There are many different strategies in cryptocurrency trading. One of them is scalping, which involves the execution of a large number of tr...
There are many different strategies in cryptocurrency trading. One of them is scalping, which involves the execution of a large number of transactions within the day. This method of trading is considered one of the most difficult, since it requires certain skills and the full involvement of the trader, writes RBC Crypto.
The experts explained in detail what scalping is and how to use this trading strategy in practice.
In a broad sense
The essence of scalping is to make small transactions in large numbers, that is, dozens, and sometimes hundreds of quick transactions during the day, each of which is designed for a profit of several points, explained Vitaly Kirpichev, Development Director of the TradingView platform in Russia. According to him, the main instruments, in this case, are the minute or tick chart, the order book, and the trades tape.
This is the case when quality is achieved by quantity, says Mikhail Karkhalev, financial analyst at Currency.com. For example, you can open 100 short or long trades during the day, each of which will bring in $ 5 on average, taking into account unprofitable positions. Thus, in one trading day, you can earn a conditional $ 500, he added.
How to start scalping
To start scalping, you need to develop a specific strategy and test it dozens of times on a demo account, or with a small real amount, advises Mikhail Karkhalev. According to him, some traders prefer to use a 1-minute timeframe, others - a 5-minute timeframe, someone uses the crossing of the moving average with the price, someone uses other indicators. All these nuances need to be tested and come to the most convenient solution for yourself, the analyst noted.
The conditions for opening and closing positions may be different, depending on the approach, however, each scalper in one way or another focuses on the volume of orders in the order book, the volume of transactions in the tape, and micro levels on the chart, says Vitaly Kirpichev. If a support level has formed on the tick or minute chart, backed by bids (the highest price at which the buyer is ready to buy an asset) and deals are made according to offers, this may be a signal to buy, added the director of development for the TradingView platform in Russia.
Profitability and load
When engaging in scalping, the profitability will depend on many factors: the size of the deposit, the level of take profit and stop loss, the trader's goal for the day, and, importantly, the psychological stability of the trader, emphasized Mikhail Karkhalev. In his opinion, scalping can be called one of the riskiest trading strategies, since this approach requires maximum concentration and attention from the trader.
Being at the monitor for a large number of hours and completing hundreds of transactions is exhausting and makes further work impossible, so Vitaliy Kirpichev recommends taking breaks from trading and even taking mini-vacations to “reboot” and recuperate.