Scalping is a day trading strategy where traders buy and sell assets multiple times a day, usually ones with high volatility, like penny stocks or cryptocurrency. This way, several small gains can add up to significant income. Scalp trading generally has a short window of opportunity compared to other strategies.
This strategy can take the form of scalping or scalp trading. The major difference between the two is that scalping is done almost exclusively with small-cap stocks, while Scalp Trading can be completed with any assets.
Scalp traders look at the nuances of how an asset trades during the day—using that information to try to capture 2% or 3% in profit from each trade. Scalpers also take advantage of 'spikes' in volume when they occur. A spike happens when there's an unusual increase in trading volume for a particular period. Because of this reliance on asset spikes, scalping has a short window to be executed successfully. Most successful scalp trades are completed within 1-5 minutes of asset spikes occurring, while in some instances, scalping opportunities can last for hours.