I was sitting comfortably in my office drinking coffee and doing my study about the most profitable strategies used by crypto traders.
The one that caught my attention was the scalping strategy, a strategy that is not new since it is already used by professional traders in stock and forex markets.
So, what is scalping in crypto?
Scalping is a trading strategy that aims to earn profit from small price fluctuations and making a quick profit from reselling.
The basic idea behind scalping is to hold your asset for a small period of time and sell it with the first opportunity.
One of the main characteristics is that it can be very profitable if a trader discovers a pattern that happens over and over again.
But you should not get confused and consider it to be an easy task.
Scalping crypto is a strategy that is not proposed for beginners because it involves a high level of complexity.
Generally, if you wish to have a good understanding at scalping crypto you should get familiar with the scalping philosophy in general.
But let’s take everything from the beginning.
What is scalping in crypto?
Scalping as a technique it’s not something new, since it is used for many years on the trading market.
Subsequently, in order for somebody to understand the scalping crypto strategy, it would be wise to take at least one quick look at the scalping in general.
After understanding the bigger picture, the connection with cryptocurrency trading would be a piece of cake.
So here are some explanation keypoints:
- Scalping is a trading method that focuses on profiting off of small shifts in the value and making a fast profit off reselling.
- In order for this strategy to be profitable, it is a prerequisite for traders to stick to their plan and not get buying and selling decisions on impulse, because one large loss is able to eliminate the many small gains.
- A profitable scalper will have a much higher percentage of winning trades against losing trades.
- Is very common for a scalper to complete a large amount of trades per day, for example it could be hundreds of them.
Generally, the percentage of profit that scalping trading gives is usually lower than 1%.
At this point it will be well understood how scalping in crypto would work.
Is scalping ideal for the crypto market?
Scalping works better in markets that offer higher liquidity.
Meaning that at this point scalping in the crypto market might not be the best choice. The reason is that despite the acceptance that cryptocurrencies have gained from the investment community which resulted in positive effects in crypto liquidity, the overall liquidity levels of the cryptocurrency market are still very low when compared with the traditional asset markets like forex and stocks.
That of course doesn’t mean that scalping crypto isn’t worth it because the market is still quite big and it’s only going to become bigger.
A nice tip if you want to do scalping in crypto would be to use Bitcoin or some of the biggest altcoins out there like Ethereum, XRP and many others.
Additionally it would be wise to use the biggest exchanges platforms since they have no liquidity problems due to their size.
Some of the best crypto exchanges recommended would be:
- Binance – That is the biggest crypto exchange platform in the world. The total volume of everyday transactions exceeds 22 billion dollars. This kind of liquidity offers a more than enough safe space for crypto scalping.
- Mandala Exchange – That’s the second crypto exchange platform, which counts more than 12 billion dollars in transactions per day.
- OKX – The third crypto platform counts 6.5 billions of dollars per day. But you should not get confused because even 6.5 billion is enough to start scalping.
The above are just 3 among the hundreds of platforms you can enroll in and start scalping and trading in general.
You should also keep in mind that the market of crypto trading is still considered to be new and is only expected to grow day after day.
Is scalping good for beginners?
A straight and clear answer would be no.
Scalping is not at all a good strategy for beginners because it involves a high level of complexity.
Some of the reasons why is considered to have an advanced level of difficulty are:
- Not only requires an in depth awareness and understanding of the crypto market but also demands experience in the exchange platforms
- In addition, requires deep knowledge and the ability to apply technical analysis because if you don’t apply technical analysis is almost impossible to succeed
- Last but not least, someone should have the experience and the ability to control his feelings in order to make the right decision. This is a skill that every trading strategy demands, but with scalping is a necessity because trades happening almost in real time and there is no room for mistakes
Is scalping illegal?
Scalping crypto is completely legal.
Although it is legal, there is a possibility it will not be allowed in some exchange platforms.
The reason is because scalping involves placing a lot of trades in a small period of time, which may result in a lot of pressure in some systems.
Therefore, some crypto exchanges might choose to ban it to protect the smooth function of their platform.
Crypto scalping is though completely legal.
Closing thoughts
After reading this post you should be in position to answer in the question: “What is scalping in crypto”
The bottom line is that crypto scalping is among the most profitable trading strategies but you should not get confused and think of it as an easy task.
And that’s because it involves a high level of complexity and you have to gain a lot of experience if you want to be successful.
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