In the investment sector, scalping is a phrase used on a daily basis to describe the “skimming” of small profits by going several times a day in and out of positions.

In the forex market, scalping means trading currencies based on a real-time research package. By buying or selling currencies and holding the place for a very short time and closing it for a small profit, the purpose of scalping is to make a profit. Throughout the trading day, several trades are positioned using a scheme that is normally based on a series of signals derived from charting tools for technical analysis. The graph is made up of a multitude of signals that when they point in the same direction, produce a buy or sell decision.

For a small profit each time, a forex scalper searches for a large number of trades.

Scalping is not unlike day trading in which, during the current trading session, a trader will open a position and then close it again, never taking a position into another trading cycle or holding a position overnight. However, while a day trader may look to take a position once or twice, or even a few times a day, scalping is much more frenetic during a session and will trade several times.

Whereas a day trader can trade off charts of five and 30 minutes, scalpers also trade off charts of ticks and charts of one minute. Some scalpers, in particular, want to try to capture the high-speed movements that occur at the time of the release of economic data and news. Whatever is high on the trader’s economic agenda, such news includes the announcement of job statistics or GDP estimates.

Scalpers like to try and scalp from each exchange they make between five and 10 pips and to replicate this process over and over during the day. Pip is short for’ percentage in point’ and is the smallest movement of exchange rates a currency pair can take. It can add up by using high leverage and making deals for only a few pips of benefit at a time. If their trades are successful and can be replicated several times over the course of the day, scalpers get the best results.

Note, the average value of a pip is around $10, with one regular lot. So the trader is able to make $50 at a time for every five pips of profit made. Ten times a day, $500 will be equivalent to this.

Scalping is not for everybody, however. For this dangerous operation, you have to have the temperament. For the whole session, scalpers need to love sitting in front of their screens, and they need to enjoy the intense concentration it takes. When you are attempting to scalp a small pass, such as five pips at a time, you should not take your eye off the ball.

You must be the type of person who can respond very easily without contemplating your every move, even though you think you have the temperament to sit in front of the screen all day or all night if you are an insomniac. There’s no time for reflection. A necessary key quality for a scalper is to be able to pull the trigger” This is particularly true if it is going to shift towards you by even two or three pips to cut a spot.