Scalping Strategy on the Binance Cryptocurrency Exchange

Scalping is not an invention of digital currency traders, this strategy appeared a long time ago and has shown itself in work quite well. But now it is most often used for cryptocurrency trading. Its name fully reflects the essence: it is like taking a “scalp”, making a superficial profit from a quick transaction.

The process of scalping consists of three steps: finding a suitable price range on the chart, tracking and confirming the willingness of the big players to move in a certain direction, choosing the best value for the transaction.

 

Strategy Tools

Scalping is a day trading strategy. It does not involve deep analysis, there is simply no time for it, the timeframe may be limited to even 1 minute, after which the trade is closed and a new one is opened.

Traders, for the sake of finding accurate signals of the dynamics of assets, can use the data of the trading book, and some of them additionally monitor the behavior of the indicator RSI Relative Strength Index, support and resistance lines. But the assessment of the market situation in any case is very superficial.

It is believed that scalping works best for bitcoin-altcoin pairs. It is important that the trading platform allows you to set stop-losses. У Binance this is a possibility and the exchange is only between currencies, so scalping strategy is popular on this cryptocurrency exchange.

 

Profit

The conditions for profitable scalping are the volatility of the cryptocurrency, the responsiveness and experience of the trader. It is not possible to earn much by means of the strategy on poorly volatile coins (about 1-2% per day). Optimally, if their price varies in the day at 15-20% or the same 1-2%, but within minutes. At the same time, the volatility should not be excessive. It is considered optimal to use scalping in a flat market, when there are price fluctuations, but no sharp price jumps.

In this case, the profitability of trading can reach from 10% to 50% and even 100%. In this case, scalping differs from other strategies by a large share of unsuccessful transactions. Depending on the trader’s experience, 60% to 70% orders may be profitable. Profits from successful trades should also cover losses of unsuccessful ones.

Scalping is quite often advertised as the easiest way of trading that beginners can use. It is not so. This strategy, despite its apparent simplicity, assumes that the trader is well versed in the digital market in general and the cryptocurrency he trades on in particular. On the Binance platform, it can take up to a year and a half to outperform successful trades over unprofitable ones.

 

What else you need to know

Scalping with a small deposit does not make much sense. Profit from each transaction is not too large, it can be significant in the sum, after closing a lot of short orders for some time. Positions need to be constantly built up, for this purpose, the account should have a considerable amount, especially in the period of training work on the strategy, when most transactions are likely to be unprofitable.

When scalping on a cryptocurrency exchange, it is important to consider the amount of commission of the platform for the transactions. Binance (open an account) features one of the lowest commissions among similar platforms, and this is also one of the reasons why scalping is popular here. And yet, the trader conducts dozens of transactions during one session, and even small fees add up to significant costs, which is also worth keeping in mind.

Scalping inevitably leads to losing trades. Some traders believe that it is necessary to average trading results, but they have many opponents who consider it a detrimental working tactic. Since it is not only a short-term strategy, but also a high-frequency strategy, it is assumed that it is better to complete an unsuccessful transaction and make a new one, paying more attention to assessing the situation.

 

An example of working with the strategy on Binance

• Going to the exchange;
• If we are going to use additional indicators, such as RSI, then in the “Trade Center” section it is necessary to select the “Advanced” mode. Next, in the subsection that appears, you need to click on the option Technical Ind, where you can find the indicator in the list of instruments.

Or we are preparing to work to be guided only by the glass, in which you need to determine the ratio of supply and demand for the asset. Then in the menu “Trading Center” you need to select the mode “Basic”.

Set the desired timeframe

Selecting a cryptocurrency. There are a lot of coins on the exchange, their price dynamics are always varied and set mainly by changes in the bitcoin exchange rate, but there are also exceptions. It is worth hurrying to choose an asset so that it is scalping-friendly and allows you to get the maximum profit from trading.

Let’s see if there are any big trades in the cup? IOTA doesn’t seem to be in much demand today, so let’s try to look at another coin, like XEM. Here we have one relatively big deal.

We assume that after this purchase the price of the coin will rise slightly and put our position in front of the price, slightly higher.

We also put a stop loss following the price, filling in the appropriate boxes and buy the coins.

You have to act quickly, because scalping is a popular strategy. On the chart, you can see how immediately after the appearance of a large trade, a number of positions of traders earning on intraday trades are lined up here. After a trade is made, close it, evaluate the situation and the result of the trades, and repeat the whole cycle again.

 

Barriers

The main difficulty with scalping on a crypto exchange is that even an experienced trader, with all the tools in hand and with all the information in hand, cannot predict the price accurately enough, because the digital market is highly manipulative. For example, when you see a large deal in the betting market, you can assume that the price will go up. But when it’s time to execute a large trade, the trader simply cancels it. And the price does not go where the scalper thinks it should go.

The big players “whales” can enter the bidding, and their task is to “mow down the hamsters,” the small players. The whales can start to rock the market with real big purchases and sales. “Swings” are a bad time to enter a trade for a scalper, you can’t identify them right away. Cryptocurrency price swings can start for no apparent reason at all on a global scale.

These features can lead to the fact that the trader will be left without profit at all. Therefore, it is recommended to scalp, risking no more than 20% of the deposit, otherwise literally one unsuccessful bet can cost the player dearly.

The problem is also too emotional behavior of the trader. Since there is no time for in-depth analysis, he may open a position believing that his actions are dictated by a good understanding of the situation, but not realizing that he is simply following his gambling.

Separately, it is worth noting that Cryptocurrency Exchanges do not always work as accurately or as fast as we would like them to. Sometimes trades are slowed down, which can lead the scalper to losses, even if he did everything correctly – a split second is enough for that.