Overview
Scalping is a very common day trading strategy for active traders who thrive in a fast-paced trading environment where they can make quick profits. While scalping caters to different types of traders, including beginners, it is an extremely risky strategy that is recommended for more experienced traders who know their way around the financial markets.
Scalp traders aim to earn profits from small price movements and in the cryptocurrency market where volatility is guaranteed, it provides the perfect trading opportunity.
Scalpers do not try to make significant profits with every trade, but they try making small profits repeatedly in short time frames throughout a single trading day, with the idea that small amounts will eventually add up.
Two of the most common tools used by crypto scalpers involve leverage and extremely tight stop-losses. Scalpers tend to use crypto trading platforms and exchanges that provide margin and spot trading to achieve their day trading objectives.
Scalping involves a shorter period and extremely quick decision-making paired with decent technical analysis and a range of charting tools, technical indicators, and more.
Scalpers rarely concern themselves with fundamental analysis unless they actively trade the news on a given day when volatility is directly caused by news events.
Bitcoin (BTC)
Bitcoin is the largest and most liquid coin in the cryptocurrency market, making it an ideal option for day trading and scalping trading strategies. When retail traders trade Bitcoin they speculate on price movements in the price of Bitcoin.
While cryptocurrency exchange trading platforms are typically used for this type of trading, more traders today are turning towards using derivatives to trade on the rising and falling Bitcoin prices, allowing them to make the most of Bitcoin’s inherent volatility.
Traders can use scalping strategies when they trade Bitcoin contracts for difference (CFDs) through a broker. In this way, traders can take advantage of price movements in either direction without owning physical Bitcoin, exempting traders from having to ensure that their coins are kept safe.
Ethereum (ETH)
Ethereum day trading and scalping have seen increased popularity amongst active traders and crypto investors because of its wider growth. Ethereum is the second-largest cryptocurrency in the world and the largest alternative coin.
Unlike Bitcoin, Ethereum was not initially created to serve as a store of value or a medium of exchange in the same way as Bitcoin. Instead, the aim behind Ether, ETH, is to pay when carrying out actions on the network when using blockchain technology.
Day trading is possible and profitable with Ethereum because of the liquidity that the coin sees. One of the best scalping strategies involves using crypto scalping bots and automated services because they do the heavy lifting in the crypto market.
However, one thing that day traders must be cautious of when they scalp ETH is momentum. Ethereum can pick up momentum extremely quickly and if traders do not react swiftly, they could lose a significant amount of capital.
Experienced traders are urged to ensure that they carry out thorough technical analysis to identify price jumps in the market so that they can time their entries/exits with ETH.
XRP (XRP)
XRP is a payment network that allows for the transfer of value at extremely low trading fees, with transaction validation happening within seconds. XRP aims to overtake competitors such as SWIFT and PayPal soon with its innovative and robust technology.
Because of the unique features that XRP provides to the digital world, the coin sees significant volatility and liquidity daily, making it a feasible option for short-term trading strategies.
XRP has high unpredictability in its price and this can present the perfect opportunity for price jumps and subsequent profits, especially for scalpers. With XRP, advanced traders tend to use a combination of fundamental analysis and technical analysis, because the price of XRP is influenced by news, price action, and technical factors.
XRP has a growing trading volume that can exceed hundreds of millions of dollars every trading day, which is why it is an extremely profitable hunting ground for intraday traders.
Various cryptocurrencies tend to shun banks, but XRP aims to embrace banks, which bodes well for experienced traders. It shows that XRP’s long-term value will increase, which means that there will be more trading opportunities.
ZCash (ZEC)
ZCash is an open-source and permissionless cryptocurrency that offers complete privacy and anonymity to users. This is achieved by encrypting all information through zero-knowledge cryptography. ZCash is one of the best options for day trading and scalping because of its extremely high volatility, liquidity, and demand.
This relates directly to the fact that ZCash is considered a completely private cryptocurrency. While there is a significant amount of controversy surrounding ZCash, especially considering that it can be used for criminal activity due to its lack of traceability, it is one of the top alternative coins in the market.
Litecoin (LTC)
Litecoin is an extremely popular cryptocurrency being traded by day traders because of its high trading volume, liquidity, and significant price swings that LTC can experience in a single trading day.
Litecoin is an open-source project that promotes peer-to-peer crypto transactions. Litecoin is often referred to as a little brother to Bitcoin, or the silver to Bitcoin’s gold.
Litecoin can be used as a medium of exchange because of its instant payments which are truly borderless, with lowered transaction costs. When day trading Litecoin, traders must ensure that they use price charts as well as volume graphs, providing traders with the ability to predict price jumps.
Litecoin typically trades within a tight price range, and this means that Litecoin can have attractive follow-through after this range is broken. For the most profitable trading opportunities, advanced traders can try to align patterns on their daily candlestick chart in combination with intraday time frames.
Tether (USDT)
Tether is a stablecoin that is pegged to the United States Dollar in a 1:1 ratio. It is considered one of the best cryptocurrencies and it has one of the largest trading volumes in the crypto space, especially when considering its 24-hour trading volumes.
This makes USDT a critical component in the day trader and scalper’s arsenal to make quick profits. While there is a firm belief that the price on USDT should not fall below $1 or rise above it, it can happen, and this makes it perfect for day traders without exposing them to a significant amount of volatility risk.
Stellar (XMR)
Highly volatile market conditions are ideal for scalpers who want to earn quick profits from rapidly changing prices. Stellar provides scalpers the perfect opportunity to do just this. Stellar has historical times of extreme volatility with abrupt price swings that feature pikes followed by slides in the price.
Binance Coin (BNB)
Binance Coin is one of the largest cryptocurrencies according to market capitalization, with Binance as one of the largest and most reputable exchanges in the world.
Due to its popularity, BNB experiences extremely high trading volumes, volatility, and liquidity making it one of the best options for scalpers to earn quick profits.
Advanced traders also choose BNB because there is a growing demand for cryptocurrency, which means that there are a plethora of trading opportunities in the crypto market with this coin.
Tron (TRX)
Tron has become an extremely popular cryptocurrency project because of its latest developments. This factor in combination with its high volatility makes it one of the most favourable coins for day trading.
Tron was designed to be a borderless open-source and decentralized project, offering rewards when content is exchanged. Because of the platform’s high value, TRX is growing quickly in the crypto space.
EOS (EOS)
EOS is another viable option for day traders, especially professional traders because its price has peaked several times in the past. This shines a strong light on a high level of volatility which allows scalpers to make quick profits using short time frames as opposed to using range trading strategies.
EOS is increasing in popularity as a cryptocurrency project, which means that its native token is seeing increased trading volumes.
FAQ
What is scalping in cryptocurrency?
Scalping refers to a trading style that is used by high-frequency and active traders who enter and exit trades in a short timeframe, allowing them to make small profits quickly over several trading sessions on a trading day.
How do I set up a crypto scalping strategy?
You need to choose the right crypto trading pair, find a suitable trading platform and exchange, consider crypto scalping bots, ensure that you understand the trading fees, and use a solid trading plan to ensure that you can earn profits while protecting your capital in volatile market conditions.
What are the best crypto scalping signals?
Some of the best scalping signals include HIRN Crypto, CQS Premium, and Blockchain Sparrows, which are all supported by Binance.
Which are the best cryptocurrencies for scalping?
Several cryptocurrencies offer day traders of all experience levels viable opportunities but those mentioned on this list are some of the best that provide the necessary liquidity, volatility, and several other components that allow traders the chance to make profitable trades.
Is crypto scalping illegal?
No, it is not illegal. However, not all cryptocurrency exchanges or platforms allow a crypto trader to use scalping and any other day trading style according to their preferences.
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Louis Schoeman
Featured SA Shares Writer and Forex Analyst.
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