Important Information

You are visiting the international Vantage Markets website, distinct from the website operated by Vantage Global Prime LLP
( www.vantagemarkets.co.uk ) which is regulated by the Financial Conduct Authority ("FCA").

This website is managed by Vantage Markets' international entities, and it's important to emphasise that they are not subject to regulation by the FCA in the UK. Therefore, you must understand that you will not have the FCA’s protection when investing through this website – for example:

  • You will not be guaranteed Negative Balance Protection
  • You will not be protected by FCA’s leverage restrictions
  • You will not have the right to settle disputes via the Financial Ombudsman Service (FOS)
  • You will not be protected by Financial Services Compensation Scheme (FSCS)
  • Any monies deposited will not be afforded the protection required under the FCA Client Assets Sourcebook. The level of protection for your funds will be determined by the regulations of the relevant local regulator.

If you would like to proceed and visit this website, you acknowledge and confirm the following:

  • 1.The website is owned by Vantage Markets' international entities and not by Vantage Global Prime LLP, which is regulated by the FCA.
  • 2.Vantage Global Limited, or any of the Vantage Markets international entities, are neither based in the UK nor licensed by the FCA.
  • 3.You are accessing the website at your own initiative and have not been solicited by Vantage Global Limited in any way.
  • 4.Investing through this website does not grant you the protections provided by the FCA.
  • 5.Should you choose to invest through this website or with any of the international Vantage Markets entities, you will be subject to the rules and regulations of the relevant international regulatory authorities, not the FCA.

Vantage wants to make it clear that we are duly licensed and authorised to offer the services and financial derivative products listed on our website. Individuals accessing this website and registering a trading account do so entirely of their own volition and without prior solicitation.

By confirming your decision to proceed with entering the website, you hereby affirm that this decision was solely initiated by you, and no solicitation has been made by any Vantage entity.

I confirm my intention to proceed and enter this website Please direct me to the website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom

By providing your email and proceeding to create an account on this website, you acknowledge that you will be opening an account with Vantage Global Limited, regulated by the Vanuatu Financial Services Commission (VFSC), and not the UK Financial Conduct Authority (FCA).

    Please tick all to proceed

  • Please tick the checkbox to proceed
  • Please tick the checkbox to proceed
Proceed Please direct me to website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom.

×

Celebrating 15 Years of Excellence

Find Out More >
Celebrating 15 Years of Excellence
View More
SEARCH
  • All
    Trading
    Platforms
    Academy
    Analysis
    Promotions
    About
  • Search
Keywords
  • Forex Trading
  • Vantage Rewards
  • Spreads
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
  • tiktok
  • spotify
Scalping vs Day Trading: What is the Difference?

TABLE OF CONTENTS

Scalping vs Day Trading: What is the Difference?

Scalping vs Day Trading: What is the Difference?

Vantage Updated Updated Fri, 2024 January 26 02:52

Most beginning traders understand the importance of having a good trading strategy. However, it is only after you have a trading strategy that is congruent with your personality and lifestyle that adhering to the trading strategy becomes possible. This is paramount as a trader.

In this article, we focus on scalping and day trading. 

Key Points

  • Scalping involves high leverage and very short-term trades to capitalize on numerous small gains, whereas day trading closes positions within a single day to avoid overnight market risk.
  • Scalpers operate on seconds-to-minutes time frames, focusing on one or two markets, while day traders work on minutes-to-hours time frames and can handle more markets.
  • Both scalping and day trading require a focused personality, with scalping demanding more intensity and rapid decision-making due to the higher frequency of trades.

Comparing Scalping and Day Trading

There are many styles of trading: scalping, day trading, swing trading, and position trading. The difference that sets these styles apart is the length of time that trades are held open.

The biggest difference between scalping and day trading is the trade duration.

Scalp trades are held for a few minutes at a time. Trades under day trading style are held for from a few minutes to a few hours. Swing trades are often held for a few days, and position trades are held from a few days to even several years.

The following table summarises scalping and day trading:

ScalpingDay Trading
Trade durationFrom a few seconds to a few minutesFrom a few minutes to a few hours
Trades closed before market closeYesYes
Trading frequencyHigherLower
Catalyst for tradesRange-based trading, news tradingRanged-based trading, news trading
PersonalityHighly focused and decisiveFocused

Scalping Explained

Scalping trades happen very quickly, and they can last as little as a few seconds. Often, a scalp trader would enter the next trade in the opposite direction. This is the hallmark of scalp trading. 

Scalping typically involves using a high level of leverage and is a very short-term trading method used to create opportunities from the volume of trades placed.

Scalping has the shortest trading cycle. It got its name because traders (scalpers) who adopt quickly enter and exit the market to skim potential returns throughout a trading day. 

In practice, scalping can be extremely difficult; it requires very quick reactions, a good understanding of the markets you are trading, and protecting your accounts from excessive commissions. It also requires endless hours of practice to develop a good grasp of the chosen markets. For this reason, you rarely see scalpers trading more than one or two markets, since it is extremely difficult to focus on a handful of markets throughout the day [1].

Commonly, a scalper trader would use a 30-minute chart to generate levels of support and resistance. Once the market reaches those levels, they would be using simple price action and order flow tools such as cumulative volume delta, footprint or tape reading to see participation at the levels [2].

Day Trading Explained

Day trading usually refers to the practice of opening and closing a position within a single trading day. It can occur in any marketplace but is most common in the Forex and stock markets. Day traders also utilise high levels of leverage and short-term trading strategies to create potential returns on small price movements that occur in highly liquid stocks or currencies.

Day traders will close all positions before the market closes every trading day. This is a hallmark of day trading, and this avoids unmanageable risks and negative price gaps between one day’s close and the next day’s price at the open.

Unlike scalpers, the goal of day traders is to trade intraday swings in price and stay in trades as long as possible.

Day traders aim to create opportunities on short-term market volatility. Trading based on the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings, or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded—usually with sudden, significant moves—which can greatly benefit day traders. [3]

day trading vs scalping

Scalping vs. Day Trading: Factors to Consider

Your personality and your lifestyle are the two most important factors in determining your trading style. 

Lifestyle and Available Time

Understanding how much time each day or each week you can consistently dedicate to trading is important in deciding your trading style.

If trading is something to which you can only commit a few hours a day, then your lifestyle allows you to be either a swing trader or a day trader.

Both scalping and day trading requires high trading volume and market volatility. 

Conclusion

If you prefer not to hold positions after market close, and you enjoy quick action, have hyper-focus, as well as not easily distracted, scalping and day trading can be a good fit for you. 

If you only have a few hours a day or a week to trade, you can still be a scalper or a day trader – as long as the hours also coincide with the high market volatility. Otherwise, swing trading is more likely to be suitable for your lifestyle.

Reference

  1. “Leverage – Investopia” https://www.investopedia.com/terms/l/leverage.asp Accessed 17 Apr. 2022
  2. “Footprint Charts – Trading Riot” https://tradingriot.com/footprint-charts Accessed 17 Apr. 2022
  3. “Interest Rate – Investopia” https://www.investopedia.com/terms/i/interestrate.asp Accessed 18 Apr. 2022
  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower both beginners and seasoned traders alike.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ products including forex, indices, gold, shares and more.