Class Rings header graphic
(Day Trading) Guide

SCALPING

Scalping is a trading style which small traders indulge into. It is a term used where the day trader or a small dealer may take small profits and close the deal. He is on the look out for small profits and as soon as makes them, he covers them. It is important that he doesn't become greedy because if he happens to suffer a loss then it will wipe out all his small profits. The trader must have a strict exit rule for himself.

It is imperative that there are favorable factors conductive to scalping. The trader must have direst contact with his agent and must have continuous live information about the price fluctuations. He also must be having the time and the energy to keep investing in various spheres. Only if all these factors combine together, this strategy has chances of succeeding.

Scalping is based on a scientific theory. There are various types of scalping and the trader deals with his shares accordingly.

Free Search Engine Submission

It is assumed that at the beginning stages the stock will move in a particular direction. The initial movement of the stock can be predicted. Once the initial stage is covered, it movement becomes unpredictable. Thus the scalper should deal with he stock in the initial stages when it movement is predictable. He should not allow his small profits to vanish in the anticipation of future favorable movements of the stock at the later stage, when the market becomes volatile. This approach is directly opposite to the approach of let your profits run where the players simple sit tight and watch to optimize their profits in spite of the risks involved.

Hence scalping is a very profitable option for those who are looking for small gains and use scalping as a basic, primary strategy of making money or use it as a supplementary method of making money. The basic idea is to make small money which makes a big mound of gain in the end. The key factors are: little exposure to the market and small moves which the traders make. He may make as low as five gains or as many as hundred of small gains in a day. The time frame is very small. Hence he is always looking for a broker who is available readily.

The day traders bank heavily on news playing aspect of the stock market and they buy and sell shares guided by these factors.

Advertise with US