What Is Scalping?
Scalping is the practice of taking many small trades — sometimes dozens or hundreds per day — each targeting a tiny price movement (often 0.1-0.5%). Holding periods are typically seconds to a few minutes.
Scalping requires extreme focus, low-latency execution, and very tight spreads. The edge per trade is so small that transaction costs dominate. Strategies that look profitable on paper often turn unprofitable once realistic slippage and fees are subtracted.
Scalping works best in deeply liquid instruments (mega-cap stocks during peak hours, BTC/USD on major exchanges) where spreads are tight and execution is instantaneous. For most retail traders without institutional infrastructure, scalping is a losing game — the cost structure is stacked against you.
Related terms
- Day Trading — Opening and closing all positions within the same trading day, holding no overnight risk.
- Slippage — The difference between the expected fill price of an order and the actual execution price.
- Liquidity — The ease with which an asset can be bought or sold without significantly affecting its price.