Best Scalping Strategies for Cryptocurrency Trading 2021
Whether you are an investor, a trader, or a HODLer, it doesn't matter as long as profits keep coming because the thing is, there is no right or wrong in the world of Crypto Trading.
As the great economist and founder of strategic management Michael Porter once said, "the essence of strategy is choosing what not to do", the answer to a good strategy lies in its application and effectiveness, and there is no difference in the crypto world.
Scalping is a common-day trading strategy where traders earn small profits by repeating the tactics 10 to 100+ times. Speed determines everything in scalping, therefore a prominent crypto derivatives exchange platform with the fastest withdrawal time in the market, providing leverage higher than average would be critical.
What is Crypto Scalping
Scalping refers to a widely used trading strategy that aims to make a profit off of small price movements in the market. It usually requires a lot of knowledge of the market, the know-how of its inside workings, quick and effective decision making, and of course, discipline.
The main goal is not to make a huge profit from each trade but to make small profits consistently. If they succeed in it, then they'll keep growing their trading account over time. They generally use various tactics like tight stop-losses and leverage.
In order to properly scalp the crypto market, a trader needs to know and understand the various strategies involved in Crypto-Scalping.
Best Crypto Scalping Strategies out there
Some of the most effective and useful Scalping Techniques are as follows:
1. Range Trading
Source: tradingstrategyguides.com
Range trading provides benefit by recognizing consistent fluctuations in prices - the highs (resistance) and the lows(support bands), in non-trending markets. It is applied in a variety of markets like Stocks, Cryptos, and Forex, thus allowing the trader to buy and sell an overbought or oversold asset.
Cryptocurrency markets, in particular, are especially volatile, where prices fluctuate all the time. This is where range trading comes into play, enabling traders to buy at support and sell at resistance once the resistance and support levels are picked out.
2. Price Action
Source: tradeciety.com
Price Action involves the technical analysis of price movements of an asset over time measured in a chart. It is also involved in all kinds of areas of the market other than cryptocurrency.
Here, traders look for trends, formations, and patterns in market structure by using price action and chart analysis, thus creating trade ideas. It essentially tries to project future price movements by analyzing past prices.
All a trader needs to do is to choose support and resistance levels in order to pick out potential setups and make profits off of them if their predictions are correct.
3. Spread Trading
Source: www.ig.com
This trading strategy simply opens up two doors at once - a long and short one. The spread utilizes the difference between the two. In application, the trader, instead of trading the asset itself, trades the relationship between two assets.
Scalpers take advantage of this spread fluctuation in various exchanges to make a profit.
The traders can observe to load a coin until the spread even out depending upon a strong or a weak signal from the wide ask-bid spread.
4. RSI Scalping Strategy
Source: www.fxtradingrevolution.com
Traders use RSI to find potential entry points that go with the ongoing trend.
Relative Strength Indicator(RSI) is an oscillating indicator useful in recognizing overbought or oversold areas.
This indicator works well depending upon market conditions with intriguing noticeable results over the long term.
5. Arbitrage
Source: marketfeed.news
What makes the crypto-space so attractive is the volatility of cryptocurrencies.
Since the market is so different, the price of the assets may vary between exchanges.
When this occurs, traders can make a profit out of it by simultaneously buying and selling at one exchange.
Also, there are two types of arbitraging techniques in crypto trading :
1. Spatial arbitrage, where a trader buys and sells the same asset at different exchanges, thereby hedging against price variations.
2. Pairing arbitrage, where the trader utilizes the price differences of a single asset in one trading platform.
It is best used in automated form since such opportunities end in seconds. There are many trading bots available that look for arbitraging chances to make a free profit. Some of them include Cryptohoppers and others, and the choice is completely on the scalper.
Speed is everything in crypto scalping
Trading is an art in itself. There are various factors that decide the profitability of a particular strategy.
Beginner traders to stick to basic strategies like light crypto investment or swing trading before trying out this form of advanced style. Here are 5 Essential Hacks for Crypto Trading Beginners to help you steer clear of the don’ts and make the right choices.
Making profits in such a market requires rigorous discipline, sufficient risk management, and keeping check of market conditions.
So if a trader feels confident in their strategy and skills, then the market might benefit them appropriately, and one might get to enjoy the fast-growing market of Crypto Trading.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. C-Trade, its affiliates, agents, directors, officers, or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same