Scalping or short-term trading involves making dozens or hundreds of trades a day, trying to scalp a small profit from each trade by exploiting the bid-ask spread.

How Stock Scalping Works

Scalping is based on an assumption that most stocks will complete the first stage of a movement. But where it goes from there is uncertain. After that initial stage, some stocks cease to advance, while others continue advancing.

A discounter intends to take as many small profits as possible. This is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades. This strategy achieves results by increasing the number of winners and sacrificing the size of the wins.

It's not uncommon for a trader with a longer time frame to achieve positive results by winning only half, or even less, of their trades–it's just that the wins are much bigger than the losses. A successful stock scalper, however, will have a much higher ratio of winning trades versus losing ones, while keeping profits roughly equal or slightly bigger than losses.