Scalping Stocks: Making Money One Tick at a Time

What Is Scalping Stocks?

Scalping stocks is a day trading strategy where you buy and sell the same security multiple times per day, holding each position for just seconds to a few minutes. Your goal is to capture tiny price increments—often just 1 to 5 cents per share—and repeat this action dozens of times in a single session.

Think of it like a market maker's job, except you're doing it as a retail trader with much less capital and speed. You're not trying to predict where a stock will go in an hour or day. You're hunting for immediate microstructure—the tiny imbalances between buyers and sellers right now.

Scalping vs. Other Day Trading Strategies

The day trading world has different flavors. Here's how scalping stacks up:

Scalping has the tightest stops and smallest profit targets. That's both an advantage and a curse. Your losses stay small, but so do your wins.

How Scalping Actually Works: The Real Mechanics

The Setup: What You're Looking For

Scalping isn't random clicking. You need a repeatable setup that increases your odds.

Level 2 Ladder Scalping (Most Common)

You watch the Level 2 order book and hunt for large bid-ask spreads or order imbalances. When more buyers than sellers show up, the price ticks up. You buy as it rises and sell into the strength.

Real example from SPY on March 14, 2024:

• SPY Level 2 shows 50,000 shares offered at $450.10 but only 15,000 for sale at $450.05
• Buying pressure emerges; the $450.10 ask gets eaten
• You buy 200 shares at $450.06 as the first ask level breaks
• Price ticks to $450.09, $450.12
• You sell your 200 shares at $450.12 (+$0.06 per share = +$12 gross profit)
• Round-trip commissions: ~$2–$3 (market-maker rebates may offset some)
• Net profit: ~$9–$10 on one 30-second trade

Chart-Based Scalping (Slightly Slower)

You watch 1-minute or 2-minute charts and scalp off small support/resistance levels, Fibonacci retracements, or moving average bounces. This is less about order flow and more about quick technical levels.

Example with AAPL on February 8, 2024:

• AAPL is choppy around its 20-period EMA at $191.45 on a 1-minute chart
• Price bounces off $191.43 support three times in 10 minutes
• You buy 100 shares at $191.44 (third bounce)
• Immediate resistance sits at $191.68 (recent swing high)
• You sell 100 shares at $191.66 (+$0.22 per share = +$22 gross)
• Total round trip: ~90 seconds
• After commissions: ~$19–$20 net profit

Position Sizing and Risk Management

This is where most scalpers fail. They get greedy with size and blow their accounts.

The 2% Rule (Non-Negotiable)

Risk no more than 2% of your account on any single trade. If you have a $10,000 account, max risk is $200 per trade.

Calculation:

• Account: $10,000
• Max risk: $200 (2%)
• Entry: $450.06
• Stop loss: $450.01 (5 cents below entry)
• Risk per share: $0.05
• Position size: $200 ÷ $0.05 = 4,000 shares

But wait. A 4,000-share position in SPY isn't realistic for a $10K account—you don't have the capital. This is why most scalpers trade smaller-cap, more volatile stocks or use a margin account (with extreme caution).

Realistic Position Sizing for Small Accounts

• $5,000 account: 100–300 shares per trade (volatile stocks like TSLA, NVDA)
• $10,000 account: 200–500 shares per trade
• $25,000+ account: 500–2,000 shares per trade (or more with margin)

Your stop loss should be tight—typically 5 to 15 cents below entry for intraday scalps. Anything wider defeats the purpose.

The Best Stocks for Scalping

What Makes a Stock Scalp-Worthy

Not every stock works. You need:

• High Liquidity: At least 1–2 million shares traded per minute during market hours
• Tight Bid-Ask Spread: Usually 1–2 cents; wider spreads eat your profit
• Volatility: Price moves at least $1–$5 per day so there are scalping opportunities
• Standard Hours Activity: Avoid pre-market/after-hours unless experienced; spreads widen when retail traders are asleep

Top Liquid Stocks for Scalping (2024–2026):

• SPY (S&P 500 ETF) — Most liquid; tightest spreads
• QQQ (Nasdaq-100 ETF) — Strong intraday volatility
• AAPL (Apple) — Mega-cap liquidity; $170–$230 range in recent years
• TSLA (Tesla) — Volatile; attracts day traders
• NVDA (Nvidia) — Tech darling; high volume; range $40–$140 in 2023–2024
• AMD (Advanced Micro Devices) — AI-related volatility
• IWM (Russell 2000 ETF) — Small-cap index with good volume

Avoid These for Scalping:

• Penny stocks and low-float runners — Spreads blow out; execution is inconsistent
• Pre-market/after-hours — Liquidity disappears; bid-ask spreads widen 5–10 cents
• Illiquid small-caps — You can get trapped; hard to exit at your target price
• Earnings days — Volatility spikes; spreads widen; risk/reward is broken

Essential Tools and Technology

Level 2 Data and Order Flow

You cannot scalp stocks without Level 2 data. Period. This shows you all bids and asks in real-time, not just the best one.

Platforms that provide Level 2:

• Thinkorswim (TD Ameritrade): Free with account; Level 2 included
• Lightspeed: $150/month for Lightspeed Trader Pro; used by pros
• Interactive Brokers: Advanced data feeds available; minimal commissions
• DAS Trader Pro: $99–$199/month; direct-access routing; many scalpers use this

Level 2 shows you:

• The bid (what buyers offer) and ask (what sellers want)
• The bid size and ask size at each price level
• Large orders about to execute (called "walls")
• When the bid/ask is likely to break (order imbalance)

Broker Requirements

Pattern Day Trader (PDT) Rule: If your account has under $25,000 and you make 4+ day trades in 5 business days, you're flagged as a pattern day trader. Brokers then require $25K minimum equity.

Workarounds for small accounts:

• Use a cash account: No margin, but no PDT restrictions. You settle trades after 2 business days (T+2).
• Trade only 3 times per week: Stay under the 4-trade threshold.
• Use a futures-based platform: Micro E-mini S&P 500 (MES) futures have no PDT rule and tight spreads.
• Get to $25K: The cleanest solution if you can.

Commission matters for scalpers. Your profit on one trade might be $10–$20; a $5 commission cuts your edge in half. Use:

• Interactive Brokers: $0.005/share, $0.65 minimum
• Webull: $0/commission (but wider spreads)
• Lightspeed: Flat fees or per-share; better for high-volume scalpers

Common Mistakes Scalpers Make

1. Overtrading (The Death of Small Accounts)

You see an opportunity, execute. Then another pops up. Then another. Before lunch, you've done 30 trades.

The problem: Most of those trades are low-quality setups. You're taking bait instead of waiting for your A-setup.

Rule: Limit yourself to 10–15 high-conviction scalps per day maximum. Quality over quantity.

2. Chasing Winners (FOMO Trading)

You miss a quick $0.10 scalp on SPY. Two seconds later, you're chasing it at a higher price, hoping for one more tick.

Result: You buy at the top, the momentum dies, you're down $0.05, and you panic-sell. That trade turns from a miss into a loss.

Rule: If you miss a setup, let it go. Another one will appear in 30 seconds.

3. Holding Too Long, Expecting Home Runs

You buy at $450.06, target is $450.12 (one decent scalp). But momentum is strong, so you hold for $450.20, then $450.30.

Then the market reverses. Price drops to $450.08, and you're still holding. Now you're only up $0.02 after all that risk.

Rule: Stick to your initial profit target. A clean 3-cent win is better than hoping for 10 cents and getting stopped out for a loss.

4. Revenge Trading After Losses

You take two losses in a row. You're down $50. Then a new setup appears, but it's marginal. You trade it anyway, with larger size, trying to make back what you lost.

This almost always fails. You're trading emotionally, not mechanically.

Rule: After a loss, take a 5-minute break. Walk away from the screen. Don't trade the next setup—wait for one you're 100% confident in.

5. Wrong Stocks (Scalping Low-Float Runners)

You hear about a stock running hard. You jump in thinking you can scalp it for quick ticks.

But the bid-ask spread is 10–50 cents wide. Your $0.05-per-share scalp edge is gone. You get slipped 20 cents on entry and 20 cents on exit. You're down $0.40 immediately.

Rule: Only scalp mega-cap, highly liquid stocks. SPY, QQQ, AAPL, TSLA. That's it.

Realistic Profit Expectations

Be honest with yourself. Here's what real scalpers make:

Beginner (Months 1–3): Likely losing. You're fighting commissions and slippage while learning execution. Average: −$200 to −$500 per month.

Intermediate (Months 4–12): Breaking even or small profit. You've dialed in your mechanics, but you're not consistent yet. Average: $0 to +$200 per month.

Experienced (Year 2+): Profitable. You've developed discipline and trade selection. Average: +$500 to +$2,000 per month (on a $25K+ account).

Why These Numbers Are Low:

• Each scalp is tiny ($5–$25 per trade)
• You need volume to make real money (20–50+ trades per day)
• Commissions and slippage are brutal
• The learning curve is steep; most people quit before they break even

A Realistic Daily Goal: If you have a $25K account and scalp 30 quality trades per day with a 45% win rate and 2:1 average risk/reward, your expected daily profit is:

• 30 trades × 45% win rate = 13.5 winners
• 30 trades × 55% loss rate = 16.5 losers
• 13.5 winners × $20 average = $270
• 16.5 losers × $10 average loss = −$165
• Net daily profit: ~$105 (before commissions)

That doesn't sound like much until you multiply it by 252 trading days: $105 × 252 = ~$26,460 annually (or 105.8% return on your $25K account).

But those are best-case numbers. Most scalpers don't achieve a 45% win rate with 2:1 payoff in their first year.

A Step-by-Step Scalping Trading Plan

Pre-Market Routine (8:30 AM ET)

• Check the overnight news; look for earnings announcements or macro events that might affect your stocks
• Pull up Level 2 on SPY, QQQ, and AAPL
• Write down your targets: max 15 trades for the day, min $0.03 profit target per trade
• Set your stops: 10-cent hard stop on every trade
• Review your last three trading sessions; identify what worked and what didn't

Market Open (9:30 AM–11:00 AM ET)

The first 90 minutes are the most volatile. Spreads are tightest; volume is highest.

• Watch Level 2 for the first 10 minutes; don't trade yet. Get a feel for the market
• Take only A-setups: clear bid/ask imbalances or chart support/resistance bounces
• If you see a setup: buy, hold 30–90 seconds, exit at target or stop loss
• After each trade, log it: entry price, exit price, profit/loss, setup type
• After 5 trades or 60 minutes, take a 10-minute break regardless of P&L

Mid-Day (11:00 AM–3:00 PM ET)

Volatility often dries up. Spreads widen slightly. Be more selective.

• Only trade strong setups; ignore marginal ones
• Take 5–10 scalps max during this window
• If you're up $100+, consider stopping early and protecting your win
• If you're down $100+, take a break; don't chase losses

Close (3:00 PM–4:00 PM ET)

Volume picks up again as institutions close positions. Spreads tighten.

• Final window for 3–5 scalps if you haven't hit your daily goal
• Be aggressive with stops; you don't want to hold overnight
• Square up all positions by 3:50 PM; don't hold into the close

Post-Market (4:00 PM+)

• Review every trade (all 15+): what worked, what didn't
• Calculate your win rate, average win size, average loss size
• Identify your best setup for tomorrow
• Check your running monthly P&L

Frequently Asked Questions

Q1: Can I scalp stocks with less than $25,000?

Yes, but you need to use a cash account to avoid PDT restrictions. You won't be able to day trade daily without waiting for T+2 settlement. Alternatively, trade only 3 times per week to stay under the pattern day trader threshold.

Q2: What's the minimum profit I need per trade?

After commissions and slippage, aim for at least $0.03 to $0.05 per share in gross profit. This gives you room for realistic execution. If the setup only offers $0.02, skip it.

Q3: How long does it take to become profitable at scalping?

Most retail scalpers take 6–12 months to break even, and 18–24 months to become consistently profitable. A small percentage give up after 3 months. The learning curve is steep.

Q4: Should I scalp with a hot stock or a boring liquid stock like SPY?

Start with boring liquid stocks (SPY, QQQ, AAPL). They have tight spreads and predictable order flow. Once you master the mechanics, you can experiment with more volatile names.

Q5: What happens if I get slipped on my exit?

Slippage is the gap between your expected price and your actual execution price. It happens to everyone. Build a 1–2 cent buffer into your profit targets, and use limit orders instead of market orders when possible.

Q6: Can I scalp stocks part-time?

Theoretically yes, but practically no. Scalping requires full focus during market hours. If you're checking your position between Zoom calls, you'll miss your exit, hold too long, and losses will mount. Trade either full-time or find a different strategy.

Your Next Steps

Scalping is not for everyone. It demands discipline, patience, fast execution, and the ability to accept small losses repeatedly without emotion.

If you're serious, here's your action plan:

1. Open a paper trading account. Practice for 2–4 weeks with fake money. Get comfortable with Level 2, order placement, and basic setups with zero pressure.
2. Build your toolkit. Open an account with your chosen broker (Thinkorswim, Interactive Brokers, or Lightspeed). Set up Level 2 data. Configure your watchlist to SPY, QQQ, and one other liquid stock.
3. Trade small. Start with 50–100 shares per trade on a real account. Your goal isn't profit; it's execution and learning. Do this for 10–20 live trades before you increase size.
4. Track everything. Keep a trading journal. Log every trade: entry, exit, profit/loss, setup type, and what you learned. This is how you improve.
5. Master one stock. Don't jump between SPY, AAPL, and TSLA. Pick one and scalp it every day for two weeks. Understand its patterns, its spreads, its order flow.
6. Review the Hub Article. Refer back to our How to Day Trade: A Realistic Guide for 2026 article for broader context on day trading risk management and mindset.

Scalping is the grittiest form of day trading. It strips away fundamentals, earnings reports, and long-term thesis. It's just you, the order book, and your ability to execute without emotion.

That's either exhilarating or terrifying. Both are correct.