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Scalping is a type of trading style whose purpose is to achieve profit by small price changes in financial markets. In scalping strategies, instead of buying and maintaining positions for a long time, people implement their trading decisions within a few seconds or minutes and thus benefit from the resulting price difference. Scalping strategy training is very popular in the financial markets, especially the currency market, and traders use it to take advantage of short-term price fluctuations. Scalping training is actually learning an intensive and fast trading method based on daily and short-term trading.
Scalping strategies are not used for long-term investments. But what in this trading method can achieve a profitable and favorable view in a short period of time is the reviews and studies of this strategy, for this purpose you need to be familiar with the principles and definitions such as what is scalper? What is tick scalping? I have presented the scalping strategy tutorial for you.
What is scalping?
Scalping trading is a method that can make a trader profit by using small price movements. In fact, by using scalping strategies, a trader can achieve profitability in a short period of time due to the small and slow price movements of various cryptocurrencies.
For example, imagine that at this moment you decide to buy product X for a short-term investment. Now suppose that the price of this product is equal to 100 thousand tomans; If the price of this product reaches 120 thousand tomans in an hour and you sell it, you have entered the world of scalping transactions.
In digital currency, scalping transactions are subject to the same regulations. Imagine you are active as a trader in the forex market on the BTC/USD currency pair. In a trading day, you notice a small fluctuation in the price of Bitcoin and conclude that the price will increase in the next few minutes.
Read more: Bitcoin price depends on what factors?!
For this purpose, you may use your analytical tools and data. In this situation, to use the scalping trading method, you must buy Bitcoin at the current price and enter the market. If your prediction is correct, within a few minutes the price of Bitcoin will increase a little and you can sell it at a higher price and make a profit in a short period of time. Scalping strategy training requires careful financial risk management, quick decision making and accurate market analysis.
This method of investing in digital currency causes the volume and number of investments to increase and the expectations of profitability to decrease; Instead, the trader can be sure based on the specified horizon that the amount of profits he gets is numerous and he does not need to wait for a long time to buy and sell his assets.
An important point in scalping trades
In scalping transactions, traders should always have an exit strategy in mind. Because it is only by using the exit strategy that it is possible to avoid possible losses in this method.
Although the trader can achieve small profits by using the scalping trading method, but considering that the number of transactions is large and numerous, the number of small gains is also more and in case of losses, all the trader’s profitability will be destroyed.
What is a scalper?
After getting to know and learn scalping, you might ask what is a scalper? In response, it can be said that the person who implements the scalping trading style is called a scalper. In recent years, there have been a large number of these people in the crypto market.
Scalper or scalper trader basically perform their analysis in short time frames such as 5-15 minutes. These people enter scalping transactions with high capital and leverage;
Read more: What is leverage in digital currency?
So that they can enter into the transaction with the confirmation of the technical analysis and achieve large profits through small movements of the price chart.
Attention: Technical analysis without fundamental analysis will be an incomplete analysis. Therefore, it is suggested not to rely on the results of this analysis alone for investment.
The digital currency market is very popular with scalpers due to its extreme price fluctuations. Professional scalpers generally make good profits from this market.
Of course, most scalpers usually analyze and trade on cryptocurrencies that have less price fluctuations. Digital currencies such as Bitcoin and Ethereum , which have a high volume of transactions, are often the focus of scalpers.
One of the important points for scalpers is benefiting from the opportunities provided by scalping. Scalper should never forget that he should take advantage of all his investment opportunities within a day and consider appropriate strategies for buying and selling the types of cryptocurrencies he wants. In order to make a profit from daily or short-term transactions, a significant volume of transactions should be considered, and therefore the risk of investing in them will increase.
What are the characteristics of scalpers?
Technically, scalpers are also considered day traders; Because they never leave their positions open for a day and night and close the position in a few minutes. But there are differences between them that distinguish them from each other. Scalper traders are basically regular people; Because they must have the necessary strictness and accuracy in keeping the positions open.
These people are opposed to the “wait until you get a profit at an unspecified time” approach. In fact, scalpers never wait to find out whether a losing trade will turn into a winner. These people make and implement their decisions based on their strategies in the moment.
A scalper must have enough knowledge and skills to avoid heavy financial losses. Therefore, a professional scalper should learn all the principles and tips related to scalping strategy training, such as working with copy trade and the copy trading platform.
On the other hand, the person who chooses the Scalping trading method must have the necessary time to review and evaluate the changes in the crypto market. Because analyzing charts such as candlesticks, classic patterns , candlestick charts , etc., requires a lot of time. Therefore, people who do not like excitement and do not have the ability to make instant decisions, it is better to forget this trading method and go to other trading methods such as reverse trading, margin trading, spot trading , etc. to go
Scalping training or Scalping performance method
As we said above, scalping transactions are based on the fact that the scalper will be profitable in a short period of time with a large trading volume. One of the important points in the performance and mechanism of the Scalping method is its connection with the concept of decreasing and increasing the price of digital currency.
In simpler terms, scalpers in scalping trades proceed with the philosophy that every price drop leads to a price increase. This means that every time the price of a cryptocurrency decreases, it will experience an upward movement; Of course, this prediction is not always correct and traders should enter the market based on their analysis and not suffer survival bias based on the movement of successful traders.
Read more: Survival Bias
A professional scalper always seeks to achieve small profits by decreasing and increasing the price of cryptocurrencies; This person tries to make less profit in one day with many trades. These concepts and, in general, the performance of the scalping trading method are based on the fact that this method is exactly the opposite of the concept of holding digital currency or keeping assets.
Read more: What is digital currency holding or HODL?
In simpler terms, as in Hodel’s concept, the trader should hold his asset for a long time in order to become profitable in the event of a sudden price increase, in the scalping trading method, the trader should limit the duration to a very short time, such as a few hours, minutes and maximum. Reduce one day.
In scalping transactions, traders either create long positions by buying low and selling high, or create short positions by selling high and buying low. The important thing is that if you decide to proceed based on scalping strategies, you should find highly liquid assets that promise large price changes within a day. Liquidity guarantees that you enter or exit the market at the best price.
Important principles of operation of scalpers in the market
- Reducing the amount of danger and risk with a short-term presence in the market.
- It is easier to take profits from small price movements.
- Small movements occur even when the market is seemingly calm.
- While other trading methods such as position trading depend on fundamental and technical analysis to identify trades, scalpers should primarily focus on technical trading techniques.
Technical analysis can be considered the study of historical currency price movements along with following current trends. In order to achieve this analysis, scalpers must use various charts and tools. These people should predict future price movements based on historical price movements, by observing and examining patterns while planning to make a transaction.
Scalping strategy training
Below are three scalping strategies for more profits:
Scalp trading with stochastic indicator
One of the scalping strategies is to use the stochastic indicator. The creator of this indicator, Georg Lin says:
The stochastic indicator determines the momentum of the price movement. Imagine a rocket launched into the air. To land, this missile must be turned off, and to turn off the missile, its speed must be reduced. Based on this example, momentum always changes before price. Scalping trades with the stochastic indicator detect movements in the trending market. This indicator determines the current price position based on the recent time range.
The purpose of this indicator is to compare the current price with recent prices to determine potential chart reversal points. In fact, in this way, downward and upward movements can be identified. The stochastic indicator usually has two lines that oscillate between 0 and 100 levels.
- Line K: This line specifies the stochastic value for each period and fluctuates as a fast line in the stochastic chart.
- Line D: This line represents the percentage of the slow indicator, and traders follow it closely based on the fact that line D shows important signals on the chart.
The important difference between D and K lines is their sensitivity. The K line is more sensitive to price changes than the D line and therefore generates more trading signals. When the K line crosses D, trading signals are generated. Since the price follows the acceleration of the trend, the intersection of these two lines is known as a price reversal signal.
Scalp trading with Parabolic SAR (Parabolic SAR
Indicators are mathematical functions that try to predict future prices using mathematical formulas. One of the useful indicators in the cryptocurrency market is the parabolic SAR indicator.
This indicator is in the form of dots that are placed in the upper and lower part of the price chart. Traders often use the SAR indicator to confirm whether the trend is bullish or bearish.
SAR buy signal
A buy position for the trader is created when the price closes above the SAR indicator. But if the SAR parabolic position changes from the top of the candle or the price changes to the bottom of the candle, the trader has the option to close his sell positions. Of course, to enter the buying position if needed, he should consider changing the trend.
SAR sell signal
If the candle or price closes below the SAR, a sell signal is generated. The parabolic SAR indicator moves from the bottom of the price to the top of it. In this situation, it is better for the trader to close the open buy positions and enter the sell position.
Scalp trading with RSI indicator
The RSI indicator is one of the most popular scalping trading indicators among cryptocurrency traders. Flexibility and providing strong trading signals are important features of this indicator. If this indicator is used correctly, the strength and direction of price movements can be determined. The RSI indicator is able to measure the rate of upward movements compared to downward movements. These calculations are normalized so that the index can be presented in the range of 0 to 100.
What is scalping?
What is scalping? Scalping is a type of day trading strategy that involves opening and closing trades in a short period of time. The main difference between scalping and other cryptocurrency trading strategies is the holding period and the way the market is analyzed. Scalpers make between 10 and several hundred trades a day, turning small profits into large profits.
What is scalp trading?
To understand exactly what scalping is, we need to first take a deeper look at how this strategy works. In most day trading strategies for digital currencies, each trade can take several hours. This is because traders use both fundamental and technical analysis to analyze the market in order to advance their trades in these strategies. In contrast, in scalping, each trade takes only a few seconds or even minutes to accumulate; and given the nature of this strategy, which only involves very short time frames, scalpers use almost only technical analysis to trade.
Given the concept and meaning of scalping in cryptocurrency and trading, you might wonder why traders focus on small price movements instead of chasing large market moves, which are more profitable. This is mainly because small price movements occur much more frequently than large, shocking market moves. Therefore, they provide more opportunities for trading.
Advantages and disadvantages of scalping in cryptocurrency
What are the advantages of scalping? Scalping, like other cryptocurrency trading methods, has its advantages and disadvantages, some of which include the following:
Benefits of Scalping
1. Less risk: Since scalping involves very little holding time, the risk of trading is greatly reduced.
2. High potential for greater profits: Scalping is not dependent on huge market changes. Therefore, it provides traders with many opportunities to profit from even the smallest market movements and price changes.
3. No need for fundamental analysis knowledge: If you are looking for the best fundamental cryptocurrency trading methods , then skip scalping. As mentioned, scalping traders mainly use technical analysis only. As a result, you do not need to have a deep knowledge of fundamental analysis techniques to succeed in this method.
4. Higher percentage of successful trades: Given that we expect a smaller amount of profit for each trade in scalping, the percentage of trades that are successfully closed is higher in this method.
Disadvantages of scalping
1. It requires a lot of effort: Scalping requires high concentration, stress management, and perseverance. To succeed in this strategy, you must be able to go through many repetitive processes with patience and perseverance.
2. Time-consuming: Given that you constantly need to wait for suitable trading opportunities in the market, scalping requires a lot of your time.
3. Spreads increase: Given that you need to make a large number of trades per day to be successful at scalping, spread costs may eventually add up to a significant amount.
How is scalping different from other trading methods in the market?
So what is the goal of scalping? To make a profit in the shortest possible time by taking advantage of the smallest price changes in the market. That is, scalpers open a large number of trades in the hope that the profit from them will accumulate drop by drop and turn into a significant amount at the end of the day. This is the most important difference between scalping and other cryptocurrency trading methods.
An important point that is sometimes overlooked when it comes to what scalping is and how it differs from other trading strategies is choosing the right market. The nature of scalping requires that it be used only in markets that have certain conditions. For example, the liquidity of the market in question must be high. The more liquid the market is, the lower the spreads will be because even a small change in price can completely cover their costs. Volatility is also another important factor to consider. Scalping requires relatively stable fluctuations in the market, and sharp price changes can be very dangerous for scalpers. Paying attention to these points will help you ultimately find the best cryptocurrency scalping strategy to make more profits.
What is the profit/loss ratio in the scalping strategy?
In this article from Farhad Moghadam Salimi’s Crypto School, we said that in scalping we are looking for small but multiple profits. This has caused the win rate in scalping to be higher than other trading strategies. Imagine that you have a limited number of darts in a dart match. What is the percentage probability that one of the darts will hit the target? Now imagine a situation where you can throw an infinite number of darts. In this situation, the probability that some of the throws will finally hit the target is much higher. Scalping is an example of such throws with multiple darts.
Important tips for new scalpers
Given the nature of scalping and the fact that it can bring people good profits in a short period of time, it may be very attractive to novice traders. People who are new to scalping should consider whether it suits their personality and temperament. This strategy requires discipline and regularity. Traders must be able to make decisions quickly, recognize situations with good potential, and constantly monitor the monitor and the market. Scalping requires understanding the market and making quick decisions. To achieve these characteristics, novice traders need to spend more time learning technical analysis and trial and error. So if you are just starting to trade cryptocurrencies, it may be better to approach scalping with caution.
Due to the extreme fluctuations in the price of Bitcoin in recent years and due to the predictability of fluctuations in most cases, the profit from scalping Bitcoin is more reliable than other cryptocurrencies.
Since scalping trades take place in a short period of time, the scalper uses more technical and technical analysis. Because the results of fundamental analysis can be relied on in the long term, and Scalpi trading does not have much time to make a decision to complete transactions.
These deals are often not suitable for people who have a lot of daily activities. Because scalping strategies require constant checking of the chart and investment portfolio.
