TRADING STYLE - SCALPING
When people think of the classic day trader, they typically imagine him or her employing this type of trading style. The scalper enters and exits a market position quickly, staying in long just enough to 'scalp' a teenie (i.e., a sixteenth, or 0.0625, of a point) in profit and getting out at the first sign of reversal. The trader using this style may make dozens or even hundreds of trades a day, sometimes on just one stock. Scalpers sit in front of their computer screens, grinding out trades (which is why they're also known as "grinders"), some trading any security that moves, others concentrating on a group of related stocks.
Scalpers are also called "trend-" or "momentum traders" because they typically look for intraday trends or momentum. They'll buy a stock on a dip, sell it on a crest, short-sell when it turns downward, and cover when it heads back up. As such, this style requires volatile stocks, a good technical strategy to time entry and exit points, and complete emotional detachment.
Scalping ideally requires a large amount of capital (some say $100,000 minimum), a full-time commitment, a professional-level trading platform with a high-speed connection, a thorough knowledge of the markets, and nerves of steel. According to some experienced in the field, this style tends to be more suited for younger traders, the rationale being that for scalping you need lightning-quick reflexes and an appetite for risk-taking. And let's face it, not only do our reflexes slow a bit as we grow older, but most of us also become more conservative in our thinking and less willing to act boldly with our money. Of course, there are scalpers of all ages, but the likelihood is that the older ones have been doing it for quite a while already.
