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Scalping academy

There are many styles for trading cryptocurrency. However, finding the one that works for you is not easy. By trial and error, every trader either finds one or creates one (combining several styles at once, depending on assets and goals). Trading on the crypto market can be called a peculiar struggle between "bears" and "bulls", except that the price of one asset falls and grows several times during the day. The essence of such small market fluctuations appears most vividly when scalping strategy is used. The scalping strategy is especially popular with traders because of the quick deals and getting quick profits.

What is scalping and what is the first thing to pay attention to?

Scalping is an active trading strategy that can be very profitable if trades are executed correctly. The strategy implies opening orders for a short period (from a couple of seconds to several hours). It is possible to choose both the level of desired profit, and the time during which the deal will remain open. It is possible to open and close several orders at the same time.

  • Traders mainly use timeframes M1-M30, and the higher time period is used only for trend control.
  • Traders work with market orders, when scalping the use of pending orders requires additional attention.
  • Traders use short Stop Loss and Take Profit. Scalping deals are the shortest: from several seconds to several minutes.
  • The work of a scalper requires constant concentration, quick reactions and professionalism. The result of a deal depends on these qualities.

Why are traders turning more and more often to scalping?

This is quite understandable: traders who use "scalping" trading style mainly trade derivatives with high levels of leverage. Ratio of profit to risk is quite low, but the positive effect is achieved by the number of trades.

Advantages of using the strategy:

  • Reduced risk due to small order timing. If the trader entered the market correctly, the chances of making a profit even in a short period of time grows. The scalper earns here and now.
  • It is easier to timely notice small market movements. Almost every trading instrument has a few cents price change more often than in case of larger volumetric changes. In this case it is possible to earn on practically any liquid asset.
  • The frequency of market price movements is high even in calm market conditions, which guarantees scalpers a chance to make profit at any time. Profitability of invested funds can be much higher with smart trading than with long-term investors.

Difficulties a trader can face:

  • It is paradoxical, but scalping increases the risks because of the need to open a large number of positions, while the risk is reduced due to the fast transactions.
  • Significant emotional tension of traders on the background of constant mental stress and the need for full concentration. To decrease the influence of emotions on trading you can use scalper robots and many advisors.
  • Scalping strategy is very sensitive to mistakes as just one wrong trading decision may lead to the loss of all the profit gained earlier.

A few words about the strategies

There are two basic approaches to using scalping strategies: pure scalping and variation scalping.

Pure scalping

Traders who only practice scalping in their work. Experienced traders try to use proven scalping strategies or develop their own ones and test them on demo accounts to increase profitability. 

Variation scalping

Traders are not solely scalpers and use different trading tactics but from time to time they trade using scalping strategies. This can happen, for example, during long consolidations – the price has no definite direction and wide trading range. In this case short-term transactions are opened when the necessary corrections appear.

Concluding thoughts

Scalping is quite an aggressive type of trading requiring great preparation. It differs from other types of trading by a high percentage of transactions with high risk. The trader-scalper has to analyze the market well enough to make all deals profitable. That is why it is important that the percentage of profit from successful trades exceeds the percentage of losses from unsuccessful ones. Competently choose the tools and methods of trading on the market according to your goals and terms.