Day Trading vs Scalping: Here Are 7 Important Differences

Blog Summary:  

Want to master the Forex market but not sure whether to focus on day trading or scalping? This guide provides a clear comparison of these two popular strategies, highlighting their pros, cons, and key differences. Learn how to choose the approach that maximizes your trading potential. Every trader is different. Your goals and preferences might be a lot unlike those of your peers. It’s important to find an approach to forex trading that is in alignment with your unique situation.

If you’ve already read our blog post on day trading vs investing, then you know that “investing” usually refers to holding positions over the long term, and day trading involves a much shorter term time horizon. But what about day trading vs scalping?

It might be helpful to think of it like this: day trading is like catching a few waves throughout the day, while scalping is like riding a jet ski through choppy waters – it’s more intense!

Let’s dive deeper into how these two different approaches to trading compare below so you can figure out which one is the right approach for you.

What is Day Trading?

As we covered in our blog post on day trading vs investing, day traders buy and sell assets within the same trading day. They open positions when the markets begin and close them before the day ends. They might hold positions for only a few hours, or for the entire trading day, but they almost never hold assets overnight.

As you can imagine, because of this, day trading requires a fair bit of skill to properly time the markets.

The primary objective of day trading is to capitalize on short-term price movements. Traders aim to buy at lower prices and sell at a profit during the same trading session.

Day traders often focus on highly volatile markets to maximize opportunities. They can day trade a variety of assets including currency pairs in the Forex market.

What is Scalping?

Technically, scalping is a type of day trading. You can think of it like this: all scalpers are day traders. But NOT all day traders are scalpers. Scalping is kind of like day trading on steroids.

Implementing a scalping trading strategy requires an even higher degree of market knowledge and trading skills than day trading. That’s because scalpers try to make a profit by buying and selling assets very quickly, often within seconds or minutes. The profits they make on each trade are, therefore, less. But by trading in volume, they can make quite a big profit.

Scalpers look for tiny price fluctuations and rely on quick reflexes and decisive action, along with a high degree of focus. Scalpers often execute anywhere from 10s to 100s of trades per day.

7 Key Differences Between Scalp Trading & Day Trading

Now that we’ve covered the basics of what day trading is and what scalp trading is, let’s compare the two. Here are 7 important differences between these two fast-paced trading strategies.

1. Holding Time: As we mentioned, day trading has a longer time horizon than scalping. It’s not uncommon for day traders to hold onto a position all day. Meanwhile, scalpers usually hold onto positions for just minutes, or sometimes hours. Scalping is faster and more intense than day trading, requiring analyzing and timing the market with great precision.
2. Trading Volume: Scalpers execute many more trades compared to day traders.
3. Skill Level: Both scalping and day trading require more technical skills to achieve success than standard investing. But scalping is by far the type of trading that requires the highest degree of mastery.
4. Risk Tolerance: While both scalping and day trading are probably not the best strategies for traders who are risk-averse, this is especially true for scalping.
5. Technical Analysis: The ability to accurately read and analyze charts and indicators is important for both scalpers and day traders, but scalpers focus on extremely short-term signals so technical analysis looks a little different for each of these trading strategies.
6. Profit per Trade: Scalpers aim for small profits on each trade. Day traders seek relatively larger gains, which makes sense because they’re trading less frequently.
7. Capital Requirements: Day trading often requires more starting capital than scalping, but this is not always necessarily the case.

Who Makes More Money: Day Traders or Scalpers?

Truthfully, both day trading and scalping can be effective strategies to make money as a forex trader.

The key difference to understand is that scalping is a lot harder to master. There is a misunderstanding that scalpers make less money than day traders but this is simply not true. However, it is accurate to say that it can be much harder to make money as a scalper than a day trader.

With the right experience and knowledge, however, anyone can learn to effectively implement either a day trading strategy or a scalping strategy.

Which is Better: Day Trading or Scalping?

Truthfully, there is no one-size-fits-all answer to this question.

Your personality, risk tolerance, time available to devote to trading, and financial goals can all factor into whether day trading or scalping is better for you.

Keep in mind that it’s also possible that another type of trading like swing trading or position trading is better suited to your needs.

Learn to Trade Effectively with Maven

Ready to level up your forex trading skills? Join the Maven Trading community today to get real trading experience without the risk!

We offer funded accounts and comprehensive support to traders of all skill levels. Benefit from low spreads, easy withdrawals, and competitive fees while you grow your trading abilities.

We’re a prop firm that invests in your potential. Start your challenge today and discover what you can achieve with Maven Trading.