Scalping strategy on the Binance crypto exchange
Scalping is not an invention of digital currency traders, this strategy appeared in the forex market a long time ago and showed itself quite well in work. But now it is most often used for trading in cryptov currencies. Its name fully reflects the essence: it is like removing the "scalp", getting superficial profit from a quick trade.
The scalping process consists of three stages: finding a suitable price range on the chart, tracking and confirming the readiness of large players to move in a certain direction, choosing the best value for the deal.
Scalping is a day-trading strategy. It does not involve deep analysis, there is simply no time for it, the timeframe can be limited to even 1 minute, after which the trade is closed and a new one is opened.
Traders, in order to find accurate signals of the dynamics of assets, can use the data of the trading cup, and some of them additionally track the behavior of the indicator Relative Strength Index RSI, support and resistance lines. But the assessment of the market situation is in any case very superficial.
It is believed that scalping works most effectively for bitcoin-altcoin pairs. At the same time it is important that the trading floor allows setting stop-losses. Binance has this option and only exchanges between currencies, so scalping strategy is popular on this crypt exchange.
The conditions of scalping profitability are the volatility of the crypt currency, speed of reaction and trader's experience. On weakly coins (about 1-2% per day) you will not be able to make much money with a strategy. It is optimal if their price fluctuates by 15-20% a day or the same 1-2%, but within a few minutes. At the same time, the volatility should not be excessive. It is believed that it is optimal to use scalping in the flat market, when there are fluctuations in prices, but no sharp jumps.
In this case, the profitability of trading can reach 10% to 50% and even 100%. In this case, scalping differs from other strategies by a large share of unsuccessful transactions. Depending on the trader's experience, from 60% to 70% of orders can be profitable. Profits from successful trades should also cover losses of unsuccessful ones.
Scalping is quite often advertised as the easiest way of trading that beginners can use. This is not the case. This strategy, with its apparent simplicity, suggests that the trader is well oriented on the digital market in general and on the cryptographic exchange, where he trades, in particular. On Binance platform, it may take up to one and a half years to exceed successful deals over losing ones.
What else do you need to know
Scalping with a small deposit doesn't make much sense. The profit from each transaction is not too big, it can be significant in the amount after closing a lot of short orders for some time. Positions need to be constantly increased, for this purpose there should be a considerable amount on the account, especially during the strategy training period, when most trades are likely to be unprofitable.
When scalping on a crypt exchange, it is important to take into account the platform's commission rate for transactions. Binance has one of the smallest commissions among such platforms and this is also one of the reasons why scalping is popular here. Still, a trader conducts dozens of transactions during one session and the total amount of even small fees translates into significant costs, which is also worth remembering.
When scalping is implemented, unprofitable transactions are inevitable. Some traders believe that it is necessary to average trading results, but they have a lot of opponents who consider it a harmful tactic. Since this is not only a short-term strategy, but also a high-frequency strategy, it is assumed that it is better to complete a bad deal and make a new one, paying more attention to assessing the situation.