Scalping in gold trading

Scalping is a style that targets small moves, on gold typically $2 to $8, with holding times from seconds to a few minutes and many trades per session. Scalpers work on 1- to 5-minute charts, rely on session timing and short-term levels, and accept small wins and small losses in volume. Because each trade’s profit is small, costs are a large share of it, and execution quality decides whether a scalping method is viable.

How it applies to gold trading

Gold scalping is popular because the market moves enough to offer several $5 swings an hour during London and New York. The arithmetic is unforgiving, though. A $5 target with a 30-cent spread gives up 6% of each win to spread before commission; on a $2 target it is 15%. Scalpers therefore prefer tight-spread accounts, the most liquid hours and limit entries. Slippage around news can erase a morning’s gains in one trade, so most scalpers stand aside at 8:30 a.m. Eastern.

Scalping also demands a stop on every trade; a scalper who lets one loser run turns a $5 method into a $50 loss.

A common mistake

Scalping during the Asian session or the daily break because the trader is awake then. Wider spreads and smaller moves make those the hours when the method’s costs are highest relative to its targets.

See also: Day trading, Bid, ask and spread, Commission, Slippage.

Frequently asked questions