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Trading Strategies

Scalping

A strategy of making many small trades for tiny profits, holding positions for seconds to minutes.

What is Scalping?

Scalping is a trading style that involves making dozens or hundreds of trades per day, each targeting very small profits (a few cents per share). Positions are held for seconds to minutes.

Requirements

  • Fast execution: direct market access (DMA) and hotkeys are essential
  • Low commissions: per-share pricing (e.g., Lightspeed, DAS Trader)
  • Level 2 data: reading the order book for short-term direction
  • High-liquidity stocks: tight spreads are critical

Scalping requires intense focus and discipline. The profit per trade is small, so one large loss can wipe out many winners.

Related Terms

Bid-Ask Spread

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask).

Hot Keys

Keyboard shortcuts for instant order execution: essential for day traders who need speed.

Momentum Trading

A strategy that buys stocks making strong moves on high volume, riding the trend until momentum fades.

Round Trip

A complete trade cycle: opening a position and then closing it. Counted as one round trip regardless of share count.

Trailing Stop

A stop that automatically adjusts upward as price rises, locking in profits while allowing the trade to run.