The digital market is complex, and you might face many challenges before actually learning the insights and developing a proper strategy that can maximize your profits with Bitcoin. Cryptocurrencies can be a risky investment without a deep knowledge of the underlying technology and making sense of the dynamic landscape, but to address common problems like volatility and sudden changes that influence the growth of Bitcoin, Experts developed some trading strategies to create a profitable routine. One of the most popular strategies is scalping, which requires short-term activity to gain quick but small profits that could generate bigger returns over time. If you are a new entry in the web3 market or you just want to see if scalping is the right strategy, here is everything you should know about this plan of action:
What’s scalping?
Scalping is a type of strategy that requires active trading, through which scalpers aim to make small profits with their short-term activity. Compared to long-term strategies like position trading or swing, scalping requires a lot more discipline and stronger risk management skills. Of course, to avoid losing your funds, it’s crucial to gain a deep knowledge of Tokenomics and the underlying technologies of Bitcoin so that you can make informed decisions that could help you achieve success. The crypto markets are open 24/7 to serve the needs of both day and night traders. However, the most active trading hours for scalpers are the London and New York sessions, usually done on the 1, 2, or 3-minute charts. With scalping, you have frequent opportunities, as you are less exposed to the market events that influence the fluctuation of Bitcoin. Emotionally speaking, there is no waiting that could make you anxious about the final target.
Key factors that influence profitability
First of all, you should make sense of the factors that directly influence the prices of bitcoin. For example, what makes Bitcoin the most wanted digital currency on the market is the limited supply, which makes the coin rare and, hence, drives a higher demand. Also, media news, competition, the high cost of production, and tech advancements could also reshape the regulatory framework. These aspects represent a significant part of Bitcoin’s price, and events like halving and the approval of ETFs are, in fact, influencing the coin’s price, which, according to Bitcoin price prediction, will grow significantly in the near future.
So, what are the aspects that influence the profitability of Bitcoin with a scalping strategy? Before becoming a committed scalper, this is what you should consider:
- Market volatility: The volatility of bitcoin depends on the factors we presented above, so you must be aware of the potential changes due to the influences of external and internal movements and events.
- Time commitment: scalping is a time-intensive strategy, so it requires a proper trading routine. In fact, for many scalpers, trading has become a full-time job and a significant commitment.
- Automated tools: automated systems and trading bots can help you increase the efficiency of your activity and implement a time-saving technique.
- Consistency: Even if you make small gains, these small profits need to be consistent over time, so discipline is a must for this type of trading.
The most popular Bitcoin scalping strategies
Bitcoin scalping requires discipline, time commitment, and clear goals in order to gain significant returns with this strategy. For example, these are the most popular strategies many scalpers use to create a considerable income from the crypto market:
Range trading
Range trading is a popular scalping strategy among scalers. Traders identify a specific timing zone, considering the external and internal events that affect the current market status, in which Bitcoin is most likely to fluctuate constantly so that they buy the assets at the lower range (support) and sell them at their next high (resistance). Considering 1-5 minute charts, traders establish the timing when it would be best to take action. Some scalers also look at reversal candlestick patterns to know when to create a new order, while others set limit orders at their entry point.
Arbitrage
Arbitrage trading is statistical and analytical. This type of scalping relies on informed decisions driven by specific data analysis. This strategy assumes the prices of Bitcoin according to the past events and possible outcomes of the current situation of the market. This kind of scalper involves mathematical and algorithmic models through which they can identify the best entry and exit point in a short period of time, and build portfolios that can manage the risks while maximizing profits.
Breakout trading
Breakout trading is an entry strategy through which scalers want to leverage market volatility and maximize the potential of Bitcoin. Scalpers need to know how to identify the support and resistance levels and take action because their interpretation pinpoints possible breakout opportunities according to the price charts. This kind of trading can be conducted on multiple markets and pairs to benefit from the potential of popular cryptocurrencies at a predetermined time.
Moving average crossover
This short-term strategy looks at the bearish or bullish crossovers on the Bitcoin market. During the bullish crossover, traders interpret the signs of a possible explosion of prices and see it as a good buying time. When the crossover is considered bearish instead, scalpers take it as a signal to sell the assets.
The bottom line
In the ever-evolving digital world, Bitcoin trading remains one of the most rewarding ways to win financial freedom. Despite the price fluctuations and overall complexity of the crypto market, with a deep knowledge of the underlying technologies and the BTC landscape, you can develop a scalping strategy that can help you make small profits and create a constant income over time. Remember that this trading strategy is time-intensive, so if you think you can manage your emotions and commit to the Bitcoin world, then scalping might be the right strategy for you.
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