Scalping
Definition
Scalping is a trading style that targets very small price moves — often just cents or a few ticks — entering and exiting positions within seconds to minutes, with the goal of accumulating many small wins throughout the day while keeping losses equally small.
Example
“I scalped SPY 40 times on Thursday — average hold was 3 minutes, average gain $0.08 per share on 500 shares. 32 winners, 8 losers. Total P&L: $920. It's grind trading, not glory trading, but the numbers add up.”
Detailed Explanation
Scalping is the most active and mentally demanding form of day trading. Every trade is a sprint — you're in and out before most swing traders have even finished analyzing their setup. The edge in scalping typically comes from reading order flow (Level 2, Time and Sales), understanding liquidity, and recognizing very short-term momentum patterns. Unlike longer-term setups where you can watch a chart develop over 15 minutes, a scalper makes a decision in seconds and executes immediately, then monitors the position for a couple minutes at most before deciding whether to exit at profit or loss.
The economics of scalping require volume (high share size) and a liquid market (tight spreads). If you're scalping for $0.10 moves, you need to be trading enough shares that $0.10 is meaningful money — 1,000 shares for $100 gross per trade. Subtract commissions ($1–5 per side depending on broker), the cost of the bid-ask spread each way, and any slippage, and a $0.10 target can quickly become $0.05 of actual profit. This is why scalpers specifically choose high-volume, tight-spread instruments: the most popular scalping instruments are index ETFs (SPY, QQQ), highly liquid individual stocks, and futures (/ES, /NQ). Scalping illiquid or wide-spread stocks is a money-losing proposition before you've even looked at a chart.
Psychologically, scalping is exhausting in a way that longer timeframe trading isn't. You're making 20–50 high-stakes decisions per day at high speed, each one requiring sharp execution. Decision fatigue accumulates faster than in longer timeframe trading. For this reason, most full-time scalpers front-load their day (trading most heavily in the first two hours when the market is most liquid and active) and significantly reduce activity in the afternoon. The benefit of scalping is that your capital is at risk for very short periods, limiting your overnight and news risk, and you're not dependent on holding through uncertain market conditions. The cost is intensity, commissions, and the constant edge-of-seat execution requirement.