Scalp trading was predominantly used in forex trading but has since closed over to cryptocurrency trading. It works by allowing traders to enter and exit positions while taking small and quick profits along the way. However, it needs well-thought strategies to work.
Since the profits are small, blind scalping can result in huge losses that cancel the small gains accrued earlier. The ability to place many short trades, access to live price feeds and other critical tools enhance the accuracy of a scalping decision.
Scalp trading is informed by the movement of an asset’s price in short intervals. Therefore, to maximize profits during movement, a scalper places many trades that last for seconds or a few minutes. By doing so, they are hedging against the price volatility of a particular asset like Bitcoin.
Notably, scalping concentrates on the profits no matter how small they are. As such, a scalper ends up with more winnings than losses compared to a trader who opens and stays in a position without a restricted time frame.
Scalping isn’t an isolated cryptocurrency trading strategy; it’s implementable alongside other trading styles. But, when endorsed as the primary trading approach, a scalper will conduct many small trades within 24 hours. Therefore, since each trade exists for a few minutes, a trader can utilize prize charts with one-minute signals.
On the other hand, when scalping is a crypto trader’s supplementary trading style, it’s best applied when the market is relatively quiet. That is when big gains are nowhere in sight.
Supplementary virtual currency scalping is done by initiating a trade with a longer exit time and then observing the trade for any scalping opportunities. Note that the longer and shorter time frame trades are placed independently, but the extended trade advises a scalper’s direction. BitTrade is among the few reputable platforms enabling crypto traders to initiate scalp trading as either a primary or a secondary trading style.
Digital currency traders almost always get the two trading approaches twisted. A day trader and a scalp trader are two different beings despite roaming the same fields. The difference? A day trader can open a trading position that lasts for hours but exits before the day’s end. On the other hand, a scalper initiates multiple trades within a day, with each trade lasting for a few minutes.
Apart from the trading time frames, scalping requires huge trading amounts to make decent profits, while day trading can utilize relatively small amounts. Moreover, the two trading styles need different trading enhancing tools and experiences.
Scalping, as we have seen, involves conducting trades with short time frames. Swing trading has a different design.
For example, swing traders “swing” with a market trend and exit their positions just before the trend reverses. However, just like scalping, swing traders can conduct multiple trades depending on how fast the wave changes.
Notably, swing traders rely on the support and resistance levels of a given cryptocurrency. They can either take short or long positions, depending on the wave. As such, a swing trade can last for days or weeks. However, depending on the strategies and the intelligence from charts and other tools, it can last for months.
A trade with a short timeframe, mostly lasting for minutes. Scalp trade helps to avoid the risks that come with high price volatility, such as the one witnessed in the cryptocurrency industry. Unfortunately, the less the risks, the less the profits. Using more funds helps counteract the effect.
Scalp trading starts with the ability to read technical signals. Fortunately, a computer program like a bot can handle the analysis.
Apart from reading signals, a bot places and closes trading positions to increase accuracy due to the short time frames involved. Using platforms like BitTrade minimizes the learning curve.
Yes. However, it depends on the strategy used and access to tools that closely predict accurate minute-based market movements.
Assuming that scalping is the primary trading style, a scalp trader can place hundreds of trades within 24 hours due to the short entry and exit times.