Scalping is one of the most profitable ways of trading. It can be considered the peak of a trader’s skill. This trading method requires experience and special trading “technique”. What is scalping in crypto?
Scalping is closing a position when a small profit of some points is reached. This method of trading originated on the foreign exchange market, but then became relevant to the cryptocurrency market as well. Nevertheless, this strategy allows crypto traders to get up to 100% per day. In the cryptocurrency market, you can use the same strategies as in the currency market. There are so many ways to trade, a few of them we will break down today.
A pip implies that a trader opens a long position at the beginning of a trend and the profit level is not high, about 10-15 pips. As soon as the targeted profit is achieved, a buy position is closed. As a rule, it takes several minutes to open and close the position. Using pips, the trader may obtain small profits several times during the day. An investor may make several hundred of such deals and have up to several thousand pips of profit per day.
All in all it sounds attractive, but there is a serious disadvantage – the results of trading are very unpredictable. If the market is highly volatile, the level of risk increases with this approach, and in the cryptocurrency market, high volatility is a common occurrence. There are many cases where a trader is late in closing an order and the trade closes with a negative or, at best, zero result. If you follow all trading rules, you can gain up to 150 points of profit a month, but you should have iron nerves and be ready for surprises. When trading pips, a trader should be near the terminal all the time, otherwise there is a risk to miss the moment when it is necessary to close the position and as a result the transaction will go in the red.
The probability of successful pips is increasing if all indicators show that the trend is either up or down and the trader could enter and open a position at the right time.
This technique is used in trading by cautious traders who have experience. In this case, a simplified technical analysis is necessary. As a rule, the supply and demand are estimated, the trader finds the figures on the charts, in addition, several indicators are used to get the signal of profitable entry points. In scalping, indicators point at insignificant price changes. Traders who use this method open positions approximately once every 6 to 12 minutes.
Scalping cryptocurrencies by drawdown
A conservative method. Here you need to break down the percentage of drawdown in seven days. The drawdown in 7 days is of interest from 20% and below, with a positive trend in the day and last hour, but not higher than 5%. If the rules are met, you can open a buy order. There is no need to wait for the closing of the trading day. The profit is established approximately about 10% from an entry point. It is a good solution for those traders who value security above all.