- Technical Indicators Used for Scalping
- Scalping Strategies
- Role of Exchanges
Scalping is a method that involves regular day-to-day trading. The trick here is, make quick small profits and pull out. A person or an investor who implements the scalping method is known as a scalper.
Scalper enters the market with a single objective of making small, quick, and repetitive profits. Crypto markets being open all the time, gives scalpers the perfect platform to grab every opportunity in the market.
To perform scalping a trader is required to be disciplined, possess strong technical analysis skills and capital management skills, and have the ability to understand charting tools. Scalping in cryptocurrency is much more profitable than in other markets.
Technical Indicators Used for Scalping
For quick trade, scalpers use technical analysis, which is highly accurate and is very effective for traders.
Scalpers, who are experienced, use their customized trading setup and sometimes trading indicators. But for someone who is less experienced and have little knowledge, the following indicators can be of great assistance:
- Trading volumes
- Trendline analysis
- Candlestick patter
- Exponential moving average (EMA)
- Support and resistance
- Order book analysis
- Relative strength index
- Fibonacci retracement patterns
- Bollinger bands
- Moving Average Convergence Divergence (MACD)
The above-mentioned technical indicators provide scalpers with necessary information regarding good entry and exit points in the market at different time frames. To increase the accuracy for trades a collection of the above indicators must be used at any point in time.
Some famous scalping strategies are:
It is the most commonly used strategy, in this, the prices are monitored for a specific time frame, a top and a bottom are established, which will act as support and resistance. The trading strategy here is to buy at support and to sell at resistance. If one of the two is broken, traders can long or short accordingly.
This strategy involves exploiting the order difference between the asking price and the bid placed in the exchange order book. The difference between the asking price and the bid is the profit. The order book can be easily exploited by the scalpers because of the volatility of the market, but there is still a need for considerable capital and a good eye to make significant profits.
It is the most prominent scalping method that is used by traders. In leverage trading, the scalper uses his capital as a margin to carry out trade and hold a leveraged position. Leverage helps increase the buying potential of a scalper.
Role of Exchanges
Exchanges provide the platform that is used by scalpers to carry out trade. Any exchange that charges a low fee is mostly preferred by scalpers, because of their trading activity of opening and closing many trades every day. Scalpers while opening or closing trade, are required to be swift because of the market volatility; hence, the exchange must be equipped with high volumes, providing liquidity to all the traders.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing.
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