Many people who get involved with stock trading eventually give scalping the market a try. While not for everyone, scalping stocks can be a worthwhile and profitable way to trade, but only under certain conditions.
Scalping stocks involves trying to make small amounts of of profits several times a day in quick time frames. Often the trades last only seconds but can run into several minutes per trade as well. Scalpers must also have access to live financial news because any important news that comes out can move the stock you are in either in your favor or against you at any given moment.
To be successful at scalping, you must be able to sell any positions that have gone against you without thinking twice. No if's and's or but's about it. If you are wrong, sell, that's all there is to it. Any emotions you have must be put aside in regards to your trading decisions while scalping.
Throughout any given day and depending on your trading rules, there are frequently many trading opportunities when scalping. One good thing about scalping is that it doesn't matter whether the market is down 30-40% for the year or up 30-40% for the year since your goal as a scalper is to make small amounts of profit in the short term.
Another good thing about scalping is that if you can find a way to be successful based on your trading plan, you are often finished trading within a few hours, sometimes by lunch. A lot of traders stop trading after lunch so being available to trade in the morning hours is a must when scalping.
Sounds great so far, right?
Now for the things to watch out for, and there are plenty of them. As I said earlier, you must be able to get out of any losing positions at your predetermined price levels to be around for the next trade. If you cannot emotionally get yourself to accept a loss without thinking twice, you will wind up losing large amounts of money and soon be wiped out.
Another thing to be aware of is to make sure you learn about good risk and money management techniques. Just as getting out of a losing position can help you be around for the next trade, learning how much money to use in each trade and the tools and order types available to you will be very important as well.
In conclusion I would have to say that whatever type of trading you think about getting involved in, the main key is taking the steps to learn about what you are getting into before jumping right in. Most traders who fail do not spend time beforehand to learn, only after they lose large amounts of money.
In addition to this article, I have several pages related to scalping on my website such as: Scalping The Market Using BAC As an Example.
Larry Both runs a website to help educate beginning and intermediate stock traders and investors. I enjoy helping other people in any way that I can, so running this website is one way I can do just that. The website provides information, tips and resources that I have gathered and learned while trading stocks online since 1997. I invite you to visit my site and take some time to look around. I am always adding new information that I feel may be useful to my visitors and my free "Market Trader" Ezine subscribers.
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