The Most Effective Guide to Scalping Crypto Trading in 2022

The scalping strategy in crypto trading is something that many traders in the cryptocurrency market are interested in. However, not everyone knows how to choose the right coin for scalping, how to trade effectively, or which strategies to apply for the best results. If you have similar questions or concerns, then this guide to scalping crypto is just for you!

1. WHAT IS CRYPTO SCALPING?

Crypto scalping is a trading strategy used by traders following scalping trading principles, where they aim to make profits from short- to medium-term price fluctuations. Scalping is an effective trading strategy in trending markets, including forex, stocks, and cryptocurrencies.

The idea behind crypto scalping is to capitalize on price waves occurring within short timeframes. This method is suitable for traders who don’t have hours to spend in front of the screen analyzing charts but still want to take advantage of quick market movements.

1.1. Differences between day trading and crypto scalping

And many coin traders also confuse the two strategies of trading coin Day Trading and trading coin surfing. So what are the similarities and differences between them? The similarity between Day Trading and scalping is that both of these coin trading strategies involve short-term transactions.

The biggest difference that can be easily seen from the intraday coin trading strategy is that opening and closing positions to buy coins and sell coins during the day, the time to hold that coin may also be very short. Meanwhile, scalping mainly focuses on capturing the price waves of trends and does not necessarily close positions at the end of the day.

1.2. How to choose coins for scalping

To scalp crypto effectively, you must know how to select the right coins. Since the crypto market is highly volatile, choosing the right assets is crucial for successful scalping.

According to data from CoinMarketCap and CoinGecko, there are nearly 10,000 tradable cryptocurrencies in the market. So, how do you filter and pick the best ones for scalping? Are there scalping tips and strategies you can follow?

Here are some key criteria for choosing scalping coins:

• Check trading volume: The coin should have a medium to high trading volume to ensure sufficient liquidity for smooth transactions. You can check this using CoinMarketCap or CoinGecko, which also allow you to rank coins by 24-hour trading volume.

• High volatility: Since scalping relies on capturing large price waves, the coin should have high price fluctuations to maximize profit potential.
• Media coverage: While this may seem unrelated to scalping, news coverage significantly impacts price movements. Being aware of major news events about a coin can help you react quickly to market changes.

2. 3 TIPS GUIDE TO TRADING COIN EFFECTIVELY

If you’re new to crypto trading or haven’t been in the market for long, you’ll definitely benefit from some scalping tips and strategies. Here are three simple yet powerful tips to improve your crypto scalping skills:

2.1. Choose the right Coins

As mentioned in the section on how to choose coins to trade above, choosing some coins among the nearly 10,000 coins currently on the market to buy coins is not an easy thing. And investing in coins has never been easy. In addition to the above criteria, you can also consider choosing coins with large market capitalization such as BTC or ETH.

However, it’s important to note that these high-market-cap coins also come with extreme volatility, which can increase the risks of scalping. Additionally, always keep an eye on Bitcoin-related news, as BTC dominates over 50% of the crypto market, meaning any significant movement in BTC can heavily impact other coins.

2.2. Choose the right Crypto Exchange

Choosing the right potential coin, the next thing you need to do is find a safe and reliable coin trading floor. If you are new, you will need to choose a coin trading platform according to criteria such as security policy, daily trading volume (this is also to ensure liquidity for your coin trading strategy) and the transaction costs you have to pay.

2.3. Timing your trades correctly

The cryptocurrency market fluctuates unpredictably and seems unpredictable, so choosing the time to trade virtual currencies needs to be really careful and cautious. Prices may increase sharply at the present time, but no one can guarantee whether that upward momentum will last or not. However, thanks to this, coin traders can take advantage to capture coin investment opportunities with short-term movements.

And most importantly, you must use a stop-loss order. Since prices fluctuate constantly, traders can hardly control all these movements. A stop loss is meant to protect your account balance, and you should only set it at a price level where you can tolerate the loss—never exceed a level that would significantly impact you.

3. RISKS OF SCALPING CRYPTO TRADING

Aside from the advantages that scalping crypto trading offers, this strategy also comes with numerous risks that traders must be aware of before applying it to their actual trades.

• Overnight Volatility: Unlike intraday trading strategies, scalping does not require you to close positions at the end of the day. While forex operates 24/5, the crypto market runs 24/7. The cryptocurrency market tends to be highly active and can experience unexpected fluctuations while you’re asleep. Therefore, if you plan to hold your crypto positions overnight, consider reducing your trade volume and using a stop-loss order.

• Higher Transaction Costs: Scalping crypto trading requires executing more trades compared to long-term strategies. Naturally, each of these trades incurs transaction fees charged by the exchange.
• Time-Consuming: Due to high volatility and the nature of scalping, where traders do not close positions at the end of the day, they must continuously monitor and analyze market fluctuations to react in a timely manner.

4. CONCLUSION

Highlighting the risks of scalping crypto trading in this article aims to help traders better understand the strategy and adopt a more effective approach. If scalping carried too many risks without yielding profits, would experienced traders still widely use this strategy?