Crypto Academy

Scalping

Scalping

4 min reading

Scalping happens to be another cryptocurrency strategy. Discover what it is all about.

Scalping

Scalping

There are many different strategies in cryptocurrency trading. One of them is scalping, involving multiple trades per day. This trading method is one of the most complex, as it requires certain skills and the full involvement of the trader. In this article, you will learn how to get started with scalping and also understand why it is considered the most difficult way to make money with cryptocurrencies. 

What is cryptocurrency scalping? 

Scalping is a popular intraday trading strategy. It involves earning intraday fluctuations in an asset’s exchange rate. The slang name for scalping is pipsing. Traders who select this strategy are called scalpers or pipsers. Scalping traders do not seek big profit targets. Instead, they are striving to profit from slight price changes over and over again. Thus, scalping traders look for small price fluctuations and market inefficiencies. They envisage that by adding up these small profits, the income will eventually grow to a significant amount.

Scalping strategies

There are different approaches to making money from intraday fluctuations in the cryptocurrency rate over a short time. Many traders use multiple strategies in their work. Some traders try to combine several strategies and use available instruments to create their trading schemes. Let us consider the most popular strategies for scalping. 

One of the most popular strategies is news trading. You need to have information sources at your fingertips to get signals quickly. It is important to regularly follow  news feeds of popular publications and monitor celebrity publications. To scalp cryptocurrency on the news, you need to understand the impact of a particular event on the dynamics of an asset’s exchange rate. In most cases, you don’t need to be a professional analyst to spot a profitable time for buying a coin. 

Another popular strategy is the conservative one. 

In this case, a trader usually waits a long time for the optimal point to enter the market. The position is held from one to several dozen minutes. Various technical analysis instruments are used for the conservative strategy: support and resistance lines, moving averages, graphical patterns, mathematical indicators, and oscillators.

The next strategy is scalping by the glass. On many digital exchanges, it is possible to view bids from buyers and sellers for buying cryptocurrencies and selling assets. The data is placed in a so-called stock tumbler. This information is used to determine which way the asset’s exchange rate will go in the short term. 

Advantages and disadvantages

The cryptocurrency community points out to newcomers that there are both advantages and disadvantages of scalping. The main disadvantages include high transaction costs in the digital currency market. Commissions on crypto exchanges are higher than on the fund or futures market. High technical risks are also present. Scalping imposes higher requirements on hardware, speed, and reliability of the Internet. There is also a human factor. High-frequency manual trading is very stressful for scalpers. Experience has shown that most traders are not able to cope with their emotions. It takes a lot of time and energy. 

But scalping has a lot of advantages. For example, its technique is a great express-school for beginners. It allows you to quickly understand market mechanisms, get familiar with basic scalping technical indicators and develop your trading strategy. Scalping is characterized by quick feedback. High potential profitability is also a typical feature for it. 

However, scalping is a good way for someone who can quickly analyze information and chart digital assets. There are some risks associated with this type of work. A topic such as scalping on cryptocurrencies requires a cautious approach. Scalping is not appropriate for everyone. It requires high reaction speed and great psychological stability. You can improve your trading safety with regular training and constant knowledge upgrade.

Conclusions