How to Scalp Crypto & the Best Crypto Scalping Strategies

Investors – novice armchair traders and seasoned veterans – are always looking to find some trading methods to turn a profit.

In today's market, it seems like it can be almost impossible since nearly every asset class is deep in red territory.

Over the years, traders who have been doing this a long time have started to notice patterns and movements.

For example, a common trend is that a bankrupt stock like Revlon or Hertz will collapse and then explode out of nowhere. For young or newer investors, they will typically and unfortunately buy close to the top and hope it goes to the moon. When this does not happen, they are stuck holding the bag and waiting for the next big run, which never materializes. However, a trader with more experience will generally jump in the trade and jump out before it hits the top.

During the pandemic, this was apparent throughout all the meme stocks, whether it was Wendy's or AMC.

But what about cryptocurrencies?

Winter has most certainly arrived for the crypto market. The main topic of discussion is if Bitcoin or Ethereum has reached a bottom.

It is unclear, but it does not mean you still cannot make profitable returns in a short period. In fact, one of the most reliable short-term trading strategies is scalping.

Let's explore what this is all about.

What is Scalping Crypto Exactly?

Scalp trading consists of taking profits from small upward price movements in short intervals.

While day traders and short-term investors can generate significant returns, scalp trading primarily consists of earning tiny profits to increase the balance in your brokerage account over time.

This is mainly done with stocks, but it can certainly be used for virtual tokens, as long as you have installed charting tools and performed your due diligence with technical analysis.

So, what is the best crypto scalping strategy anyway?

Best Crypto Scalping Trading Strategies

Here is a look at three common scalping trading strategies to employ:

1. Range Trading

Many day traders will utilize range trading for their cryptocurrency endeavours.

Investors will wait for a pre-determined price range to be established and begin to trade in this area. The belief is that the bottom of the range will support the trade until the range has been shattered.

So, let's say Cardano is trading in a range of 75 cents and 83 cents during a session; investors can function within this eight-cent window.

2. Bid-Ask Spread

The next strategy is the bid-ask spread.

In the financial markets, this represents the difference between the asking and bid prices.

But how does this work for crypto scalping trading? It all comes down to the wide and narrow bid-ask spreads:

Wide: The asking price is higher, and the bid price is noticeably lower than what is typical. It suggests that there are more buyers than sellers, allowing investors to swoop in and sell.

Narrow: The asking price is lower, and the bid price is higher than normal. Scalpers will take advantage of scalping to accelerate purchases.

3. Arbitrage

It is all about arbitrage in short-term crypto trading.

This is a clever and effective way of scalping Bitcoin gains.

Crypto arbitrage involves profiting from buying a digital currency from an exchange and selling it on a different exchange with a higher price, no matter how minuscule. This is achieved simultaneously and requires fast trading software and a speedy internet connection.

Arbitrage can only work in cryptocurrency since this is a highly volatile market, and each exchange sets its own prices.

Best Crypto Scalping Indicators

Now, it is not the luck of the draw and just buying and selling at random to be successful at scalping.

It is crucial to incorporate some of the best crypto scalping indicators in your overall strategy to ensure that you are using data, trends, and charts to scalp rather than buying and selling on a whim.

So, what are these indicators anyway? Here are some of the more popular measurements:

Moving Average Convergence Divergence(MACD) Indicator: MACD consists of following trends and identifying momentum to determine the relationship between the two moving averages of the asset's price. The MACD line is important since if it crosses from below to above the signal line, the indicator flashes bullish.

Relative Strength Index (RSI): The RSI is a popular measurement since it gauges the price momentum of an asset or security. The general premise of the relative strength index is to determine how quickly investors are bidding the price of the cryptocurrency up or down, using a scale of zero to 100.

Trading Volume: For short-term trading, it is crucial to have a heavy trading volume to ensure there is enough price action and movement. So, be sure to watch out for trading volumes when you are scalping Bitcoin, Litecoin, or FileCoin.

Is Scalping for Everyone?

Indeed, there is nothing inherently wrong with refraining from participating in scalping. Short-term trading can be risky and requires lots of quick-thinking decisions. Long-term trading is also terrific since you can avoid the headaches and pressure of short-term swings. Plus, there are other comparable techniques to deploy, like swing trading.

At the same time, if you are constantly monitoring one-minute charts and have a knack for identifying patterns and seeing noticeable price movements, scalping could be an excellent strategy for your crypto trading plans.

For many years, scalping had been used mainly for stocks and forex. But, thanks to the rise and prevalence of crypto, Bitcoin enthusiasts are using it, too. It might be time to add it to your arsenal of tricks.