If you are a trader, you can make a lot from coins with high liquidity with a 5 minute scalping strategy.
What is crypto scalping?
Scalping is a style of crypto trading for adrenaline junkies. If you always find yourself staring at 1-minute charts or getting in and out of traders faster than an investor can open an earnings report, scalping might just be your godsent trading tragedy.
When you are a scalp trader, you aim to harvest your profits from small price moves. Your goal won’t be to make a profit on every trade you make but to accumulate small profits over and over again. When done properly, crypto scalping helps in growing trading accounts over time.
How does it work?
Crypto scalping is heavily based on technical trading analysis. Anyone who wants to go down this rod needs to learn at least the basics. The scalper will use both charts and big release news to make profits within a short timeframe.
The goal isn’t to hold on to an investment at all, but to simply capitalize on the growing trading volume to exit with a small gain. When you do this many times for a trading day, you will end up making significant profits.
A lot of crypto scalpers will use a 5-second chart of their trades to buy in and sell quickly. A trader can make about 100 deals during a trading day if they are quite active. But, obviously, trading this way demands tons of fees. So it is necessary to make sure the trades are profitable before you enter them. Generally, scalpers need more robust planning and stronger discipline than regular crypto traders.
Crypto scalping strategies
Now, let’s get to the “how”. The first strategy is range trading, which involves monitoring the price movement between the high and low levels within a certain period. The bottom and top of the range serve as the support and resistance, respectively, until the range is broken. That means traders will aim to buy when things are in the support stage and sell when there is resistance.
The more frequently the price touches either level, the more likely the level will eventually be broken. This scalping crypto strategy can therefore work well for traders using a 5-minute timeframe, though a stop-loss will be essential for when a breakout occurs.
Secondly, we have the bid-ask spread strategy. For some scalpers, it is all about aiming to exploit the bid-ask spread—the difference between the bid and ask prices. Scalpers can make money from any considerable difference between the two.
There are two instances where the bid-ask spread occurs in scalp trading. First off, a wide bid-ask spread is when the asking price is higher and the bid price is lower than usual. This tends to happen when there are more buyers than sellers, causing the price to rise. Crypto scalpers will therefore be selling at this point.
Scalp traders hold on to their assets for an even shorter period compared to crypto day traders. Day traders might make a couple of deals per day, but a scalper will make many trades in quick successions.
The 5 minute scalping strategy is you doing the same thing but within a 5 minute cycle. This way, you are less likely to get caught in the web of coins dipping on you.
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