Among intraday trading strategies, scalping stands out separately. This method of earning is not only distinguished by a unique approach to trading, but is also known for its scrupulousness.
Be that as it may, some traders use this strategy as the main one, while others use it as an addition to the finished system. What is interesting about this tactic? And is scalping suitable for beginners?
Characteristics of the scalping strategy
The term of this trading strategy implies the opening of a large number of small transactions in a short time period during the day. An experienced trader can close dozens and even hundreds of trades in one trading session. In this case, the profit from scalping on the exchange is only a few points for each closed position.
Thus, scalping is a trading strategy where the scalper’s income is formed not by the quality of one transaction, but by their quantity. The main tools of a trader using this style of trading are the order book, the tape of transactions, a small timeframe – a minute or 5 minutes, as well as a tick chart. These tools are also applicable for bitcoin scalping.
Categories of traders who are engaged in scalping
It has already been mentioned in passing about the different options for using this technique. Conditionally, those who are engaged in scalping can be divided into three categories:
- Newcomers. Novice traders may resort to this strategy unknowingly by closing trades as soon as they are opened. The main driving factor in this case is the fear of a large loss or loss of profits that have appeared.
- Medium and long term traders. These players use scalping rather to warm up and practice trading skills, allocating a small percentage of the deposit for this.
- Professional scalpers. Such traders treat the scalping strategy as the main way of earning and use it to trade stocks, currencies, futures.
In the latter case, the main focus is on finding high liquidity with a minimum spread. This will allow you to instantly close the deal at any time, which is of great importance in automatic scalping.
What should be considered when doing scalping?
During the study of scalping, training should not be neglected in any case. Before moving on to real trading, you need to practice a lot on a virtual deposit. The level of a trader’s income also depends on correctly placed stop loss and take profit orders, the size of the expected profit and, of course, the size of the deposit.
We must not forget that scalping on cryptocurrency or any other asset is a risky strategy itself, requiring full involvement and focus.