Is it possible to earn a few points of profit quickly? What is scalping?

Scalping is a type of intraday trading that takes advantage of small price movements over a short time by making a large number of trades.

Deals are closed very fast: in a few minutes or even seconds. Scalpers are traders who engage in scalping. They enter into transactions to obtain a profit on small price fluctuations, using a glass, a strip with clusters, or a candlestick chart. That said, many are convinced that scalping is a great solution because it allows them to make quick profits.

However, it is important to understand that this type of strategy is characterized by a high level of risk. The scalper's main trump card is a solid understanding of the markets and an effective strategy.

Because scalping orders are held open from several milliseconds to several minutes, the asset must have high volatility and liquidity. If we are talking about the Forex market, it is the classic pairs EUR/USD, and GBP/USD, which have the greatest liquidity. Overnight, this may be USD/CAD, AUD/USD, or USD/JPY. Also, volatile futures for oil, gold, and stock indices, such as NQ futures (futures on the Nasdaq 100 Index) show good results.

Pros and Cons of Scalping

It is possible to earn a few points of profit quickly by using the scalping method. Trading on the currency market is connected with financial risks, and scalping as a fast way to earn money has higher risks. Let's consider the main advantages and disadvantages of the method so that you can properly assess the prospects and make your conclusions.

Advantages of Scalping

• The activity of the market on short timeframes provides many opportunities for entering and exiting trades. If a normal trader selects an entry point twenty-four hours a day, a scalper makes dozens of trades a day.
• A large number of transactions is a fast profit earning and it is a good base for gaining experience and professional growth. Practical skills and speed of reaction are very important in scalping; that is why traders' automatism and, consequently, income grow with every new deal.
• No risk of a rollover to another day or weekend, which allows you to cross out the cost of swaps.
• You do not need a big investment to start trading. Accelerating even the minimum deposit is quite real due to the high frequency of trade.
• The scalping strategy has great profit potential. For example, having 1% profitability per day, you get almost 240% per year.
• Also, one of the advantages of scalping is the possibility to combine it with regular long-term trading. While the trader is waiting for his trades to close, designed for a longer timeframe, he can make short orders, reacting to the price movement, for example, to the news release.

Disadvantages of scalping

• Active price movements create a large number of stressful situations, which is a great psychological burden. Trading is time-consuming and requires full concentration.
• High spreads of the broker often "eat" a significant part of the income of the scalper, so it is important to choose the broker with the lowest commissions.
• Limited tools. Scalpers can set stop-losses but they usually do not have time to do it. Also, there is not enough time for technical analysis so the number of losing trades increases.
• Excellent Internet speed, powerful technique, and high speed of order execution are crucial for effective trading.
• One trade does not give a big profit. In long-term trading, the profit is usually dozens of points, while the scalper is satisfied with only 2-5 pips. That is why we have to open a lot of orders.

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