When looking for ways of making a buck, many start thinking of doing business, others believe that trading is the way to go. If trading is the path you have chosen, then there are many nuances that have to be taken into account, such as which strategy to apply.
Scalping is one of the many strategies applied by traders. It has its pros and cons, its limitations and its highlights. One thing that should be taken into account is that scalping is by far one of the most popular strategies in crypto trading.
1 How Does That Work?
Bluntly put, scalping is a trading strategy aimed at profiting from minor changes in an asset’s price. The trade involves placing hundred trades in intraday trade with hopes that small asset price movements are easier to catch than large ones. The verb “to scalp” itself means to take off the top surface of something, to reap the skimming, in this case – the small profits. The traders who implement this strategy are known as scalpers.
Technically put, scalping is high frequency and high speed trading done manually or through the use of automated bots, such as MoonBot. When scalping, traders open and close position very often with a frequency of 1 to 15 minutes. Each transaction ideally brings a small profit, which in sum, turn small profits from each transaction into tangible amounts after a few hours.
The very foundation of scalping is market volatility. It is pointless to trade a stable asset with a scalping strategy, since it will simply not have sufficient price movements at the necessary speed to have any effect for the benefit of the trader. The crypto market is ideal for scalping with its high volatility for a large number of coins.
If an asset fluctuates poorly within a 1-2% range per day, the scalper will not will be able to earn much. Successful transactions will bring pennies that are not worth the effort. Some cryptocurrencies fluctuate 15-20%, or even 30% within a day, and even 1-2% within a few minutes. 1-2% in total brings good profit if the scalper sells at least $100 worth of an asset.
The average scalper usually gets about 25-30% per day by following the basic rules of trading. More experienced traders can make up to 60% per day. There are even exceptions who manage to make 80-100% a day on some coins in times of pumps.
2 Yays And Nays
Like any strategy, scalping has its advantages and shortcomings. If we look at the advantages, we can single out the potential of relatively high income on a small amount of initial investment.
The second main advantage is that scalping is a very short-term strategy that does not involve too much thinking, plotting and planning. MoonBot allows its users to scalp automatically while going about their business. This is an excellent opportunity for making passive income.
After practicing on scalping, new users trade much more efficiently using other strategies. The main thing here for beginners is not to scalp with substantial amounts. Part of the money is guaranteed to be lost anyway before anyone masters the ropes and starts making profits.
The third greatest advantage is that scalping is very easy to catch up on. It does not require too much in-depth knowledge of trading or the market. It is great practice for any novice trader, as in the first weeks of trading, any newcomer will still not be able to understand all the tools of a trading interface and use them in full.
There are disadvantages as well. The greatest disadvantage is the high risk of losing money. On the cryptocurrency market, the volatility factor reigns supreme and is therefore the greatest risk. The higher the volatility – the higher the risk of loss. If an asset fluctuates strongly and unpredictably, the losses can be prohibitively high and the profits will never cover them with interest.
Time is the second greatest disadvantage, since the strategy inherently requires a lot of it to be of any worth. Traders can spend all day making small profits that would otherwise have been made with one big trade in a matter of minutes. Cryptocurrency exchanges do not work as smoothly as the largest traditional ones, so lags in a split second still occur. Scalping means that every second matters.
Technical support on many exchanges sucks, meaning that any problem will be solved in a matter of days, or hours if the user is lucky. The software on many exchanges is poorly made, meaning that the lags will not let a trader scalp efficiently.
MoonBot has negated the risk of technical failure by implementing the MoonScalper add-on for manual and professional trading. MoonScalper gives an advantage due to the increased informational content on the trading charts.
MoonScalper provides faster drawing of deals and changes in the orderbook, shows vertical and horizontal volumes, graphical drawing tools for graphs, measures volumes of purchases and sales over a period of time, and allows for simultaneous placement of several orders on one coin.
3 The Approaches
There are two main approaches to scalping called Piping and the Classical approach. Both have their nuances that have to be taken into account.
The “pips” are units of measurement of an asset’s price fluctuation, hence the name Piping. The piping strategy is considered to be the most high-speed and high-frequency method of scalping. Pipsers, or the traders who work using this strategy, work within 5 minute intervals. More often, they work within 2-3 minute intervals. This interval allows for manual trade, but is taxing on the human physiology.
The traders who do it manually almost do not analyze what they are doing, because the number of errors they make is very high within the framework of the profit they receive. Piping is considered one of the most risky techniques, but beginners often start with it, because it requires almost no knowledge of trading.
2 The classical methodology
The classical methodology, on the other hand, is a technique used by more experienced and cautious traders. While working with the classical approach, the trader assesses the supply and demand lines, looks for trading figures on charts and uses one or two indicators to receive signals about profitable entry points. The strategy requires at least marginal knowledge of technical analysis. The indicators in the scalping approach signal minimum price jumps, which are meaningless for traders who hold positions.
On average, traders working according to this method open positions approximately once every 6-12 minutes. Experienced traders have very good knowledge of trading instruments, the ability to control themselves, the ability to grasp the full picture of the market and make superficial forecasts in a split second. All this ensures the success of scalping even with moderate asset volatility and fairly high commissions.
4 Pump It Up
Pumps are a well-known phenomenon on the crypto market. This is when a coin’s price is being artificially inflated by various information sources. In essence, a pump is the creation of artificial demand for an asset through its mass purchase by a limited group of people (known as pump-groups) for the purpose of subsequent sale at a higher rate to the hamsters.
Pumps usually take place with new and very hyped coins. The hype factor is the key, since it is the news background that creates demand within the users’ psyche. As soon as all the investors’ funds have been invested in the purchase of the asset to be pumped, the next phase of the pump begins through active advertising. Most news about the asset is launched well in advance, so that when the growth begins, the traders can find confirmation of the reasons for the growth. Naturally, this is fake information.
Pump participants actively stir up interest in the coin, advertise it in chat rooms on the exchanges, prophesy a great future and explosive growth for the asset, post fake news about it on specialized forums, websites, in chat rooms, and artificially put up huge amounts of orders for purchases on the exchanges. In general, they are doing everything possible to provoke interest among potential investors, who must believe in the future growth of the asset.
At this stage, the value of the asset usually grows significantly and it is important for the participants of the pump-group not to lose the peak moment of market entry and sale. During the peak, the price of the pumped asset may increase by up 10–30 times or 50–100%.
It is extremely difficult for any single trader to pump a coin alone. The trader must have immense disposable resources for such an action and the risk may well not be worth it. As such, most of the time, traders gang up into a pump-group and organize their actions to reap profits. The lone wolf approach is suitable only for the sharks of the cryptocurrency world who can afford to pour a few tens or even hundreds of thousands of dollars into the desired coin. According to experts, the minimum entry threshold for a single pumping of non-top cryptocurrencies is from 15 thousand dollars.
5 Doing It Right
There have been hundreds of examples of pumps on the crypto market and MoonBot has taken into account the desire of crypto market participants to make use of the scheme. As such, MoonBot has implemented an excellent set of functions for participation in pumps.
The terminal allows for several methods of participation in pumps. The manual methods requires the user to enter the name of the coin to be pumped after receiving a signal in the Telegram channel. The automatic method involves reading messages in the Telegram channel and buying a coin with preferable involvement of the trader. And there is the automatic pump detection mechanism using the PumpDetection strategy that involves opening a transaction automatically or manually.
Whichever way the user decides to go, the effect is the same as the MoonBot scoops up information from the market and detects upcoming pumps, thus allowing its users to participate in profit making.
Still, anyone who wishes to participate in the pump scheme should pay attention to the situation on different exchanges, watch the graphs, follow the chat rooms and contact the MoonBot community of traders for help. None of these precautions negate the use of personal intuition and knowledge when engaging in high-risk trading.
Over 4000 traders have already joined MoonBot in the pump scheme and have entered the Top-20 most influential traders of Binance. You should become one too.
The MoonBot token of sale is taking place already and everyone can support the project and help it develop further. The goal of the MoonBot team is to raise only $400,000 during the round for the release of a new and advanced product – MoonTrader.
The new product will allow traders to have more opportunities in trading. Beginners who are still taking their first steps will also benefit from MoonTrader, as it will incorporate a very user-friendly interface with highly advanced functions.
6 Coming Up Next
Now that you know all about scalping, do not miss your chance to take advantage of this simple and yet profitable strategy. MoonBot was built with scalping and pumps in mind, so take a ride down the MoonBot terminal and try it out.
Who knows? Maybe you will end up on Binance’s Top-20 list in no time. But if you want to participate in the pumps, then it is better to use MoonBot for analysis and evaluate the risks. After all, pumps involve big risks and we advise you to think well before engaging in them.