Scalping trading (or shortly “scalping”) is a tricky strategy. It does not promise traders instant huge profits, it gives quite the opposite. Scalping relies on minor fluctuations in asset prices over a short period of time, like one day. An investor will receive a small profit, but these payments will be frequent, and thus a decent amount can be earned.
The essence of this strategy is quite simple — the more often asset prices change, the more often a trader will make a profit. And which market is characterized by high volatility? That’s right, the cryptocurrency one.
How to “scalp” crypto?
For crypto traders, strategies of the “here and now” format are often important, because it is not easy to guess numbers in such a volatile market (remember the famous Bitcoin crash in March 2020?). It seems that scalping trading was literally created to work with crypto.
Cryptocurrency scalping is divided into 2 types — manual and automated. With manual scalping, a trader needs to independently monitor the state of the market and asap respond to all changes. New positions are usually opened every 5–10 minutes.
Automated scalping trading completely relies on specially designed programs. It’s freeing traders from being constantly tied to a crypto exchange. The exclusion of the human factor from the trading system also reduces risks.
Sometimes the scalping strategy is called intuitive. And, indeed, often in such a fast game, when there is only a couple of minutes to make an investment decision, a trader has to listen to his intuition. But in order not to turn scalping into a session of extrasensory perception, the investor must still have:
- experience in crypto trading;
- knowledge about the crypto market and understanding of the principles of its functioning;
- analytical skills;
- the ability to build both short-term and long-term trading strategies;
- the ability to think and act quickly;
- the ability to keep emotions under control.
Coins for scalping trading
Usually scalpers do not trade the same coins for a long time. The reason for this is the market volatility and the constant change in price priorities. Moreover, it is not so important whether the coin is growing or falling in price — the main thing is that it does not stand still. One of the first truths that a young scalper learns quickly is “no movement — no trade.” That is why it is so important to wisely choose cryptocurrency assets for a more profitable work.
SimpleSwap has made a list of coins that might be suitable for the scalping trading strategy. However, don’t forget to do your own research before making any decisions.
- Shiba Inu (SHIB)
The meme token, which appeared in 2020 as an alternative to Dogecoin. It is working on the Ethereum blockchain according to the ERC-20 standard, does not support any smart contracts and is not backed by fiat or digital assets.
- Dogecoin (DOGE)
Another dog token that was born in 2013. SHIB’s main competitor today. DOGE belongs to the Litecoin blockchain and runs on Proof-of-Work algorithm.
- Polygon (MATIC)
The main coin of the Polygon network is the fork of the Ethereum network. Polygon solved some of the problems with the scalability of Ethereum. It works on Proof-of-Stake algorithm.
- STEPN (GMT)
This is the native token of the STEPN NFT game on the Solana blockchain. This SocialFi project rewards users for the kilometers they have walked or run. In STEPN, players need to purchase a GMT NFT token and complete various game tasks.
- Balancer (BAL)
Another coin of the ERC-20 standard based on the Ethereum network. This is the governance token of the Balancer decentralized exchange launched in 2020. BAL allows users to vote for changes of the exchange protocol. The work of Balancer is regulated by smart contracts.
- Polkadot (DOT)
The Polkadot project positions itself as a new generation blockchain protocol, the so-called “segmented blockchain”. It allows you to combine several different blockchains, creating easy-to-interact bridges and expanding the possibilities of crypto exchange.
- Unifi Protocol DAO (UNFI)
Native token of the Unifi Protocol smart contract platform. It operates on the Ethereum blockchain. Unifi Protocol helps developers create DeFi projects on various networks.
Risks of cryptocurrency scalping
Here are some key risks to consider when engaging in cryptocurrency scalping:
- Volatility. Sudden price movements can result in losses if trades aren’t executed swiftly or if market conditions change rapidly.
- Transaction Costs. Cryptocurrency exchanges typically charge fees for each trade executed.
- Emotional Stress. Cryptocurrency scalping requires constant monitoring of price movements and making quick decisions.
- Regulatory Uncertainty. The regulatory landscape for cryptocurrencies is still evolving in many jurisdictions.
The scalping trading strategy has been extremely successful in the Crypto World. Usually this is an ultra-precise entry into a short-term trade with minimal risks and great potential. During the day, the scalper manages to make a huge number of transactions, and the less time he holds assets, the less he risks and the less he earns. With this strategy you constantly have to keep your finger on the pulse. So before entering this strategy, you should evaluate your strengths and capabilities in order to stay safe.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Overbought & Oversold: Signals for Crypto Traders” and “Top 5 Crypto Trading Strategies”.
The easiest way to buy, sell or exchange coins is to use SimpleSwap services.
SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.