Everything you need to know about scalping or scalp trading

Sponsored Content 24 May 2022

The cryptocurrency market is known to be volatile and highly competitive.

This form of volatility can actually make way for profit-generating strategies, and scalping is one of them. Also known as scalp trading, it’s the short-term cryptocurrency trading strategy with which the traders will be able to earn small-range profits which add up over the course of time.

So, if you are new to the cryptocurrency world and aren’t utilizing scalping while trading on bitcoin-motion.cloud or your other exchange platforms, this article will have all the necessary information!

What is scalping or scalp trading?

Scalping is defined as the process that allows cryptocurrency traders to leverage better outcomes from the small price movements rather than targeting the massive profits. On the other hand, scalp traders tend to place trades for shorter investment periods. The primary idea is to curate a combination of smaller gains, which eventually leads to a significant profit.

It is important to remember that scalp trading is a short-term strategy, which means quick decision-making is essential without spending excessive time on making decisions. The scalpers tend to take part in purchasing new tokens and coins whenever there is a higher interest in specific assets with top-notch liquidity and higher volume.

Unlike other events that play over an extended time period, scalp traders tend to depend on the short-term events that drive higher interest in the crypto assets, which are often fueled by the news. However, scalp trading isn’t meant for everyone, and you need in-depth market knowledge, particularly the market operations.

How are profits made?

The traders involved in scalp-based trading are known to develop ideas with proper technical analysis – it’s a special form of analysis that allows the traders to predict the market behavior for upcoming months or years, depending on the previous volume data and price movements. In addition to this, technical analysis is also known as charting.

Speed is another important factor because scalp traders need to make quicker decisions and leverage the short-term volatility, which can be measured in seconds or minutes. Consequently, the scalpers will be able to reap immense gains over the course of time. Having said that, scalp trading usually includes charting, consistency, and speed as the major elements.

Being a scalp trader, you must select the currency pairs that exhibit the higher volatility rate to gain benefits from the smaller price movements. By leveraging the small price differences between the token pairs, you will be able to reap quick profits or rewards and minimize the risks.

Fundamental Analysis Vs. Technical Analysis

When it comes down to studying the cryptocurrency market, technical analysis and fundamental analysis are the two primary approaches.

  • Technical Analysis – it is defined as the process of analyzing the volume data as well, and market price actions over the course of time. When you outline the patterns based on the mathematical signals and reading charts, it will be easier to gain insights into the future of the crypto market, promising more accurate trade exit and entry
  • Fundamental Analysis – it is defined as the process of studying the industry sector, country, and prospects of future earnings that depend on the sector, macroeconomics, and company-based conditions

In the majority of cases, the scalp traders apply both forms of these analyses.

Range of scalping techniques

There is an extensive range of techniques used for scalp trading, and we are sharing some of them in the section below;

  • Range Trading – this trading technique involves when scalp traders need to wait for the trades to implement within the specific price range. In addition, the traders utilize the stop-limit orders whenever the trade is launched at the future market prices whenever an asset hits the minimum price that’s mentioned in the order
  • Bid-Ask Spread – this trading technique is utilized by scalpers, which actually helps them gain a great price difference between the lowest ask rate and the highest bid
  • Leverage – it is defined as the amount which traders use to amplify the margins and can be used for boosting the size of the position

Being a successful and profit-bearing scalping trader, you need to improve your chart reading skills as well as knowledge of various cryptocurrency trading strategies. So, expand your market knowledge before you start making the desired profits.

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