In the past few years, Bitcoin has shattered a lot of records. Millions of people from all over the world are now swarming to Bitcoin and attempting to obtain their own personal supply of the digital coin. However, other people continue to remain pessimistic about the future of virtual assets and contend that trading in bitcoin is too hazardous to be a wise investment. The significant volatility of the Bitcoin market is one of the main worries. Trading bitcoins is often thought to be an extremely dangerous activity. The good news is that a sound trading strategy can help to lower risk. It’s important to note, though, that not all trading approaches work well in the choppy market. Scalping is one of the greatest trading methods for Bitcoin since it focuses on taking advantage of minute price changes. In other words, while some regard volatility as a risk, scalpers see it as a chance.
What is Scalping and how does it work?
Scalping is a fairly popular intraday Bitcoin trading technique using bots like Immediate Edge Pro (click here to learn more) Since the idea is universal, it can be applied to practically any other asset, including stock and FX, therefore it is not just for cryptocurrency trading. As previously indicated, scalping essentially enables traders to benefit quickly from tiny price swings, particularly in shorter time frames. Therefore, scalpers would place as many trades as they could over brief periods of time in order to gain tiny but steady profits rather than striving for huge profits in each deal. The goal is to amass a number of modest profits and add them together to generate a sizeable profit at the conclusion of the trading day.
The best moment for the scalp is typically when interest in a specific asset is increasing and there is significant volume and good liquidity. The majority of the time, the price of cryptocurrencies fluctuates, giving traders a greater chance to seize more opportunities on a given day. Scalping is an excellent way to create a steady income in the cryptocurrency market, like Bitcoin. But keep in mind that scalping is a short-term technique, therefore traders must be nimble and accurate.
Essentially, this method calls for traders to spot patterns in the price chart and technical indicators, evaluate the information to get insight into upcoming market behavior, and then repeat. The outcome will then be utilized to choose entry and exit positions as well as take profit and stop loss levels.
Some of the best Bitcoin scalping indicators are as follows:
- Trading volume
- MACD indicator
- Candlestick patterns
- Support and resistance levels
- Relative Strength Index (RSI)
- Fibonacci Bands
- Bollinger Bands
- Open Interest
Is Scalping Profitable?
If you’re willing to invest the time to learn how to use the scaling technique properly in Bitcoin trading, it can be quite profitable. However, it’s also simple to lose money here if you’re often frustrated or if you can create a strong plan and stick to it. Scalpers must have specific exit strategies.
How Scalping Differs from Day Trading:
Incredibly, scalp traders keep onto their assets for even less time than cryptocurrency day traders. A scalper will make numerous trades in rapid succession as opposed to day traders, who may only make a few deals per day.
Types of Scalpers:
Following are the different types of scalpers:
Scalpers who adopt a systematic trading strategy are known as systematic scalpers. For when to enter and quit the trade, they typically conduct thorough research and construct trigger setups. In light of this, every action is prepared and planned. The effectiveness of their regulations and their adherence to them are what support their system. They must therefore rely on data and algorithms rather than letting their emotions rule because doing so could cause the entire plan to shift.
Discretionary scalpers, on the other hand, typically make trading decisions “on the fly,” responding to market volatility. Because they typically only respond to the changes without adhering to any defined regulations, some of these scalpers may or may not have established entry or exit points. But that doesn’t mean they frequently behave carelessly and without a second thought. Before acting, they may take into account a number of variables, but they frequently rely on instinct and gut feeling.
Scalping can be profitable if the following strategies are followed:
In order to use this scalping strategy, Bitcoin traders must watch the chart for a specified price range before trading within it. The concept is that the support region will be at the bottom of the range, and the resistance area will be at the top. Traders would use price retests from support and resistance to place orders as long as the price moves inside the range. But when the range is breached, traders either trade the breakout or watch for another fixed range to form.
Leverage is the amount of additional money that is “borrowed” by traders in order to raise the size of their position. This is why a lot of Bitcoin scalpers prefer to use products that let them employ leverage, such as margin trading platforms, futures contracts, and other kinds of products. However, because scalpers frequently open numerous positions simultaneously, they must be mindful of slippage.
Trading this strategy calls for traders to use a sizable spread between the highest bid and the lowest ask. This technique is better suited to algorithmic or quantitative trading, though. The explanation is straightforward: Humans are less adept than algorithms in spotting minute market inefficiencies. As a result, the usage of trading bots dominates this trading method. They interpret algorithms faster and more accurately than humans can.
Bitcoin scalping is a great technique to capitalize on all of the minute price changes in a single day. However, bear in mind that this trading approach has a certain set of guidelines that must be understood and adhered to. You need to have a solid trading strategy and stick to it, just like with any other investment. Choosing the right indicators for your scalping style is a part of this. Other than that, always think about the risks and balance the benefits and drawbacks before attempting something. Once all the boxes are checked, all you need to do is the practice to start making money.