What is the point of scalping?
The concept of scalping is to make deals in large amounts, that is, dozens and sometimes hundreds of deals during the day, each of them designed for a profit of a few points. As a rule, scalpers hold positions from a few seconds to a few minutes.
Scalpers stick to the idea that insignificant price oscillations are visible even on relatively calm markets and with a large number of transactions, you can get a very considerable profit. Scalping is one of the variants of intraday trading. Because all deals begin and finish during one trading day and there is no rollover.
Scalping is probably the best method of educational trading. It makes a trader constantly watch the market, analyze it and try to understand the reasons for various market movements. According to the general rule, in order to learn the art of stock trading, you need to make 100,000 transactions. If for a medium-term trader it will take years to make such an amount of transactions, a scalper can do it in a few months.
Some facts about scalping:
- The less you are in a deal, the less risk you take. This is an axiom of scalping. On the other hand, the less you are in a trade, the less you earn. This is the downside of scalping.
- Scalpers sleep peacefully at night because they do not leave their positions in the market and do not depend on what happens the next day: whether there will be a war, whether serious economic news will be released, etc.
- Due to the fact that scalpers do not move trades through the night, they can risk much larger sums and higher percentage deposits in one trade, thus increasing their profitability.
- Profits of scalpers are counted in hundreds of percent. For professional scalpers, it is quite usual to earn 250 percent and more from their deposit.
- Even if a scalper sets himself a minimal target - 1% per day, he will still make many times more than any investor during a year. And this is despite the fact that, contrary to popular belief, scalpers risk less than any other traders. Due to the fact that they spend a very limited amount of time in trading, their risks are under control. If something is not to his liking in the market, they immediately close a position.
There is nothing surprising that scalping is a complicated strategy because not every trader is able to open many deals in a short period. Scalping is like a sport. The scalper has to be in form all the time - disciplined, collected, rested, able to orient himself quickly in the market and react to situations here and now. He must constantly train, keep a diary every day, study his statistics, analyze past deals and try to improve results.
However, the profitability of scalping is very tempting for many market participants. For this reason, software such as a crypto scalping bot was created for them.
Bot scalping meaning
Everyone probably already knows that a cryptocurrency trading bot is a software that executes all actions on a cryptocurrency exchange for a trader.
There are several types of cryptocurrency bots.
- Simple trading bots. Act within a strategy and make a decision to buy or sell an asset based on technical analysis indicators.
- Advanced bots. Robots without a preinstalled strategy or partially configured. Their functionality allows the trader to flexibly customize the strategy.
- Scripted bots. Open-source cryptocurrency bots. Require programming skills from the trader.
- Signal bots. Such bots do not perform trading operations. They collect data from different sources and make trade recommendations "sell or buy".
The trading strategy of bots can be very simple, such as this:
- When the price of a cryptocurrency drops, it should be bought.
- When the price rises, it should be sold.
However, the strategy can also be much more complex. The algorithm can take into account recent historical data, and indicators, and be guided by signals. High-quality bots analyze more than a hundred parameters when placing orders.
How do scalping bots work? The essence of such a trading robot is to trade by scalping strategy. In simple words, the software will analyze the market, find variants that meet the specified parameters, and make a trade. A cryptocurrency scalping bot will open and close dozens or even hundreds of trades in a short period of time.
If you are trading a specific cryptocurrency, the bot can help you with that as well. For example, the Bitcoin scalping bot will take over the execution of a scalping strategy for the most popular cryptocurrency.
The main advantages of cryptocurrency trading robots.
Even experienced traders need some time to analyze the market situation. Beginners will do it even slower. As a result, a good trading opportunity can be missed. To avoid such situations, many traders prefer to use bots. They analyze everything much faster and make decisions much faster than a human. In addition, robots are able to analyze an unlimited number of trading pairs.
If you compare the bot with a human by this parameter, the advantage is again on the side of the robot. A human is simply unable to analyze a large number of assets and make a correct decision. But some people try to leave this work to bots, using only ready-made results.
A person can make mistakes in the process of market analysis. It is related not only to the level of training but also to the psychological state of the trader. Bots work strictly within the algorithm. If there is a signal, it will use it.
Day and night trading
A person needs a rest. Many traders cannot devote more than two hours a day to trading. A bot works 24 hours a day, and it does not need to rest. Using bots allows a person more free time. Many algorithms are set up for full automation of trading from the appearance of a signal to making a deal.
Lack of emotions
A person is subject to various psychological states - he can be a gambler and can feel fear or depression. It affects the trading results. A bot does not feel any emotions. It works only within its algorithm.
Traders often make one serious mistake. They can exceed their limits and lose their money. The crypto scalping bot will act according to a pre-built algorithm. If the limit on the deal size is set at $10, the bot will never independently change it.
What are the disadvantages of cryptocurrency robots?
- Template behaviour - bots are not capable of independent analysis. They cannot understand when the market situation changes which can lead to a total loss of money.
- Absence of emotions - it is an advantage on the one hand, but on the other hand, it is a disadvantage. The matter is that a person, after a certain amount of losing trades, can make a decision about the end of trading for a day, for example. After some time, he will probably modify the system and start working again. The bot will trade until the trader stops it or the account balance is empty.
- The need for control by the trader. The fact is that the robot cannot be left on its own for a long time.
How to get scalping bots?
There are three ways to get a bot for scalping:
- Develop it by yourself.
- Downloading it for free.
The first option is suitable for those who are familiar with programming. Most often, each bot is developed for a particular exchange. Accordingly, the exchange must support the connection to it through the API.
The second option is suitable for those who do not know how to code or do not know how to create their own application. Today many companies are engaged in developing this kind of software. They offer not only the purchase but also the rent of a robot. Professional traders can order bots from programmers, specifying in the terms of reference all the aspects that must be present in a program.
The third option is to download bots for free. This is the main advantage. But the disadvantage is that the user can not be sure that the robot will not, for example, transfer all of his earnings into the external accounts of third parties.
Now you know what are scalping bots. Do you need to use them? The answer to this question is different for everyone. This software will help automate your trading using a scalping bot strategy, thereby increasing your profits. However, you should remember that a robot is not a human, so you should not give it complete control of your trading account. If you use a robot as an assistant rather than your main trading tool, you should be able to achieve impressive results.