What is Scalping?
Scalping in trading, whether it’s Forex or CFDs, refers to a style of trading where investors enter a position for a very short time frame.
What is scalping?
The definition of scalping differs to the industry and the context the word is used in. Just like scalpers who resell concert or sporting tickets at a large or quick profit, the term can be applied to forex trading. Scalping in trading, whether it’s forex or CFDs, refers to a style of trading where investors enter a position for a very short time frame. Traders may enter a position for as little as a few minutes before liquidating once the price or value rises by a few pips. Some scalpers will open the position for only a minute, while others keep the position open for up to 5 minutes or more.
Why is scalping used?
The strategy is aimed at reducing risk and reducing potential losses. But at the same time, any profits made from a trade will be significantly smaller. Scalpers rely on small and frequent gains, opposed to buy/sell and holding strategies used within swing trading. In order to make a noticeable profit, traders must be patient, allowing small positions to accumulate over time. Scalping requires more attention than long-term trading due to the frequency and faster time frames involved. An individual’s accuracy and speed when entering and exiting the market also contributes to profitability. Whether it’s scalping or another method of trading, investors are still vulnerable to losses if the market doesn’t move in their favour.
Is scalping allowed?
Scalping is a popular trading method used by many investors across different markets. As long as traders are speculating on price changes, and not manipulating the market, scalping is permissible with EightCap.
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