The content in this blog should not be considered as financial advice, but rather as a personal opinion.
Why Scalping is Perfect for Crypto: Tips for New Traders
Scalp trading, also known as scalping, is a crypto trading strategy to make repeated profits over a short period of time.
Scalp trading is a popular cryptocurrency trading strategy used by leveraging the crypto market’s volatility to make regular short profits. Scalp traders, also called scalpers, seek profits from smaller price swings. The strategy’s main aim is to tighten stop-losses and make moderate short-term profits within a short time frame.
What does scalping mean in crypto trading?
Scalp trading helps crypto traders make profits through small price movements of their crypto assets within a few minutes or even seconds.
Scalpers invest in assets that are highly volatile and have high trading volumes. This is a unique way to generate on-the-spot profits from highly volatile assets with limited risks.
However, scalping is not everyone’s cup of tea. It requires precision, advanced knowledge of cryptocurrencies, market know-how, and experience in handling volatile assets.
How do scalp traders generate profits?
Scalpers can use their own personalized scalping strategy through real-time technical analysis (TA).
That said, some fundamental principles of scalping will remain the same for all traders.
Technical Analysis allows traders to learn and study market behavior, understand past asset price movements, and make predictions. On average, a scalper takes around 5-10 minutes to complete the process.
The 5 minute candle timeframe is a widely used strategy, since it is open to clear analysis and thus increases the predictability of scalping.
Read more about timeframes here
Scalping Pros
- Highly profitable, especially for seasoned traders.
- Small profits can accumulate to a substantial amount over time.
- Less risky for small-time traders and novice traders.
- Profits are generated through market fluctuations without the market needs to move in a particular direction.
Scalping Cons
- Requires a minimum number of trades to generate substantial profits.
- Increases overall transaction costs because traders must pay multiple trading commissions.
- Time-consuming and requires precision and high concentration.
Crypto Scalping Indicators
Moving average (MA)
The MA indicator shows the asset price movement over a given period. Other indicators such as the SMA (Simple Moving Average) and EMA ( Exponential Moving Average) also provide valuable information about recent price changes.
Support and Resistance
These levels help in the quick execution of a trade.
The “Support” level denotes the stage where the price movement has stopped going downwards and moves upwards, while the “Resistance” level denotes the point when the price no longer moves up and starts to fall.
Relative Strength Index (RSI)
The Relative Strength Index RSI determines the entry and exit points for trades. It is a great way to gauge the asset’s overall price trend and performance.
A Beginner’s Guide to Essential Indicators
Tips for crypto scalping
- Learn the basics – Start with a demo account. It is a good idea, especially for beginners, to open a demo account and practice simulated trading before using real funds.
- Gather information – Learn about the different scalping strategies, the crypto exchanges’ various fees, asset reputation in the market, price movements, market behavior, etc. It is also advisable to do a short course in crypto trading or join a community to learn the basics.
- Get familiar with trading analysis tools – Research and get acquainted with trading indicators and other applications, such as trading bots and charts, that can help execute trades.
Bottom line
Crypto scalping is a straightforward trading strategy that carries less risk and enables traders to earn small, regular profits throughout the trading day. It’s one of the best methods to learn and profit from crypto trading, particularly for beginners who are interested in understanding the fundamentals of crypto trading.