What is one characteristic of scalping in trading?

Prepare for the Chartered Market Technician Level 1 Exam. Study with comprehensive resources including flashcards, detailed explanations, and multiple choice questions. Enhance your technical analysis skills and ace your exam confidently!

Scalping is a trading strategy characterized by making numerous trades throughout a day with the aim of taking small profits from each transaction. This method focuses on short-term market movements, where traders typically hold positions for a very brief period, often just a few seconds to a few minutes. By executing multiple trades quickly, scalpers capitalize on minor fluctuations in price, which accumulate to form a significant overall profit.

The emphasis on short durations and frequent trades is what distinguishes scalping from other trading strategies, such as swing trading or long-term investing, where positions are held for longer periods. Therefore, taking very small profits from quick trades perfectly encapsulates the essence of scalping.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy