scalping strategies

scalping strategies

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Cryptocurrency traders have quite a few options to make a profit using different trading styles and strategies. One of the most profitable trading styles on a volatile cryptocurrency market – scalping . This is a complex but effective trading method . We will talk about scalping strategies and their features.

Scalping on the crypto market : what is it

Scalping in the financial markets is a strategy of trading and profiting from a small change in the value of an asset. The essence of the strategy is to successfully close the maximum possible number of positions with a small profit, but ultimately earn a large amount.

Scalping is a trading strategy that is especially profitable in a highly volatile market where asset prices change very frequently. To improve efficiency, traders actively use leverage and set stop losses to control losses. A cryptocurrency trader who has chosen this style of trading must immediately respond to an increase or decrease in the rate. As a rule, transactions are opened for several minutes or even seconds. The main success factors in this case are a clear plan of action and the speed of decision-making.

Important! To use scalping strategies on the stock exchange, currency pairs with high volatility are required. This style of trading is relatively safe, unlike swing trading and day trading , it carries less risk and allows you to make profit faster.

Best scalping strategies

Scalpers have developed many earning strategies that bring profit. Consider the main scalping strategies in trading cryptocurrency :

  • Range trading . The range should be understood as the dynamics of the asset rate over a short period between two given price levels. You can open long and short positions, depending on the rate. To determine the optimal range, you need to open positions manually, buy an asset on support, and sell it on resistance.

  • Bid-ask spread. The strategy consists in the difference in the value of an asset on demand and supply. Having opened a position, the trader quickly closes it when the price has increased or decreased by a couple of points. It is necessary to distinguish between a wide bid-ask spread and a narrow one. With a wide rate of demand and supply, they differ significantly, with a narrow one, the difference is small.

  • Arbitration. This scalper trading strategy is especially popular due to the high volatility of cryptocurrencies . It consists in earning on the difference in the exchange rate of the same asset in several markets. You can simultaneously open short and long deals on several trading floors or trade within one exchange using the USD/BTC trading pair or another with high volatility.

  • Margin trading. To increase profits, traders who choose margin trading use borrowed funds. This allows you to work with large amounts, increasing the potential profit. One of the tools for margin trading is leverage, which is provided by most major exchanges. With leverage, a trader can open trades for large amounts without actually owning them.

What are the pros and cons of scalping strategies ?

Scalping , like all crypto trading styles , has advantages and disadvantages. Its advantages:

  • low risks (transactions are usually opened in small amounts);

  • an easy way to earn money (due to the reaction to minor exchange rate fluctuations);

  • trading automation .

Scalping Disadvantages :

  • the need to respond quickly to price changes;

  • energy consumption and self-discipline (it can be difficult for beginners to join the process);

  • insignificant income from one transaction (to get an impressive profit, you need a serious start-up capital and a large number of successfully closed positions).

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