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Scalping is called high-frequency trading in the cryptocurrency , stock and other financial markets. Its peculiarity lies in making a large number of short-term transactions during one trading session. Scalpers trade quickly, hold positions for a few seconds or a few minutes, and never leave open orders for the next trading day.
One transaction brings a small income to the scalper , as the trader reacts to small price fluctuations. But for a scalper , the total daily result is important, he opens the maximum possible number of orders throughout the day in order to increase income. This approach reduces risks, because transactions are made with small amounts. The complexity of scalping lies in the speed of trading – it is necessary to respond to the movement of the rate quickly, fixing the minimum profit.
Trading with a limited range
One of the trading strategies for scalpers is to trade an asset with a range limit. In this case, the “range” is the movement of the exchange rate between the established price levels for a certain time. By choosing this tactic, the trader opens long (up) and short (down) orders. To determine the optimal range, positions are opened manually, scalpers buy the asset at support and sell at resistance. Trading support is a price level at which traders expect a downtrend to stop due to a high concentration of demand for an asset. Resistance is the price level at which the appreciation of the exchange rate is expected to stop due to the concentration of supply.
Arbitrage or arbitrage speculation is another popular trading strategy, especially in the cryptocurrency market due to the high volatility of assets. Scalpers who choose this tactic earn on the difference in the rates of the same asset on several trading floors, buying and selling it on different exchanges at the same time.
Arbitrage trading can be space trading or pair trading. Spatial – this is the opening of long and short positions on several sites for profit and hashing risks. Pair arbitrage is carried out within the same exchange using a currency pair with high volatility and liquidity (USD / BTC or others).
Bid – ask -spread is the name of the difference in the value of an asset on demand and supply. In order to buy an asset at the market price as quickly as possible, a trader has to accept the highest offer price. To sell an asset instantly, you must accept the lowest bid price. The difference between the ask and bid price of an asset with high liquidity is usually small, so traders fill orders with insignificant changes in value. Exchange rate fluctuations are amplified if there is a wide spread, that is, a significant difference in the rates of demand and supply. But even a small spread allows a trader to make good money if he makes a large number of successful transactions during one trading day.
A feature of margin trading is the use of third-party funds. By trading with leverage, a trader increases the potential profit, can work with large amounts without actually owning them. Leverage is provided by many large exchanges, and traders with a certain deposit can get it. The greater the leverage, the higher the possible profit, along with this, the risks increase in case of an unsuccessful transaction.
A price change is a strategy based on the study of the dynamics of the value of an asset. To use the strategy, the scalper needs to learn how to mark the movement of the course and analyze it in order to independently predict the future value. This strategy is similar to many others based on the behavior of the price of an asset.
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