The primary objective of investors in the financial market of India is to gain profits. Nevertheless, they begin by experimenting with a specific trading approach and gradually move on to the next one until they discover the most advantageous technique that can yield higher profits compared to others.

Each investor possesses a unique trading approach, with some following the value investing strategy and others adopting intraday trading. In the case of intraday trading, the concept is relatively straightforward: purchase stocks during the market opening hours and sell them before the market closes. If the selling price is higher than the purchasing price, the investor earns a profit, but if it’s lower, they face losses while selling or converting the order into delivery. However, investors employ diverse methods within intraday trading to benefit from the fluctuating prices.

Scalp Trading, also known as Scalping, is among the most commonly employed techniques.

What is Scalp Trading or Scalping?

Scalp Trading, or Scalping, is a trading technique in which traders aim to make small profits from frequent trades. Traders utilising this strategy hold their positions for a brief period, ranging from a few seconds to minutes, and close them after making a small profit. Scalping requires traders to have a strict exit strategy to avoid holding on to a losing position for too long. This technique is typically used in high liquidity markets, where small price movements can generate profits.

Let’s say an investor wants to scalp trade a particular stock that is currently trading at $50. The investor believes that the stock’s price will increase in the next few minutes, so they buy 100 shares of the stock at $50 per share, spending a total of $5,000.

A few minutes later, the stock price increases to $50.20, and the investor sells all 100 shares at the new price, earning a profit of $0.20 per share or $20 in total.

Even though the profit seems small, scalpers aim to make multiple trades like this throughout the day to accumulate profits. With a large enough investment and the ability to make quick decisions, scalping can be a profitable trading strategy.

How does Scalping work?

Scalping is a stock market technique that operates on the assumption that most stocks experience an initial stage of price movement, but it becomes difficult to predict the stock’s direction beyond this point. Scalping aims to take advantage of the initial stage by allowing the investor to capitalise on the movement rather than waiting for the stock price to advance further.

Individuals who engage in Scalping are called Scalpers, and they believe that it is more advantageous to earn small profits on several trades than to risk all their capital on a single trade in a day. Although their profits may be smaller and they may occasionally lose out on significant gains, the high volume of their trades enables them to accumulate a substantial amount of profits.

The premises of Scalping in the stock market

Scalping in the stock market is based on the following premises:

  • Limited market exposure reduces the risk of incurring significant losses.
  • Small price movements are easier to capitalise on than waiting for a larger movement based on supply and demand forces.
  • Smaller price movements occur frequently, even daily, as compared to larger ones. Even in a bearish market, small upward price movements are relatively common.

How do Scalpers analyse the market before Scalping?

Scalpers use various tools and techniques to analyse the market before scalping, such as:

  • Technical analysis: Scalpers use technical analysis to identify price trends, patterns, and support and resistance levels, which help them determine the best entry and exit points for their trades.
  • Level 2 quotes: Scalpers use Level 2 quotes to access real-time market data, including bid and ask prices and the number of shares available to buy and sell at each price level. This information enables scalpers to make quick and informed trading decisions.
  • Time and sales data: Scalpers use time and sales data to monitor the price and volume of trades in real-time. This information helps scalpers identify significant price movements and trading opportunities.
  • Market volatility: Scalpers prefer to trade in markets with high volatility since it creates more opportunities for profit. They monitor market news and events that could impact market volatility, such as economic reports or corporate earnings announcements.
  • Risk management: Scalpers have strict risk management strategies in place, such as using stop-loss orders, to limit their losses and protect their capital. They may also avoid trading in markets with low liquidity or high volatility to reduce their risk exposure.

Day Trading Vs. Scalp Trading

Day trading and scalp trading are two popular short-term trading strategies used in the stock market, but they differ in several ways.

  • Timeframe: Day traders typically hold their positions for a few hours, while scalp traders hold their positions for only a few seconds or minutes.
  • Profit targets: Scalp traders aim to profit from small price movements, while day traders seek to capitalise on larger price movements.
  • Risk: Scalp traders take on more risk since they make more trades in a day, while day traders have less risk exposure due to their longer holding periods.
  • Account size: Scalp traders usually have a larger account size to take on the higher risk associated with their strategy, while day traders can work with a smaller account size.
  • Market focus: Scalp traders focus on short-term market movements, while day traders may consider long-term trends as well.
  • Trading style: Scalp traders rely on technical analysis to make trading decisions, while day traders may use both technical and fundamental analysis.

Ultimately, the choice between day trading and scalp trading depends on an individual’s trading style, risk tolerance, and investment goals.


In Conclusion, scalp trading is a short-term trading strategy in which traders aim to profit from small price movements in the market. It is a high-risk, high-reward strategy that requires a lot of experience, quick decision-making skills, and discipline. Scalpers use technical analysis to identify opportunities and often employ leverage to amplify their returns.

While scalp trading may not be suitable for everyone, it can be a profitable trading strategy for those who have the skills and mindset to succeed. It is important to note that scalp traders should always use risk management strategies to protect their capital and avoid over-trading. With the right approach, scalp trading can be a valuable tool for investors looking to achieve their financial goals.

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