- Meaning of Scalping in Crypto
- Requirements for Scalping
- Scalping in Cryptocurrency vs. Other Markets
Scalping is a short-term trading method that requires huge discipline and intense technical analysis. It is a day trading method that can be intense and highly rewarding. In scalping an investor is required to be very careful, implement and stick to a predetermined system and apply impeccable technical analysis.
Meaning of Scalping in Crypto
Scalping is a trading strategy implemented mostly by investors who like to trade for a short duration of time, sometimes less than a day. Traders who practice the scalping method are known as scalpers. The main aim of scalpers is to make a quick profit from small fluctuations of prices in the market. With cryptocurrency being highly volatile, scalping is a very high-risk and high returns trading strategy in comparison to other markets.
Scalpers use a simple strategy, where they try to harvest limited profits, but from small repetitive trades. Even though they set small goals, but they make a profit consistently. Sometimes scalpers also use leverage to maximize their buying power. To perform trading, scalpers rely on different technical indicators, such as candlestick patterns, RSI, and support and resistance.
In scalping, after making a profit of around 2% positions are generally closed. The key to making money here is, make small quick profits until the daily quota has been achieved.
Requirements for Scalping
Some basic prerequisites of Scalping are
- Strong Technical Analysis Skill
- Capital management skills
- Trend line analysis
- Charting tools
Scalping in Cryptocurrency vs. Other Markets
Scalping is a concept that is similar for all the markets, but in cryptocurrency, Scalping is completely different. Some major differences related to scalping in cryptocurrency and other markets are discussed below:
Crypto markets are highly volatile than other markets like the share market. A skilled scalper will seize every opportunity in the crypto market to take advantage of price fluctuations. Thus, more profits in very little time can be made in the crypto market. High profits often come with high risks, thus chances of loss are also very high.
Markets like stock markets and Forex require mediators, that assist in regulating transactions, resulting in high transaction costs. In scalping, repetitive trades are done during a day, which will lead to very high transaction costs in other markets than crypto.
Crypto markets are always open, no matter if it’s a holiday or any time of the day. Trading never stops in the crypto market, where on the other hand stock markets and Forex are only opened for a certain time frame during a day and are closed on weekends and any other public holidays, denying the chance for scalpers to seize any opportunity, based on any recent events. This is not the case with crypto markets, and scalpers can seize any opportunity as soon as possible.
Cryptocurrencies are not regulated so there is always a certainty of risk involved with them, while in other markets, there is a regulatory body that is constantly monitoring the marketplace and any abnormal activity or malpractice gets investigated immediately.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing.
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