Scalping — Trading Wiki

Publisher and editorial transparency

Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Scalping means

Ultra-short-term trading capturing tiny price movements (seconds to minutes). Requires low-latency execution, tight spreads, and relentless discipline.

In depth

Scalping is an ultra-high-frequency trading style where traders aim to profit from very small price movements — typically a few cents on stocks or a few ticks on futures — by entering and exiting positions within seconds to minutes. Scalpers execute dozens to hundreds of trades per session, accumulating small profits that compound into meaningful returns through sheer volume. The strategy demands the lowest-latency execution infrastructure, the tightest possible bid-ask spreads, the lowest commissions, and an extraordinarily disciplined mindset.

Scalpers typically use the order book (Level 2 data), time and sales (the tape), and very short-term charts (1-minute or tick charts) to identify micro-opportunities. Common scalping setups include order flow imbalances (when buy orders significantly outnumber sell orders at a price level), support/resistance bounces on the 1-minute chart, and opening range breakouts during the first 15 minutes of the trading session. Commission costs are the critical variable in scalping profitability. Because each trade captures only a few cents per share, commission and spread costs represent a significant percentage of gross profits.

Scalpers typically require direct market access (DMA), per-share commission structures (rather than per-trade), and accounts with exchanges or brokers that offer maker-taker rebates.

Key points

• Captures tiny price movements over seconds to minutes
• Requires extremely low latency, tight spreads, and low commissions
• Break-even win rate depends on realized win and loss amounts plus costs

Why it matters when you are learning

Scalping is the Formula 1 of trading — thrilling but unforgiving. Master slower styles first; scalping rewards only the most disciplined traders.

Practising Scalping on the simulator

Use the simulator as an observation exercise for Scalping. The main feature to identify is: Captures tiny price movements over seconds to minutes. A second feature to compare is: Requires extremely low latency, tight spreads, and low commissions. A third feature to note is: Break-even win rate depends on realized win and loss amounts plus costs. The presence of the concept is not a prediction or a trade signal. Educational simulation only — not financial advice.