Cryptos

Crypto Scalping Strategy: How to Make Consistent Profit Every Day

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The term ‘scalping’ is a technique prioritizing the small profit gain but in a large volume in day trading. Scalping is the specialized trading method of exploiting small price changes to gain profits. It also helps to gain rapid reselling profit.



However, traders who prefer the uncompromising exit strategy are suitable for scalping since many small profit gains may get lost if just one bigger loss occurs. It will water out all the hard work traders did to gain those small profits. Therefore, to be successful with this technique, the trader should have the correct tools like a direct-access broker, live feed, and, of course, the strength to place multiple trades.

The following section will see a crypto scalping trading guide that includes exact buying and selling trading methods.

What is scalping trading?

A day trading method that comprises opening and closing trades inside a shorter period range is called scalping. Compared to other types of day trading techniques, scalping is unique when it comes to holding periods and analyzing the market.

However, the maximum day trading techniques allow trades to be held for several hours on the same day of trading. Also, traders may utilize both technical and fundamental analyses in those methods. Surprisingly, trades are held for only a few seconds to a few minutes in scalping. Also, due to the short periods for holding trades, scalpers essentially utilize technical analysis techniques.

How to trade using crypto scalping in trading strategy?

We’re going to classify crypto scalping in a possibly basic way. Scalping can be simultaneously hasty, electrifying, and complex for the day traders. Congenitally, scalping integrates trades commonly only held for a few seconds to a few minutes maximum. Generating all potential profits is the prime intention of any trading technique. Besides, the principal purpose of scalping is gaining the most profit from the shortest price changes. Also, scalping is substantiated to be one of the most profitable trading strategies by the volatile character of cryptocurrencies.

However, an instant response to price fluctuations is required to be a meritorious crypto scalper and generate tenable profits. Therefore, scalping rotates around three essential elements:

  • Consistency
  • Velocity
  • Chart reading skills

A short-term trading strategy

The short-term crypto trading strategy has developed based on the market trend on the lower timeframe. This trading strategy will add the 2 line MACD indicator for the trade signal and the 50 period SMA to understand the market trend. Moreover, this strategy will apply to the M5  time frame.

Bullish trade scenario

First, you must add the 2 line MACD indicator and the 50 period SMA indicator on the chart. Then identify the market trend on the five minutes chart. If the price is above the 50 periods SMA, it indicates that the market’s momentum is bullish.

  • The 2 line MACD indicator adds more confluence by creating a bullish crossover above the 0.00 level.
Short-term bullish trade setup

Short-term bullish trade setup

Entry

Look for the price to reside above the 50 SMA indicator. Open a buy trade when the MACD lines cross each other upside over the 0.00 level.

Stop loss

Place the stop loss order below the 50 SMA with at least a 5-10 pips buffer.

Take profit

Take the profit when the price breaks below the 50 SMA line with a bearish candle close. Or else, you can take the profit by calculating at least a 1:3 risk/reward ratio.

Bearish trade scenario

First, you have to add the 2 line MACD indicator and the 50 period SMA indicator on the chart. Then identify the market trend on the five minutes chart. If the price is below the 50 period SMA, it indicates that the momentum of the market is bearish.

  • The 2 line MACD indicator adds more confluence by creating a bearish crossover below the 0.00 level.
Short-term bearish trade setup 

Short-term bearish trade setup

Entry

Look for the price to reside below the 50 SMA indicator. Open a sell trade when the MACD lines cross each other downside below the 0.00 level.

Stop loss

Place the stop-loss order above the 50 SMA with at least a 5-10 pips buffer.

Take profit

Take the profit when the price breaks above the 50 SMA line with a bullish candle close. Or else, you can take the profit by calculating at least a 1:3 risk/reward ratio.

A long-term trading strategy

The long-term crypto trading strategy has developed based on support and resistance. This trading strategy will add the stochastic oscillator indicator to identify the divergence from the support and resistance level. Moreover, this strategy will apply to the D1 time frame.

Bullish trade scenario

First, you have to add the Stochastic Oscillator indicator to the chart. Then look for the price to bounce upside from the support level with a D1 impulsive bullish candle.

  • The stochastic oscillator adds more confluence by creating a bullish divergence.
Long-term bullish trade setup 

Long-term bullish trade setup

Entry

Open a buy trade when the price had a daily bullish candle close above the support level.

Stop loss

Put the stop loss order below the daily bullish candle with at least a 10-15 pips buffer.

Take profit

Set the take profit order at the upcoming resistance level. Or else, you can take the profit by calculating the 1:3 risk/reward ratio.

Bearish trade scenario

First, you have to add the stochastic oscillator indicator to the chart. Then look for the price to have a daily bearish candle close below the resistance level.

  • The stochastic oscillator adds more confluence by creating a bearish divergence.
Long-term bearish trade setup 

Long-term bearish trade setup

Entry

Open a sell trade when the price had a daily bearish candle close below the resistance level.

Stop loss

Put the stop loss order above the daily candle with at least a 10-15 pips buffer.

Take profit

Set the take-profit order at the upcoming support level. Or else, you can take the profit by calculating the 1:3 risk/reward ratio.

Pros and cons

👍 Pros 👎 Cons
  • Using a crypto scalping strategy contains lower risks since it engages smaller positions.
  • Trading with a crypto scalping strategy demands a swift response because delaying can be crucial.
  • In this strategy, small price movements take place more frequently, making it effortless to achieve profits.
  • Crypto scalping strategy can be backbreaking for traders with underprepared minds.
  • With the crypto scalping strategy, trades can be easily automated since it is normally established on the calculable technical indicator.
  • A higher amount of capital is required to obtain a meaningful outcome since the profit is lower on each trade.

Final thoughts

In a nutshell, making the best use of the crypto scalping strategy depends on the quality of your broker; it is a vital point you should take into account beforehand you start trading. Also, a quality broker will impact the safety of the platform you are utilizing, along with the fees payable and the accessible resources. Moreover, it is significant to keep in mind the risks associated with the crypto scalping strategy.

Therefore, always be mindful of getting help from any available tutorials and demos if you are a novice. First and foremost, ensure to properly understand your charting signals, indicators, trading bots as well.

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