Scalping is a popular spread betting strategy that is widely used by amateur, as well as experienced traders. A strategy used for minimising risk, scalping involves quickly opening and closing positions, usually to make a small profit. As prices rise and fall throughout the day, you will be presented with numerous opportunities to make small gains; an experienced scalper may make a few dozen small gains in one day, totalling a substantial overall profit. While scalping can be highly effective, one of the main pitfalls of this strategy is that it requires a great deal of patience and a keen eye on the markets.
Traders who use this strategy successfully are not interested in long term market movements; they will close a trade whenever the opportunity of making even a few points arises. The key to this strategy is to grab as many small gains whenever possible in order to end the day in a profit.
The main benefit of scalping is that you get to keep a large proportion of your capital intact and so your exposure to risk can be reduced. Gaining by a few points whenever you can, you can move towards making a large profit with several small gains throughout the day. This spread betting tip can be great for traders who are disciplined and risk adverse.
However, scalping can be a painful strategy to implement if you are impatient. To carry out this strategy effectively, you will need to watch the market throughout the day whilst opening and closing positions many times. As scalping is a short term strategy, it is not uncommon for a trader to close his or her position and the market to continue in their favour; this can result in future emotionally-driven decisions that can be very costly – and one big loss can take a long time to recover from when scalping.