Economy
Why Scalping is the go-to Trading Strategy for Cryptos
If you’re familiar with forex dealing, you’ve also come across the word scalping. It is also known as scalp dealing. It’s a trading technique in which customers benefit from minor fluctuations in futures markets.
Functional analysis, such as the MACD, and candlestick tables, are primarily used in its implementation. This is now standard procedure for cryptocurrency traders.
The aim of this approach is to make money fast, but the issue that keeps coming up is how it works for cryptocurrencies like Bitcoin. We’ll go into the specifics of how crypto scalping operates and how you can use it to your benefit as a crypto trader.
How does scalping work?
Scalping has traditionally been shown to be a low-cost, short-term trading tactic that yields lower gains with less risk. Traders who use this technique do so by making a series of small trades easily. And as the trading day progresses, these small trades will add up to a significant amount of benefit, as in this minute scalping technique, where a trader must bring in all of his paces and focus for these small trades to come in, and this is why most veteran traders use electronic trading systems, which are built to assist traders in identifying and executing trades based on data obtained from various sources.
Traders that use this technique for cryptocurrencies can keep an eye on the values of a crypto pair, such as ETH/BTC or BTC/USD, and take advantage of market fluctuations to benefit from each small transaction. When rates rise, investors benefit from higher market volume because it adds value.
This helps you to open and close trades easily without having to keep them for an extended period of time. And as soon as the market reaches your target price, sell signs will appear, closing your positions for you while you walk away with a slight profit.
However, for the beginner on the market, it is more beneficial to use the 1-minute scalping strategy, which can be a little bit different from what the experienced traders are using. The method would still necessitate time and focus effort. If you are unable to devote at least a few hours per day to this FX approach, you should try using other, less time-consuming trading tactics.
The exchange and trading costs are two very critical factors to remember when implementing this approach. Since most trades charge a taker and a nominal creator fee on each deal, and you’ll be doing multiple minor trades in a row, you’ll need profit margins and risk resources to cover the fees you’ll incur for this approach.
Bonuses are often offered by trades that foster liquidity in order to reduce trading costs. These bonuses are often linked to an exchange-specific token that can be used to further mitigate costs, often up to a 50% discount.
Altcoin scalping vs Bitcoin scalping
Bitcoin is also the most stable of the dynamic community of cryptocurrencies when compared to other cryptocurrencies. This ensures the gains per exchange are smaller, but it’s still useful for scalping because theoretical research forecasts that BTC will stay steady during the trading session. As a result, the most popular method of scalp trading in the cryptocurrency industry is BTC scalping.
Altcoin, on the other hand, may have significant price variations. This is especially true if the coins are smaller and are not sponsored by a well-known business. A coin could be deleted from the list, so anything could go wrong, including the money you made from the trades. If the coin isn’t worth much, the cost of transaction fees can be greater than the profit you gain from trading.
Whatever crypto you want to test your scalping technique with, persistence and concentration are essential. It’s always a good idea to turn off your feelings at this stage to prevent being upset or giving up on your trade too soon if you don’t see profits within a few minutes.
What time is good for scalp trading with cryptos?
You’ll be able to tell whether the new business dynamics favour scalping or not until you know what to look out for. It’ll take some time and experience, but if you know what to look out for, you’ll be able to tell. When using the scalping technique, crypto investors are always on the lookout for three key business variables.
Relative Strength Index (RSI)
This is a tool that is measured based on recent market shifts. The relative Strength Index (RSI) determines if a commodity, such as Altcoin, is oversold or overbought and displays the results as a line graph. It could represent a number between 0 and 100. A Relative Strength Index of 70 or higher sometimes indicates that an asset is oversold or overbought, signalling a reasonable time to sell. When it is 30 or lower, the same is true: the stock is undervalued and primed for a price rise, signalling a reasonable time for a seller to buy.
Support and Resistance Levels
If an asset’s price rises or falls, its support and resistance ratios can change. As a result of this transition, an asset may experience a downward trend and a concentration of demand, or it may experience a rise in demand as prices decline.
The Moving Average
Investors use this to predict where an instrument’s price will go in the future by using historical data to predict what will sell. Some traders use charts to manually watch these metrics, but automation tools will help you interpret the same data quicker.
Scalping allows a dealer to make a lot of small gains from a large number of small transactions that accumulate easily, proving that “a little goes a long way.” Traders should be aware of the fees associated with such transactions, as the value provided can be less than the fee paid. However, much like anything else, a trader must put in time and effort to become an expert, particularly in a market as competitive as crypto trading.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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