Scalping, when used in reference to trading in securities, commodities and foreign exchange, may refer to either a legitimate method of arbitrage of small price gaps created by the bid–ask spread, or a fraudulent form of market manipulation. Arbitrage Scalping, in the arbitrage sense, is a type of trading in which traders try to open and close positions in very short periods of time in markets such as foreign exchange and securities with the aim of making a small profit from the trades. How scalping works Scalping is the shortest time frame in trading and it exploits small changes in currency prices. Scalpers attempt to act like traditional market makers or specialists. To make the spread means to buy at the Bid price and sell at the Ask price, in order to gain the bid/ask difference. This procedure allows for profit even when the bid and ask don't move at all, as long as there are traders who are willing to take market prices. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. The role of a scalper is actually the role of market makers or specialists who are to maintain the liquidity and order flow of a product of a market. The profit for each transaction is based only on a few bips (basis points), so scalping is typically conducted when there are large amounts of capital and high leverage or there are currency pairs where the bid–offer spread is narrow. Principles Spreads are bonuses as well as costs Stock Markets operate on a bid and ask based system. The numerical difference between the bid and ask prices is referred to as the spread between them. The ask prices are immediate execution (market) prices for quick buyers (ask takers); bid prices for quick sellers (bid takers). If a trade is executed at market prices, closing that trade immediately without queuing would not get the seller back the amount paid because of the bid/ask difference. The spread can be viewed as trading bonuses or costs according to different parties and different strategies. On one hand, traders who do not wish to queue their order, instead paying the market price, pay the spreads (costs). On the other hand, traders who wish to queue and wait for execution receive the spreads (bonuses). Some day trading strategies attempt to capture the spread as additional, or even the