What Is Scalping?
Scalping is a term used by traders that aim to take small but frequent profits from minimal movements in the market. Although the Crypto market is very volatile, waiting for the ‘next big move’ can result in a huge loss in balance for something that may never come, or worse, price jumps in the wrong direction. Many expert scalpers will take more profit from the market making small trades then traders do when they hit a big pump or dump. They are not focused on big profits every trade.
How To Scalp
In order to scalp you first need to have discipline in your trading. Scalping is not there for the greedy. Scalpers also need to be able to read the market to an extent. The aim of scalping is to enter a trade at a support or resistance line, wait for the price to go the correct way for them and then close the trade with a profit. Some scalpers set a profit close and a stop-loss when they execute their order and will stick to them targets regardless. Other scalpers will wait for the price to go past their target and then set a stop-loss on that target to try and gain any further movement, but still taking their original profit if the market retracts.
You can scalp the market whether you expect to the price to go up or down. Patience is key. Scalpers do not jump in to an order at market price, they will set a limit price and wait. If the price moves away too far, then they will re assess and change price and direction accordingly. Trading and executing at market will cost more in commission and significantly reduce any profits the scalpers re looking for.
Going back to market volatility, not all scalps will pay off. As we all know, resistance and support levels can and do break. If they didn’t the price would never move. Scalpers use stop-loss strategies to reduce any losses significantly. Some will set very tight stops, meaning that their loss is minimal. Others will set their stop-loss just past the next resistance or support line. This is because when the market breaks, it does not always travel too far before recovering again, so sometimes is good to wait.
Managing Your Funds
Never enter a trade using all your account balance. As much as dreaming of a Ferrari because you have read all these stories about how traders make thousands a day trading is not the mindset you need. Typically, traders use no more than 5%-10% of their balance in one trade (5% being more common). Like all professional traders, scalpers know what % they want to profit per trade, but they also know what % they are prepared to lose per trade. As a rule, per day you should lose no more than 5% of your balance and aim for 5%-10% profit. Build your balance. The more you earn, the more you begin to understand the charts and learn, the bigger the trades you can start to place.
Check out our tried and tested trading platforms HERE