The cryptocurrency craze has been flourishing for a while now and there is no sign of slowing down any time soon. Traders have eagerly welcomed cryptocurrency as a new asset to trade on, and various techniques have evolved on how to effectively trade cryptocurrency. One key differentiator among these trading techniques is the amount of risk involved while some traders want to go for long-term profits; some are looking for a quick profit with minimal risk. If you want to know how to trade cryptocurrency daily, read this quick guide on how to scalp cryptocurrency.
What is scalping?
Scalping is essentially a form of daily cryptocurrency trading with multiple trades over the course of a day. It is ideal for traders who want speedy profits without much risk involved. In order to know how to scalp crypto in the most effective manner, a trader must frequently follow updates on the cryptocurrency market and learn how to read crypto charts. The key here is to keep you alert to small changes and make quick decisions so as to capitalize on upswings in the cryptocurrency’s price. The advantage of scalping cryptocurrency is that prices move very quickly and thus it is possible to make consistent profits on a daily basis. However, all this requires a lot of sustained attention and market knowledge from the trader in order to make a sizeable profit.
Indicators for scalping crypto
Certain trading indicators can help you know when to buy or sell when you’ve just started learning how to scalp crypto.
- Relative Strength Index
This is a solid index for beginners to rely on as it acts as a quick guide on when to buy and sell. If the Relative Strength Index (RSI) is below 30, it is a good time for the trader to buy and if the RSI is more than 70, it is a good time to sell.
- Bollinger Bands
This is a technique developed by John Bollinger, and it uses two trading bands along with the moving average in order to illustrate the price volatility of a cryptocurrency. The expansion and contraction of the bands indicate whether prices are fluctuating or steady.
- Support and Resistance
This again makes use of two trading bands i.e. support is where demand is strong enough that the price won’t fall any further, and resistance is where selling is strong enough that prices won’t rise anymore.