Scalping has two different meanings. Scalping occurs in the context of foreign exchange, as well as in ticket sales. We will define both below.
Scalping in Foreign Exchange
In foreign exchange, refers to the act of trading currencies while maximizing the opportunities that short-term changes present. This is also known as a form of arbitrage. This may be done by either purchasing or selling a currency, holding on to this for a short period of time, then closing it. Although profits made from this method are small, several transactions take place in a span of one day.
Decisions on these are made by scalpers depending on the signals which tell them when to buy or sell. An automated system may also be used for this, using software that can identify the same signals that are based on technical analysis. This is generally regarded as a low risk method, and several traders also find that this is an easier way of generating income from the Forex market. However, many traders disapprove of this practice.
If a trader engages in transactions which last for several days with large pips targets, then he is considered a position trader. On the other hand, day traders are involved in transactions that run for less than a day. The maximum target might be around a hundred pips. Scalpers, however, engage in trades that last for a few minutes and may aim for as low as five pips per transaction. Since several trades could be made per day without much effort, the benefits appear to be much greater for scalpers. There is minimal stress and more profit to be earned in scalping, in comparison with the situation of position traders.
Scalping in Ticket Sales
Scalping is the practice of buying a ticket at retail price from an official vendor, then reselling it at a markup. A person buying Yankees tickets for $65 each, then selling them later for $100 each is an example. Scalpers take advantage of increased demand before the event to profit from their transactions. In the States, you’ll often see scalpers standing outside a concert or sports venue, selling more expensive tickets. People usually buy them, too. Scalping is usually illegal, but is done anyway.