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<p>Although scalping may mean fast profits that compound in the long run, it’s perilous and discouraged for new market entrants.</p><p>‍</p><p>Many trading  strategies are available for the traders in the market. A few noted ones  are quite popular with the trading community; this includes <a href="https://www.investopedia.com/articles/trading/05/011705.asp" rel="noopener noreferrer nofollow">day trading</a>, <a href="https://www.investopedia.com/terms/p/positiontrader.asp" rel="noopener noreferrer nofollow">position trading</a>, <a href="https://www.bsc.news/post/trading-toolkit-swing-trading-explained" rel="noopener noreferrer nofollow">swing trading</a>, and <a href="https://www.investopedia.com/articles/trading/05/scalping.asp" rel="noopener noreferrer nofollow">scalping</a>.  Although different traders employ these different strategies, the goal  here is to achieve profit at the end of the trading activities. Unlike  the other listed methods, scalping is meant only for the sophisticated,  knowledgeable trader who can maintain the trading volatility without  being under any pressure.</p><p></p><h2 id="header-0"><strong>What is Scalping?</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/b52a0234dbb0437fa702711a5e0483e5.png" /></p><p>If  living the fast life is for you, you’re fluid and flexible and can take  decisions on your feet; then you should consider taking on the scalping  trading method. <a href="https://www.investopedia.com/articles/trading/05/scalping.asp" rel="noopener noreferrer nofollow">Scalping</a> is a trading activity that involves trading within a shorter time frame  compared to other trading patterns. In scalping, traders trade <a href="https://www.investopedia.com/terms/i/intraday.asp" rel="noopener noreferrer nofollow">intra-day</a>,  i.e., trade setup is achieved within few minutes, 5 mins, 10mins, 1  hour (the highest time frame for scalping). Entry and exits are  dependent firmly on Technical Analysis - a type of market chart analysis  that uses price action, candlestick patterns, trading volume, and a  combination of various trading indicators.</p><p>Because of its concise time frame, scalpers rarely rely upon <a href="https://www.investopedia.com/terms/f/fundamentalanalysis.asp" rel="noopener noreferrer nofollow">Fundamental Analysi</a>s  - trading analysis that deals with fundamentals of a project, news, or  rumors. The News is the only type of Fundamental Analysis scalpers can  use as it provides high volatility and volume in the market.</p><h2 id="header-1"><strong>Scalping Execution</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/8a531d735b0f42ac88926e4a19765781.png" /></p><p>Scalpers  don’t hold for the long term; the goal is to hold for the shortest time  possible to maximize profits quickly. Taking advantage of smaller  profits allows for consistent compounding, which is the safest route  possible for the scalper. Although scalping generally depends on the  lower timeframes, scalpers take advantage of the volatility in the  extensive trading timeframe. Scalpers zoom out to check for market  trends and direction and then zoom in to pick their entry and exit  points.</p><h2 id="header-2"><strong>Leverage</strong></h2><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/b8227fdabe764097b23254f0d62a9eee.png" /></p><p>Because  the price movement is relatively small, which could mean smaller  profits than other trading types, scalping involves leveraging to boost  profit. This method is usually associated with <a href="https://money.usnews.com/investing/investing-101/articles/futures-trading-basics-everything-you-need-to-know-about-futures" rel="noopener noreferrer nofollow">Futures</a> and <a href="https://www.businessinsider.com/what-is-margin-trading-how-it-works?op&#61;1" rel="noopener noreferrer nofollow">Margin</a> trading. However, it should be noted that although leverage could mean  huge profit when trades go in favor of the scalper, it could mean  significant loss when the trade goes against his setup. For example, if a  scalper picks a position with a 100X leverage, he makes 100X in profit  if the trade goes his way and invariably losses 100X  if it goes the  other way.</p><h2 id="header-3"><strong>Risk Management</strong></h2><p>Because  scalping involves swift movements, risk management is the paramount  principle for a successful scalping system. This trading method isn’t  for newbies in trading or for the indisciplined as blowing your account  is highly likely with this trading method. Stop-losses are an integral  part of scalp trading. Setting stop-loss below the support region of the  trade setup when going long(buy) and above the resistance region when  going short(sell) acts as a protection against sharp losses due to  resulting <a href="https://tradingstrategyguides.com/best-breakout-trading-strategy/" rel="noopener noreferrer nofollow">breakout</a>s.</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/8378d6b6848b4711aa00191be1edbda2.png" /></p><p>Correct  position sizing is another crucial skill adopted by successful  scalpers. Risking appropriately, minding your position size, and placing  a stop loss will guarantee your continued trading existence in the long  term. Picking a position that fits your capital allocation is a skill  necessary in scalping else; you’re not far away from a liquidation  email.</p><h2 id="header-4"><strong>Significance of Scalping</strong></h2><p>When  a scalper successfully employs trading indicators, engages the right  discipline, and approaches scalping professionally, they can be rewarded  by making small gains pretty fast. This quickly compounds and resulting  in very significant gains. In a <a href="https://news.tradimo.com/glossary/ranging-market/" rel="noopener noreferrer nofollow">ranging market</a>,  a type of market that almost looks like there is no significant price  movement - scalping activities could mean immense profit when correct  leverages are applied. Scalping is not done by a human only; in these  days of high volatility and advanced tools (bots and algorithmic  trading) are becoming common in the market. For the human side of scalp  trading, there exist two kinds of scalpers that define the scalping  method, the discretionary and systemic scalpers.</p><p>‍</p><h2 id="header-5"><strong>Discretionary and Systemic Scalping Strategy</strong></h2><p>Discretionary  scalpers make trading decisions on the spot; he depends on his  intuition or gut feelings, many times, fueled by news or market  sentiments. For example, if X coin has achieved its ATH (All-Time High)  and Y coin seems to be ranging, he takes on a position in Y coin,  waiting for a breakout of price. The discretionary scalpers do not have a  strict set of rules before taking on positions.</p><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/01d26d6ad5fb464096fd14638d3a3a99.png" /></p><p>For  a Systemic scalper, there are rigid rules he must follow. He is  data-driven and uses a combination of tools to pick his position. Unlike  discretionary traders, he doesn’t depend on his gut feelings or  intuitions. He uses indicators that are common with scalping events.</p><h2 id="header-6"><strong>Indicators used</strong></h2><p>A combination of different trading indicators could improve on a high success point of a scalping trade.</p><ul><li><strong>Relative Strenght Index</strong> (RSI): is the most famous tool used. It indicates an oversold and  overbought position of trade. When a market is above 70 RSI, it is said  to be Overbought; below 30 is the Oversold region.</li><li><strong>Support and Resistance</strong>:  The first step for a technical analyst is to plot the Support and  Resistance zones of a trade setup. The zones indicate a region where the  market is likely to change its direction. The Support zones are usually  above the current market price while Resistance is above.</li><li><strong>Moving Averages</strong>: Typical Moving Averages like the <a href="https://www.babypips.com/learn/forex/simple-moving-averages" rel="noopener noreferrer nofollow">Small Moving Average</a> and the <a href="https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical-indicator-guide/ema" rel="noopener noreferrer nofollow">Exponential Moving Average</a> show the market trend. It indicates a bull, ranging or a bear market, from which scalpers can pick their positions.</li></ul><p><img src="https://academy-public.coinmarketcap.com/optimized-uploads/ca6902ba74e64f59a9bcbdb227acff68.png" /></p><p>Other trading tools like the Elliot waves, Finobaccci, and Bolinger tools are also adopted for a successful scalping activity.<em> Is this type of scalping style suitable for me</em>? A vital question anyone considering scalping should ask.</p><h2 id="header-7"><strong>Should You Consider Scalping Trading</strong></h2><p>Absolutely  No! If you’re a newbie, reconsider other trading strategies,  particularly one that deals with a more extensive timeframe, like  position and swing trading. Reasoning? As a newbie trader, the tendency  for allowing your emotion to come in the way is relatively high as  things happen fast in real-time.</p><p>As an experienced trader with  expertise, you should develop proper risk management, spare funds (money  you can afford to lose comfortably), and disciplined position size.</p><h2 id="header-8"><strong>In Closing</strong></h2><p>Although  scalping may mean fast profits that compound in the long run, it’s  perilous and discouraged for new market entrants. Those who can’t think  on their feet or are easily irritated are not too fit for this type of  trading. You shouldn’t consider the gains first but instead, the  potential risk involved.</p><p>A gained $200 is better than a lost  $2000. Therefore, this trading strategy is meant for experienced traders  with enough spare funds to trade. As a newbie, for your peace of mind,  go for longer trade setups.</p><p></p><p>Find more educational content on <a href="https://www.bsc.news/" rel="noopener noreferrer nofollow">bsc.news</a></p>

Trading Toolkits: Scalping Explained

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