , so scalping is typically conducted when there are large amounts of capital and high leverage or there are currency pairs where the bid-offer spread is narrow. Whenever the spread is made one or more party must pay it paying the cost to receive some value on completing the transaction quickly and some party or parties will receive that money as profit.
Scalping in this sense is the practice of purchasing a security for one's own account shortly before recommending that security for long-term investment and then immediately selling the security at a profit upon the rise in the market price following the recommendation.
Scalping is analogous to front running , a similar improper practice by broker-dealers. It is also similar to but differs from pumping and dumping , which does not involve a relationship of trust and confidence between the fraudster and his or her victims. From Wikipedia, the free encyclopedia. This article is about trading in securities or commodities. For other uses, see Scalping disambiguation. This article needs additional citations for verification.