What Are Scalpers?

Typically, investors make their money by buying a security and then selling it at a profit. It is not uncommon for investors to hold positions for a few months to several years. On the other side of the coin are the dealers foreign exchange market today. The typical trader doesn't hold a stock for more than a few days and often trades stocks multiple times a day. Scalpers are a specific type of short-term trader who can move in and out of a stock or other asset class dozens, or in some cases hundreds, of times a day.



Understanding Scalpers

Scalpers are often energetic individuals who thrive in times of stress and have the resources and temperament to handle the high volume of transactions. While almost anyone with a lot of time, money, and knowledge (among other qualities) can become a scalper, it often makes sense to leave this type of trading to the more experienced day traders.

The Costs

There are several issues that make it difficult to be a scalper. First of all, holding so many positions can be time consuming. In fact, it is safe to say that the scalper is glued to his monitor all day, waiting for the slightest movement to enter and exit positions. Being a scalper can also be expensive (in terms of dollars and opportunity cost) forex trading platforms in India. Indeed, the scalper often needs to have money in hand to be able to seize opportunities in the blink of an eye. And don't forget the commissions. In fact, commissions can be a big killer. Just think of all the ticket fees a scalper could rack up in a day and how that eats away at his hard-earned winnings. For this reason, scalpers who work alone should try to get the lowest commission rates by negotiating with a broker



Tools of the Trade

Scalpers need special equipment to be successful. This may include accessing Level II quotes to track offers and requests throughout the trading session. Access to card information and a phone line is also important. Aspiring scalpers should also be aware of how decimalization can affect trading, and therefore their profits. Specifically, traders and investors historically bought and sold stocks using a fractional system; Transactions were generally made in fractions of 1/16 (or the equivalent of $ 0.0625) or more  about foreign exchange market you. Today, spreads are often only separated by a few cents and transactions are done in cents. This is a problem because it may be more difficult for the scalper to make a profit. For example, if a scalper buys a stock for $ 10 and sells it for $ 10 with a decimal of 1/16, using fractions, he will get a profit of $ 62.50 on 1,000 shares (excluding commissions). However, if that same scalper bought a stock at $ 10 per share and sold it at $ 10.01, his profit would only be $ 10, which probably doesn't even cover the commission. Again, the point is, this can be a stumbling block for future scalpers and should be taken into account.

Entering the Game

So how do you become a scalper and participate in this exciting and potentially lucrative field? To be clear, scalping isn't for everyone. Scalpers must be naturally willing to take risks and manage the tensions that surely come with this frantic style of trading best broker in India for forex. With this in mind, there are no formal educational requirements to become a scalper yourself. In fact, it's technically something almost anyone can do if they have the time and the resources. Of course, it probably makes sense for a scalper to initially trade only a few stocks at a time and have a thorough understanding of the markets. In fact, for this reason, many would argue that scalping should most likely be left to professionals or experienced day traders.

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