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Scalping is one of the most attractive trading systems that allows you to quickly make a profit. It is not easy, but it is quite suitable for beginners. This method of trading on the stock exchange helps to improve the skills of a trader, learn how to quickly analyze and respond to rate changes. We will tell you how to start scalping in order to come to a high income.
What is scalping: features, pros and cons
Before you start scalping , you need to understand what are the features of this style of trading. Scalping is called high-frequency trading of assets with high volatility. Scalpers open short-term trades to capitalize on small price fluctuations. The trader’s task is to fix a small profit and open as many orders as possible during one trading session in order to receive a tangible income in total.
Trades are held for only a few minutes. If a trader has chosen pipsing (one of the types of scalping), positions are held for several seconds.
A trader’s earnings are 2-3 points. You can make good money only when you execute a large number of orders during the day.
Trading on short intervals. The shortest timeframes are used.
Orders cannot be left open for the next session, scalping is a type of intraday trading.
The advantages of this style are the high frequency of signals, fast results, the efficiency of trading on fundamental analysis, the ability to quickly “overclock” a small initial deposit. Another important advantage is the ability to earn when trading on a flat (a period of calm when the rate does not grow, but does not fall either).
The disadvantages of scalping include a small profit from one transaction, so you have to open dozens of positions. Scalping is difficult from a psychological point of view, as it forces you to sit at the computer for hours, carefully watching the orders and the course movement, and react instantly. A noticeable disadvantage is slippage – this is a situation when an order is opened or closed at a rate worse than the scalper expected. This happens due to high volatility, technical problems on the server and delay in signal transmission.
How to start scalping cryptocurrencies : what you need to know
To start scalping, you need to master the basics of this strategy. The trader needs to know:
What is volatility. The higher the volatility of the asset, the better for the scalper. Such an asset is sensitive to almost any news, and its rate is constantly changing, allowing traders to capitalize on small fluctuations.
What is liquidity. The higher the liquidity of an asset, the easier it is to sell or buy.
How to choose a currency pair. Having chosen scalping, a novice trader should use classic currency pairs with high volatility, for example, BTC/ETH, USDT/BTC and others.
How to start scalping on the stock exchange , how to prepare?
Do not rush to open a deal until you are ready for the trading session. It is worth starting scalping trading with the following actions:
Timeframe selection. Scalpers use the shortest timeframes, ideally between 1 and 15 minutes.
Choice of indicators. Technical indicators help you choose a suitable entry point for a trade; without them, it is difficult to successfully apply a strategy. The best option is to use trend indicators, oscillators and volume indicators.
Studying the news. Fundamental analysis is effective in scalping. A trader should follow the news and events that affect the prices of assets with high volatility. Before a trading session, it is important to read the latest financial news and analyze it.
Mastering tools for determining key support and resistance levels, choosing the right ones. To determine the entry and exit points of a trade, traders use Fibonacci levels, the Gann method, or the Andrews Pitchfork method.
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