Scalping is a special approach to trading where investors try to maximize their efficiency by opening as many potentially profitable market positions as possible. Since it is a game of numbers, consistency is the most important factor. A crypto scalping bot is a script that specializes in executing a strategy that utilizes this particular approach.
Advantages of scalping
We won’t go into every single minutia of what it means to be a scalper. Instead, we will talk about this trading method in general and try to pinpoint some of its aspects. The advantages of the approach are plentiful which is evident from the sheer number of scalpers in any financial market.
- Maximum efficiency. Scalpers try to utilize all their time and focus on quick reactions to market events. This approach requires you to develop a very reliable technical analysis strategy to ensure that you have a lot of signals to work with.
- Consistent profits. A retail trader opening dozens of market positions throughout the day usually does not risk and tries to minimize losses. Conservative take profits and even more conservative stop losses allow scalpers to maintain a steady level of profitability without exposing themselves to huge risks.
- Works with any asset. As long as an asset is traded with sufficient liquidity and trading volume, a scalper can find a good way to work with it. While not every single digital asset can be described as high-liquidity, many of them are exactly that.
- It can be automated. Contemporary scalper bot software is quite powerful and accessible to anyone. Companies like WunderTrading offer advanced automation products for a low price. You can get run up to five crypto scalping bots simultaneously for free with this provider.
Scalpers focus on using the most efficient products and services to enhance their ability to make money within a single trading day. Achieving consistent monthly profits is their most sacred and important goal. You may slip here and there, but the bottom line must be in the green by the end of the month. Some retail traders are even harsher on themselves and aim to be profitable every single week.
Disadvantages of scalping
The method indeed has many advantages appreciated by retail traders. It is a great way to work with new financial instruments, test a technical analysis strategy, or make a quick gamble if you don’t have a large starting capital. However, it is also full of obscure pitfalls that many newcomers do not notice.
- Using leverage. The vast majority of scalpers have to use leverage to make significant gains from tiny price movements. Margin accounts are not an exotic financial product, but many people without any prior exposure to financial markets often underestimate the risks associated with using borrowed funds.
- You can’t skip a beat. Any pause or delay means a gap in your productivity and potential profits. To maintain a positive bottom line, a retail trader must keep working for as long as possible without any days off.
- Scalpers can be wrecked by volatility. Slow reaction and hesitation may cost you dearly during periods of high volatility in the market when prices change rapidly. Scalping as a strategy is extremely vulnerable to brief moments of uncertainty that occur frequently in the crypto industry.
- It is mentally exhausting and stressful. Trading non-stop and caring about every single market position can be demanding to your mental health. Since many retail traders do not want to take time off, it means that they are under constant stress.
The downsides of scalping are quite apparent just like its advantages. It is necessary to understand that it is like having a demanding day job. It takes a heavy toll on your mental and physical health. However, there is a beam of light at the end of the tunnel! You can use the power of automation to counter some of the disadvantages.
What bots do scalpers use?
Experienced retail traders prefer one of two paths to automating their in-market activities:
- Preset solutions. Companies like WunderTrading have special bots that are designed to maintain a certain level of performance. They can be fine-tuned according to your risk tolerance and specific requirements. DCA buying is a strategy used by most conservative traders who accumulate resources. GRID is an excellent choice for day traders and scalpers.
- Custom systems. You may be interested in using a custom script to automate a unique technical analysis strategy. Usually, scalpers use certain approaches to identifying signals that they will act upon in 100% of cases. If you have a strategy like this, you can easily automate it with some tinkering on a good automation platform.
Finding advanced scalper bots for sale is not an issue. Choosing a good company that can deliver a steady performance and consistent profits is a completely different story.
The best crypto trading platform for scalping
Before we dive into the issue of selecting a good automation vendor, we have to discuss exchanges where you can use bots. Centralized exchanges usually have API allowing third-party developers to connect to the platform directly and bypass the user interface. CEX platforms are by far the most popular destination for most retail traders.
Among companies that certainly deserve your attention are some of the CEX platforms below:
- Bitfinex. This CEX platform offers a wide range of services to an international audience. It has some issues with security and struggles to maintain good relationships with all banking operators in the industry, but it is a great service in terms of technology. Bitfinex scalping bots are quick and work without any issues on the side of the platform. If you do not have a monstrous portfolio, choosing this platform is a good idea.
- OKX. Since its rebranding from OKEX, the company managed to expand to an even greater number of countries. The company focuses primarily on the SEA region but has offices in many countries across the globe. The only issue is that some Western nations do not allow the company to operate. OKX has a strict set of policies that go against regulations enforced in the US, UK, and Canada.
- Binance. The biggest centralized exchange in the crypto industry by a large margin. This company offers a rich selection of advanced financial products including staking, investments, fundraising, and more. A Binance scalping bot will work with instant order execution, high liquidity, and huge trading volumes. This exchange is represented in the western hemisphere and Asia.
While some decentralized platforms also offer API and try to expand into many niches of the retail trading industry, CEX platforms are still ahead and can be integrated with a wide range of third-party services such as WunderTrading or TradingView. Since many retail traders are interested in using these highly specialized instruments, they naturally flock to centralized exchanges.
Now, that you have a better understanding of which exchanges you should check out to start trading cryptocurrencies, we can talk about automation vendors.
How to get scalper bots?
Whether you are interested in day trading BTC or scalping Dogecoin, you need to start somewhere. Companies that offer automation services for investors in the crypto domain are numerous and have various advantages and disadvantages. Nonetheless, a good platform will have certain traits that can be easily recognized even by inexperienced users.
- Good UX/UI. User experience is a crucial part of any online service. If you have difficulties with understanding how to perform certain actions or easily get lost in the menu, you have made a bad choice. It is important to work with a provider that uses a smartly designed dashboard, intuitive navigation and offers detailed tutorials.
- Price and promotions. Since the beginning of the 2010s, automation turned into a product available to the masses. You can find a product that suits your preferences and requirements while not hitting your wallet too hard. Additionally, you should be looking for companies that are not afraid to put their product out. 3Commas offers a long trial. WunderTrading has a special free account allowing users to run up to five bots.
- Diversity of products. It is nice when a company focuses on something that it does well. Yet, the best scalping bot can come with some compliments from the developers. Look for companies that offer other advanced products like preset bots, copy trading, customization, and portfolio management. You will avoid additional expenses by choosing a company that allows you to do everything in one place!
- Reliability. Server uptime, a long list of affiliates, a perfect track record, good customer reviews, and the quality of the UI will tell you everything you need to know about an automation vendor. It must have a certain level of trustworthiness before being on your list of potential providers to work with. Reliable companies are rare and you should not trust everything before testing.
Imagine that you have ticked all the boxes and found a company that perfectly suits your idea about bot creation and also has a great reputation. Now, you need to decide which bots to run!
What is the most profitable scalper bot?
Whenever we start talking about profitability, various experts and veterans claim there is a system that makes money better than any other. On the other hand, we can firmly state that how profitable any given automated trading system is depends on many factors including the personal preferences of users, their risk tolerance, and portfolio size.
Here are some arguments in favor of this statement:
- Even the best scalper bot will inevitably have a series of bad trades that generate losses. Users with large portfolios can easily withstand such bad periods and wait until the performance reaches optimal metrics again. People with small portfolios may simply run out of money before the system starts performing as intended.
- A strong scalping strategy will work wonderfully for people with high-risk tolerance and willingness to take some gambles here and there. Conservative investors using the same settings, conditions, and price action may not achieve success due to trying too hard to reduce risks and limit the potential of a trading system.
- Most automation providers have similar technology and often work with the same cloud computing providers. It means that the instruments are comparable in performance. The biggest deciding factor will be the type of strategy employed by users who run bots. When it comes to scalping, you need to choose a good technical analysis strategy that generates many signals and has a good ratio of confirmed positives to false positives.
In essence, the best scalping bot is the one that works for you. Contemporary automated crypto trading is affordable and can be used by anyone. However, only those who understand the limitations of this technology will be able to buy scalper bots that can deliver excellent performance and consistent results.
How to get a scalper bot for free?
WunderTrading offers all its registered users an opportunity to test virtually any strategy. You can simply create a new account and run up to five bots with any settings. Note that you will still need to pay for TradingView to use advanced systems that involve more than three different indicators.
Many scalpers do not use anything else. You need MACD, RSI, and moving averages to make predictions consistently if you understand how the market works. The price of scalper bots is irrelevant if you are not going to pay for them. Five bots can be enough to run a good automated system.
On the other hand, scalping can be a dangerous endeavor that may incur serious losses. You may try to offset these risks with low-risk automated strategies such as GRID bots and arbitrage. These approaches can generate small profits consistently and cover losses suffered from a series of bad trades that can occur even with the best scalping bot!
Which is the best crypto to scalp?
It is necessary to work with cryptocurrencies that have traits optimal for scalping. You need to look for digital assets that are traded against stable coins (these pairs have the highest liquidity and rapid price action) and have distinct characteristics:
- High trading volume. Scalping needs intraday volatility and large trading volumes to work. You need to have many opportunities to enter and exit the market instantly without waiting for other traders to pick up your buy or sell order. Trading pairs like ADA/XRP will not work in many cases due to lower trading volumes.
- Popularity among retail traders. A high trading volume may not indicate popularity and demand. For example, a couple of whales can move a huge volume of DOGE back and forth against LTC or XRP. The trading pair will have good metrics, but the actual demand is low and may not even have sufficient market participants for quick order execution.
- Sufficient price action movements. You don’t need to work with extremely volatile assets, but there must be just enough volatility to allow you to enter and exit a market position quickly. If nothing happens in the market for hours, it is hard to call any activity with the asset scalping even if you open and close positions within a single trading day.
Good examples of such tokens are Bitcoin, Ethereum, Dogecoin, Ripple, and Litecoin. However, you may choose other coins if they have high trading volume and sufficient liquidity.
Another good approach is to trade derivatives that do not suffer the same liquidity issues as some assets in the spot market. Trading futures and options can be quite dangerous for inexperienced retail traders who do not understand the risks associated with using leverage. At the same time, perpetual futures and crypto options can generate massive profits for scalpers who have a good strategy.
Scalping Bitcoin
BTC is the flagship digital asset of the crypto industry, the original cryptocurrency, and the biggest token in the whole market. With its massive trading volumes, high price, an acceptable level of volatility, and undeniable popularity among all retail traders working with crypto, Bitcoin looks like the best target for scalpers.
One of the issues with Bitcoin is the price. A single unit costs over $20K with the all-time high getting extremely close to $70K. You can move fractions of Bitcoin and still make money, but nominally impressive changes in price may be lower in percentage points compared to other popular tokens like Ethereum or Dogecoin.
Bitcoin has multiple advantages that should be considered:
- The coin is too big to fall. Scalpers can keep most of their resources in specific coins. However, if something were to happen to the said coin when you are on a “vacation”, you could lose everything. It is highly unlikely that something like this will ever happen to Bitcoin with its market cap eclipsing hundreds of billions USD.
- Bitcoin is supported by all exchanges. Some of your favorite coins may not be supported by certain exchanges which is not a big deal for a small-time retail trader. However, if you grow your portfolio massively and want to start diversifying, moving to other platforms can be a challenge if you are used to working with a token that is not supported by the biggest CEX platforms.
- BTC is great for bot scalping. Bitcoin is liquid and moderately volatile. It means that you can make money by holding it and waiting for it to appreciate and by trading daily. Scalpers can use a variety of technical analysis approaches to produce reliable signals. You can also trade alongside the current trend in the market since Bitcoin usually moves in one direction for relatively long periods.
Scalping Dogecoin
This token represents another side of the scalping world where you focus on short-term performance and try to squeeze value from each trade. DOGE is still a highly volatile digital asset that has value because just enough people are interested in using and trading it. Dogecoin is not a meme anymore, but it is also far away from being a reliable value storage medium.
Dogecoin has high liquidity, impressive trading volumes, and enough market participants to make it a great target for all scalp bots. At the same time, it does not have the same level of consistency or brand recognition as Bitcoin. It means that you cannot use it as baseline crypto for your trading operations.
It is a good idea to trade it against USDT or BUSD and focus your portfolio on stablecoins instead of DOGE. Diehard enthusiasts will say that Dogecoin is destined to reach the “moon”, but we are living in an objective reality where Dogecoin is still a questionable project that must prove itself before serious investors will start looking at it as something worth investing in.
Scalping other tokens
You can choose any mainstream coin and it will be a good destination for a scalping strategy. Ethereum, Bitcoin, Dogecoin, Litecoin, Ripple, Cardano, and many other coins have sufficient liquidity and trading volume to support an army of scalpers trying to outsmart an even bigger army of day traders and conservative investors.
You simply need to avoid obscure tokens, NFTs, and other digital assets that are not supported by all exchanges and do not have enough price action movement to warrant the deployment of a dedicated scalping bot.
The main takeaway
If you want to run scalping bots, you need to choose a good strategy, suitable assets to trade, and a reliable provider of automation services. WunderTrading offers a wide range of services and automation products that will elevate your investment efforts to the next level and help you build a fully autonomous trading system.