Definitions
What is Scalping?
Scalping is a trading strategy that involves opening and closing short-term positions with the intention of making accumulated profits.
Scalping is one of the trading methods alongside day trading and swing trading.
In order to accumulate small profits in a short period of time, it has come to be called from the skull “scalping” meaning “skin the head”.
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How to perform Scalping strategy?
Most scalping traders display charts of various currency pairs on the screen, and their trading patterns and technical indicators are sticking in front of the monitor until a trading sign is issued, and most people look for trading opportunities.
Most people buy and sell orders as market orders and close orders as market orders.
There is no clear definition of trading time, but the holding time of a position can be as short as a few seconds to as long as tens of minutes.
It is common to trade with higher leverage.
Although the profit at one time is small, the style is such that the winning rate is increased and the profit is accumulated gradually.
Difference from medium and long term strategies
Medium- to long-term trading involves buying and selling in anticipation of how the currency will move after 6 months or 1 year.
In that case, fundamentals analysis is important, so studying for it is also necessary.
On the other hand, scalping can be judged only by knowledge of technical indicators.
As for the technical indicators, buy and sell signs appear in an easy-to-understand manner, and the fundamentals do not affect the small price movements of several tens of dollars.
So scalping may seem simpler and easier to understand than medium- to long-term trading, which requires difficult economic knowledge.
However, technical analysis is deep and it is not the easiest to make profits than medium- to long-term transactions.