A short-term trading strategy that capitalizes on price changes during the day (trading session). Differently stated, scalping the market involves trading in the market tick by tick. By nature, prices change every time an order is placed, and traders attempt to take advantage of changes in a security’s bid-ask spread. In other words, scalping is the taking advantage of the differences between the price that a broker will buy at from those who offer to sell and the price that the broker will charge those who want to purchase. As such, scalping is a type of arbitrage that is implemented in a quick action and reaction (usually within minutes). Scalping provides better results in markets with high liquidity.

Scalping exposes traders to a higher risk when market prices change quickly. This is why some traders describe scalping as “picking up nickels in front of a steamroller”.

In the above sense, scalping is a legal practice. However, the word “scalping” is also sometimes used to refer to some illegal activities, such as offering a security to the public and then selling it in private.