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Scalping on the stock exchange is used by beginners and professional traders. This is a profitable trading style, which consists in making money on small fluctuations in the asset price. To use scalping strategies effectively, you need to learn how to choose them, have self-discipline and quickly respond to price movements. We will tell you how to trade scalping correctly on the exchange.
Characteristic features of scalping in trading
Scalping is called high-frequency trading, when a trader opens many trades for a profit of several points. Reacting to the slightest fluctuations, the scalper opens long or short positions, holding them for only a few minutes.
Before you figure out how to trade scalping , it is worth studying its features. Character traits:
Short-term trades lasting several minutes, sometimes seconds, depending on the type of scalping . For example, pipsing is deals that are held for no more than a minute, and classic scalping involves opening positions for 5-10 minutes.
Small profit, earnings are only a few points (2-3).
Timeframe , trading on short intervals.
Closing of all positions before the end of the trading session, transactions are not transferred to the next day.
What to look for when choosing a scalping strategy?
There are many strategies for scalping trading on the stock exchange . For example, trading by glass. The Market Depth contains data on orders created by users of the exchange. DOM scalping trading will be successful if the trader has learned to analyze his data – this will allow him to determine entry points and make a forecast of the rate dynamics for a short period.
Another strategy is momentum trading. In trading, an impulse is some kind of event that affects the financial markets and asset prices. This may be political or economic news, after which trend changes are noticeable. To use this method, a trader needs to master fundamental analysis.
Many use a trading strategy based on indicators, algorithms that help analyze price movements and predict them. There are many different indicators, for example, OBV is one of the main technical analysis tools that allows you to confirm a trend change.
When choosing a strategy, you need to be based on the following factors:
ability to work with technical or fundamental analysis;
market understanding, ability to analyze financial news;
knowledge of indicators, ability to use the most popular indicators.
How to choose a currency pair?
Scalpers trade on Binance and other major exchanges. It is worth choosing popular trading platforms with a high trading volume. It is also important to choose the right asset, the main requirements for it are high volatility and liquidity. Volatility indicates frequent exchange rate fluctuations that scalpers earn . And high liquidity provides an opportunity to quickly sell an asset if necessary. The higher the liquidity of an asset, the smaller the spread.
The spread in trading is the trading cost that accounts for most of the profit. A highly liquid asset has a large trading volume, and the spread is smaller. For successful and profitable trading, scalpers open ECN accounts, which allow you to instantly execute orders and use the minimum spread.
Beginners should start cryptocurrency trading with classic liquid pairs: BTC/ETH, BTC/LTC, USDT/BTC, ETH/LTC and others.
How to start scalping trading?
Scalping is trading within one day. For a trading session to be successful, you need to prepare for it. Before the start of trading, it is worth studying the important news that came out overnight and the day before. Keep in mind the difference in time and different time zones when studying the news of the American and Asian financial markets.
learn more about what scalping is and how to trade profitably in financial markets on the Crypto course. Crew . We teach popular trading strategies from scratch, help beginners choose the best trading style and develop the most effective tactics for making good profits even with a small deposit.