In this article, we will be discussing forex day trading vs forex scalping, what their key differences are, and which strategy may be best suited to your trading style.
When it comes to trading the forex market, most beginner traders, at first, find it difficult to process all the information that inevitably comes their way. While it is important to understand the multiple facets required to successfully trade the markets, many inexperienced traders can get stuck when choosing the right trading style that suits them as an individual.
There are four primary trading styles – namely, scalping, day trading, swing trading and position trading. While all of them have one objective in mind – which is to make money – they do have distinct differences in the strategies used and the time commitments required to implement them.
In this article, we will be discussing day trading vs scalping, what their key differences are, and which strategy may be best suited to your trading style.
Scalping
Scalping simply refers to the act of quickly entering and exiting positions in the forex market by targeting small price movements. Due to the small target objectives, ‘scalp’ traders can generally hold a position anywhere from a few seconds to a maximum of a few minutes, often using leverage to maximise their profit potential.
The most popular timeframes that scalpers use are the 1-, 5- and 15-minute chartsScalping strategies mostly include technical analysis techniques such as scalping indicators, chart patterns and candlestick patterns to identify trading opportunities.
To make money, scalpers rely on making small yet consistent gains that compound over the long term. However, all their trading activities are conducted during a single trading session without carrying positions over to the next day.
In essence, scalping can be defined as day trading because all trades happen during the course of one day. Yet, not all day traders can be considered to be scalpers.
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Day Trading
Day trading, as the name suggests, refers to traders that open and close their positions within one trading session. Like scalpers, they do not carry any positions over to the next day.
What makes the day trading style different from scalping is that traders generally hold their trading positions for longer periods of time – anywhere from a few minutes up to a few hours using larger timeframes like the 5-, 15-, 30- and 1-hour charts.
Day traders also use strategies that rely on technical indicators, chart patterns and candlestick patterns to identify trading opportunities. But where a scalper targets small price movements with short holding times, a day trader targets larger price movements.
Which is Most Profitable?
Scalping vs day trading – which forex strategy is most profitable? The answer to this question is that both can be profitable, but both, of course, are susceptible to risks and loss in capital.
The question that the traders should really be asking is ‘which trading style is right for you?’. There are many crucial factors to consider before you choose which style of trading you would like to try out.
As a scalper, you need time, intense focus, and discipline to trade multiple setups a day. Whereas a day trading strategy may require less of your time, you will likely be trading less often.
Some traders may have a higher tolerance to risk than others, which can make one trading style more attractive than the other.
Most beginner traders, at first, believe that trading will be easy. However, they quickly get a rude awakening when they realise that it is not. This is not to say that trading cannot be profitable, but like most things in life, success comes with practice and the more experience you have the better you will become at trading.
Which is Better for Beginners?
Scalping and day trading strategies can both be suited to beginner traders, but again, finding the best trading style will entirely depend on a trader’s personality, skills, and experience. There is no one-size-fits-all trading style. Perhaps the best approach to take as a beginner trader will be to experiment and evaluate strategies that are based on both of these styles.
Here are a few questions that beginner traders need to ask themselves which may help with their trading decision.
1. After experimenting with both trading styles, which one do you feel the most comfortable with?
Perhaps you like a fast-paced trading environment, or maybe you prefer to take your time and not feel rushed. Some traders may have a higher risk tolerance than others, which can make one trading style more appealing than the other.
2. What are your long-term financial trading goals?
Do you dream of becoming a full-time trader or do you want to supplement your day-to-day income? Perhaps you want to save more money for retirement. Knowing what your trading goals are is important and will help you stay disciplined in order to achieve them.
3. What style of analysis do you prefer?
Some traders might prefer to base their trading decisions on fundamental analysis or find that they are better at technical analysis. Perhaps a combination of both techniques yields better trading results.
Whatever your answers to these important considerations might be, proper risk management remains a crucial part of trading, no matter which trading style you decide on – volatility and the potential for losses must be constant concerns to remain aware of.
Avoiding common pitfalls that beginner traders tend to make, such as using too much leverage, trading without a stop loss, over-trading and breaking the rules of their trading strategies, need to be avoided at all costs. Successful traders are experts at managing their risk, regardless of the trading style they prefer.
The Best Scalping and Day Trading Brokers
| Broker | Features | Regulator | Platforms | Next Step | |
|---|---|---|---|---|---|
 Your capital is at risk
Founded: 2014 |
|
FSPR | MT4 | ||
 73 % of retail CFD accounts lose money
Founded: 201473 % of retail ... |
|
FSA SC | MetaTrader 4, Web Trader | ||
 Your capital is at risk
Founded: 2006Europe* CFDs ar... |
|
ASIC, FSA, FSB, MiFID | MetaTrader4, Sirix, AvaOptions, AvaTrader, Mirror Trader | ||
 Your capital is at risk
Founded: 2020 |
|
- | Pro Trader, MT4, MT5 | ||
 Your capital is at risk
Founded: 2009 |
|
CIMA | MetaTrader 4, MetaTrader 5, WebTrader | ||
 Your capital is at risk
Founded: 2012 |
|
BaFin, CySEC, FCA, NBRB, VFSC | MetaTrader 5 | ||
 Between 74-89% of CFD traders lose
Founded: 2010Between 74-89 % of retail investor accounts lose money when trading CFDs |
|
ASIC, FCA | MetaTrader 4, MetaTrader 5, cTrader | ||
 Your capital is at risk
Founded: |
|
FSA, VFSC | MetaTrader 4, Web Trader, Social Trading Allpips, Web Platform Allpips | ||
 Your capital is at risk
Founded: 2000 |
|
DFSA, FCA, FINMA, MFSA, only EU traders), SFC FCA (Swissquote LTD | MT4, MT5, AdvancedTrader | ||
 Your capital is at risk
Founded: 2013 |
|
CySEC | CrowdTrading | ||
 77% of retail CFD accounts lose money
Founded: 1996 |
|
ASIC, FCA, IIROC, MAS | fxTrade, MT4 | ||
 Your capital is at risk
Founded: 2016 |
ASIC, CIMA | MT4 | |||
 Your capital is at risk
Founded: 2015 |
|
FCA, SCB | MT4 | ||
 Your capital is at risk
Founded: 199173.05% of investors lose money when trading CFDs with FXCM |
|
- | FXCM Trading Station (Web, Desktop, Mobile), FXCM MetaTrader 4, NinjaTrader | ||
 75% of clients lose money. Capital at risk.
Founded: 1983 |
|
ASIC, FCA, MAS | Advantage Web, AT Pro, MT4, WebTrader | ||
 Your capital is at risk
Founded: 2008 |
|
CySEC, FCA, FSA, FSCA | MT4, MT5, WebTerminal | ||
 Your capital is at risk
Founded: 2017 |
FSC | XOH, MT5, | |||
 Your capital is at risk
Founded: 2016 |
CySEC | ||||
 Your capital is at risk
Founded: 2017 |
Lowest Commissions in Australia $4.50 per lot RT |
ASIC, VFSC | MT4 | ||
 Your capital is at risk
Founded: 2012Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose. |
|
FSA, FSC | MT4, MT5, WebTrader, Proprietary Mobile App | ||
After comparing the key differences between scalping vs day trading, we can conclude that both trading styles can be profitable and that there is no single trading style that is better than another. However, while profits may be possible, it remains important to realise the risks involved. Losses of capital must always be factored into any form of trading and the strategy you employ.
Finding the right trading style that fits your personality and time commitment is a very important part of trading, which will require you to perhaps try both styles until you find the one you are most comfortable with.
With the right mindset, effort and level of discipline, the trader should be able to quickly build up enough experience to make the right decisions and assess the pros and cons of each of the strategies mentioned above.
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