In short-term forex trading, there are two terms of trading strategy that the traders usually use. Both are day trading and scalping. Generally, day trading is trading transactions in the short term. It is usually done in one day. Likewise, Scalping transactions tend to be large in a short amount of time.
With a similar trading process, you might be confused to choose which trading strategy is better since they look similar. However, there are significant differences between Day Trading and Scalping.
Check out the differences between Day Trading and Scalping Strategy:
Trading Period
A day trader, as the name suggests, trades in a matter of hours every day. The average day trader opens a position within a period ranging from 2 hours to several twelve hours each day. Meanwhile, a scalping trader trades in a very short period, usually only in a matter of one to five minutes.
Capital Used
A day trader allocates funds to get consistent profits in daily trading. A professional scalper opens an account position with a large amount of capital and makes a profit quickly in trading a few minutes.
Some scalpers also open several positions at once in one trading session to multiply the profits they can. With such a trading style, a scalper has a greater risk than most day traders.
Experience and Risk Management
To become a scalper who can consistently make a profit requires quite a lot of experience. This is because a scalper never doubts his predictions. When opening a position with a large amount of capital, he already knows the direction of market movement so that in a matter of minutes, his trading position has made a profit. According to Investopedia, the trader should have a strict exit strategy because one large loss could eliminate the many small gains the trader worked to obtain.
Thus, this strategy is not suitable for beginners in forex trading. For novice traders, it will be better if you use day trading strategy than scalping.
Trading Results
With such fast trading methods, a scalper can collect trading results very quickly. A day trader takes one or two days to get his trading results. Otherwise, a scalper can get profits several times in a day.
Read more: Fundamental Analysis, Easy Steps for Successful Trading
