Levi Smith in Economists and Finance, Financial Analyst, Finance Dec 19, 2019 · 1 min read · 2.7K

Scalping Technique: What It Is And How It Works?

Scalping Technique: What It Is And How It Works?

Investing in the stock market is not for anyone. The shares are parts of a company. So when you buy the papers, you become an investor of the company. However, like all equity investments, it is recommended that it be a long term investment. This market is also characterized by short-term or very short-term operations such as scalping. Before we get into the technical details, let's understand how the stock market works. To invest in the stock market, you will need a brokerage platform that has experienced professionals. Invest in the stock market with Fyers, and explore the world of possibilities.

Advantages of investing in stocks

Investing in stocks mean that you become a business owner as well. Of course, in the proportions of the quotas you purchased. The advantages of investing in stocks include,

· Need a smaller amount of money if you want to start.

· Receiving dividends periodically.

· Potential for good long term profitability.

· Income Tax (IR) on income is charged at the exit of the investment.

· You can buy and sell stocks at any time.

Ways to invest in stocks include direct buying which is when you choose the ones you want to buy and transmit the order to the broker by phone or internet. Other ways to invest in this market are through Index Funds - ETFs, investment clubs and also through equity funds. The scalping technique is basically a day trading operation. This type of transaction means buying and selling shares of the same asset on the same day.

Scalping technique is a short term operation

Scalping the technique is a short-term stock exchange operation that happens several times a day. But, there is a difference between scalper and day trader. Both transactions involve acting in the short term to receive dividends. Scalping means buying at the lowest price a buyer is willing to receive, and selling at the maximum price a buyer is willing to pay for security. It is a strategy for making profits from the small price changes in operations throughout the day.

The difference between scalping and day, trading is the time traders “hold” the paper. Scalpers hold papers for a very short time, ranging from seconds to an hour. With this, scalpers can perform up to about one hundred operations per day. In day trading, the trader holds the securities longer. Operations happen in minutes or hours. The similarity between the two techniques is that neither lasts longer than a day. No "night turns" to continue trading the next day.

Conclusion

Given this data on how the scalping technique works, we only corroborate the fact that you need to define your investor profile before you can make a decision that involves your money. For this, you must also know what the types of investments available in the market are. Investing in the stock market can be a great deal, for those who can invest longer and seek higher returns. But, you need to be prepared to lose too. After all, the greater the potential for profitability, the greater the risk of investment.