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Introduction to Scalping

Scalping represents the shortest-term trading style—even shorter than day trading. In general, most traders scalp currency pairs using a time frame between 1 and 15 minutes, yet the 15-minute time frame doesn't tend to be as popular. Both 1-minute and 5-minute scalping timeframes are the most common.

It got its name because traders who adopt the style, known as scalpers, quickly enter and exit the market in order to skim many small profits off of a large number of trades throughout the trading day. Scalpers believe that it's easier and less risky from a market volatility perspective to catch and profit from small moves  rather than from large moves, which is in part why it's popular among professional traders. However, scalping comes with the opportunity cost of bigger gains from those large moves and is only for disciplined traders who seek small, repeated profits.

The main premises of scalping are:

● Lessened exposure limits risk: A brief exposure to the market diminishes the probability of running into an adverse event.

● Smaller moves are easier to obtain: A bigger imbalance of supply and demand is needed to warrant bigger price changes. For example, it is easier for a currency to make a 10 cent move than it is to make a $1 move.

● Smaller moves are more frequent than larger ones: Even during relatively quiet markets, there are many small movements a scalper can exploit.

Three types of scalping

The first type of scalping is referred to as "market-making", whereby