Scalp
Scalping is a trading style built around taking many small, quick profits rather than waiting for a big move. A scalper might be in and out of a position in seconds to a few minutes, aiming to capture a tiny slice of price movement — sometimes just a few cents or a handful of ticks (the smallest price increment a market can move) — and then repeat that process dozens or hundreds of times a day.
The logic behind scalping is that small, high-probability moves happen far more often than large ones, so a trader can build up profit through volume and repetition instead of size. This requires liquid markets (ones with lots of buyers and sellers) so orders fill quickly at predictable prices, tight spreads (the gap between the best buy and sell price) so that cost doesn't eat the small profit target, and usually fast execution tools, since a few seconds of delay can turn a winning scalp into a loss.
The nuance that trips people up is that scalping's profits per trade are small, so costs matter enormously. Commissions, fees, and the bid-ask spread are fixed or semi-fixed costs that apply whether a trade makes $200 or $2 — for a scalper targeting a few cents of movement, those costs can consume most or all of the edge. This is also why scalping is closely tied to pattern day trading rules and margin considerations, since firing off many trades a day can trigger regulatory classifications with their own requirements.
Scalping is also mentally and operationally demanding: it requires constant attention, fast decision-making, and discipline to cut losers immediately, since the whole strategy depends on losses staying as small as the intended gains.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The definition mentions pattern day trading rules and margin considerations in passing without citing specific thresholds, which is intentional. If a specific number of trades, dollar threshold, or margin requirement is ever added to this entry, it must be confirmed against current FINRA/exchange rules, as these figures change over time and should not be asserted from memory.
A day trader needs to know whether their strategy is a scalp before they place it, because the trade management, position size, and acceptable slippage for a 30-second trade are completely different from those for a multi-hour trade — treating a scalp like a swing trade (or vice versa) is a common way to turn a small loss into a large one.
A trader buys 500 shares of a liquid stock at $42.10 planning to sell as soon as it prints $42.20, a 10-cent target. The stock ticks up to $42.21 within 40 seconds, the trader sells, and nets roughly $55 after commissions on a trade that lasted less than a minute — repeating this setup is the core of a scalping approach.
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