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This section does not cite any sources. Scalping is the shortest time frame in trading and it exploits small changes in currency prices. Scalpers attempt to act like traditional market makers or specialists. The role of a scalper is actually the role of market makers or specialists who are to maintain the liquidity and order flow of a product of a market.
Spreads are bonuses as well as costs – Most worldwide markets operate on a bid and ask based system. The numerical difference between the bid and ask prices is referred to as the spread between them. Lower exposure, lower risks – Scalpers are only exposed in a relatively short period, as they do not hold positions overnight. As the period one holds decreases, the chances of running into extreme adverse movements, causing huge losses, decreases.
Smaller moves, easier to obtain – A change in price results from imbalance of buying and selling powers. Most of the time within a day, prices stay stable, moving within a small range. This means neither buying nor selling power control the situation. There are only a few times which price moves towards one direction, i. It requires bigger imbalances for bigger price changes. Large volume, adding profits up – Since tthehe profit obtained per share or contract is very small due to its target n of spread, they need to trade large in order to add up the profits. Momentum traders on technicals – These traders look for fast movements hinted from quotes, prices and volumes, charts.