Lots of people get into the crypto space to make a profit. While some head over to sites like CryptoCasinos.com to engage in crypto casino gaming, others delve into riskier investments like derivatives trading. Derivatives trading helps traders spot different styles of trading, in which scalping is inclusive.
Scalp trading is one of the shortest trading strategies which involves a trader instantly getting in and out of positions. It is different from arbitrage trading because it’s facilitated on only one exchange and is usually done on perpetual futures positions. To be a scalper, you’ll need to be a good decision-maker, understand technical analysis and some price action strategies.
Scalpers are not only limited to crypto trading since they’re in the forex, stocks, and even precious metals markets. Professional traders who do not want to go into scalping entirely but enjoy the thrill allocate some of their capital for this activity.
Scalp Trading Basics
Scalp trading is a strategy where traders aim to gain from the slightest price movements in an asset. For instance, where swing traders that carry out long-term trades are looking to make a 50% gain with a big upward price movement, scalpers can make the same gain from a smaller one.
The idea is to get several gains during the movement so that the profits will add up to one big revenue. Scalpers hold their trades anywhere in the range of seconds to 15 minutes. They view 1 to 5-minute candles and make many different trades daily.
How Scalpers Make Money
Scalp traders make money through technical analysis. They can’t rely on fundamental analysis, which facilitates a higher movement in a digital currency’s price but can take years. Hence, they favour technical analysis tools such as price action, support and resistance levels, and chart patterns.
Scalp traders can also use technical indicators like the Moving Averages, Fibonacci Retracement, Stochastic RSI, and MACD. Advanced scalpers even create their custom indicators.
They’re the most private type of traders because a well-known scalping strategy is a strategy with a low success rate. Hence, the reason for their high levels of privacy and secrecy.
Sometimes, scalpers can zoom out to higher time frames like the 1-day or 1-month to check the market’s general direction. This way, they get to understand the prevailing market sentiment and favour trades in the general market direction.
Conclusion
Scalping is one of the most interesting trading strategies since it involves quick profit-making. The idea is to take a lot of immediate profits that sum up to big revenues at the end of a trading day.
Scalpers typically look at timeframes that range from 30 seconds to 15 minutes. They get engaged in technical analysis utilizing tools like RSI, support and resistance, MACD, and moving averages.