*Scalping* is a short-term trading strategy used in financial markets, including cryptocurrency, to capitalize on small price movements. The goal of scalping is to make a series of small profits over a short period rather than aiming for a big, long-term gain. Scalpers take advantage of *small price fluctuations* by entering and exiting trades rapidly, often multiple times within a day. This strategy is particularly popular in highly liquid markets where price movements happen frequently.
*How Scalping Works:*
1. *Short Time Frames*: Scalpers typically trade on *short time frames* like 1-minute, 5-minute, or 15-minute charts to spot and act on small price movements.
2. *Frequent Trades*: They make *numerous trades* throughout the day, sometimes even hundreds of trades in a single day, with each trade lasting only a few minutes.
3. *Small Profit per Trade*: Each individual trade typically has a *small profit*, but because they make so many trades, the cumulative profit can add up over time.
4. *High Leverage*: Many scalpers use *leverage* to amplify their small profits. This can be risky, but when used correctly, it increases potential returns.
5. *Tight Spreads*: Scalpers usually focus on assets with tight *bid-ask spreads* because this minimizes the cost of entering and exiting a trade.
*Key Features of Scalping:*
- *Low Time Frame*: Scalpers typically work with 1-minute, 5-minute, or 15-minute charts.
- *High Frequency*: They execute many trades throughout the day, each aiming for small profits.
- *Minimal Exposure*: Trades are opened and closed quickly to reduce exposure to market fluctuations and risks.
- *Technical Indicators*: Scalpers rely heavily on *technical analysis* and indicators such as *Moving Averages (MA)*, *Bollinger Bands*, and *RSI* to find entry and exit points.
- *Liquidity*: Scalping works best in *liquid markets* where assets are frequently traded and price fluctuations are consistent.