Since the cryptocurrency market is notorious for its high volatility, here's what you need to know about the crypto scalping strategy.

Today's trading environment has evolved into a digital market, allowing traders to make money through various methods. Especially after the crypto investment starts booming in the last few years, making crypto trading a medium the public has been actively pursued as an opportunity to earn big profits. As we know, there are many ways to trade in the crypto space, however, one of the most popular today isn't day trading, but scalping. In the following article, we will discuss deeper on the crypto scalping strategy.

crypto scalping strategy

Crypto scalping strategy is a term used to describe a trading method that takes advantage of the volatility in the cryptocurrency market. Unlike hedging, this strategy was created and designed by traders looking to make a consistent profit in these highly volatile markets. It's not something you can do every day, but it is an effective strategy if you're looking for ways to trade cryptocurrency and make money over time.

 

How does Crypto Scalping Works?

Crypto scalping is high risk and high reward strategy. With this strategy, the goal is to make small gains most of the time and only occasionally have a substantial gain. It involves taking multiple trades over a short period to achieve positive outcomes before market conditions change.

A famous quote in the crypto community goes, "HODL!" which is supposed to mean "Hold on for dear life". This means that you should hold on to your cryptocurrency no matter what and that you should not sell it for any reason. HODL is an extension of the idea of buying low and selling high, but it has its flaws.

The idea behind scalping is that coins make an upward movement after experiencing a fall in prices, so it makes sense to buy them when they're as cheap as possible and sell them when they're high enough. Predicting these movements accurately is nearly impossible. Instead of getting it right every time, a good trader sacrifices the size of wins and increases the number of gains by making lots of small trades.

Scalpers analyze charts and graphs (mostly candlesticks) to find opportunities for profit by opening and closing trades quickly (usually within minutes). They are not interested in long-term positions. However, when they do open a position, they stay in it for a short time (typically 15-30 minutes), so they can minimize their losses if the market changes rapidly.

 

What are the Basic Assumptions in Crypto Scalping?

Scalping is an advanced cryptocurrency trading strategy that can be used in many ways. There are three main assumptions under which it works:

  • Benefiting from small price movements is much easier to achieve in crypto markets. This is due to the high volatility of crypto assets. As previously mentioned, the main idea behind scalping is to take advantage of minor price differences and trade accordingly.
  • By keeping your exposure to the market low, you reduce the probability of suffering adverse events or incurring losses. It's essential to keep in mind that while crypto scalping can provide an excellent opportunity to make a profit with less risk, it is still not a good idea to use it for making long-term investments.
  • There is enough liquidity on all the exchanges. As with any other financial trading method, scalping also requires sufficient liquidity on all the involved exchanges so that one can sell their assets at any moment without encountering any problems or losses.
  • Smaller price movements occur more often than larger ones. Even during periods of no action, a trader may engineer small profits to keep in the game.

If you are a beginner, be careful about the risk of scalping cryptos by using a demo account until you are really proficient in order to avoid trading mistakes that can make you lose money.

 

Final Thoughts

Scalping is a powerful strategy for crypto traders who want to make the most of the volatile nature of digital currencies. While it can be incredibly risky and might not necessarily be the best choice for beginners, it can also help you take profit from small surges in cryptocurrency prices. By trading small in size, a trader can always meet their targets and increase profits. If you need to succeed as a scalper, it is essential to know about value and volume, the importance of liquidity, and how to track those swiftly changing metrics.

Nevertheless, as the scalping method is not for everyone, if it doesn't suit your style, there are many crypto strategies out there you can try, such as swing trading or trend trading.