Which scenario is associated with scalping?

Which scenario is associated with scalping?

• A. Buying stocks and holding for dividends
• B. Encouraging investors to increase stock prices
• C. Short selling to capitalize on declining values
• D. Investing in stable, low-risk bonds

Answer: (B)

Scalping refers to a trading strategy that involves making quick profits from small price changes in a security, typically achieved through rapid buying and selling activities. Encouraging investors to increase stock prices aligns with scalping as it implies creating demand, which can lead to price increases in the short term. This form of market manipulation can attract more traders to participate, allowing those employing scalping strategies to capitalize on the resulting price movements.

In contrast, buying stocks and holding for dividends is a long-term investment strategy focused on income rather than quick gains. Short selling, which aims to profit from declining stock prices, does not reflect the intention behind scalping, as it is based on a different market approach. Lastly, investing in stable, low-risk bonds is not associated with scalping as it typically involves seeking security and steady returns rather than engaging in aggressive short-term trading strategies.