Scalping Trading Strategy: Best Markets for Scalping

Intro

Crypto markets can offer various conditions over time, some can be trending and others can be in a range phase. Scalping is a trading strategy able to capitalize on those conditions quickly, taking advantage of small price fluctuations.

During those markets, like trending and range-bound, other opportunities in the form of breakouts will emerge consequently. Breakouts can appear to reverse a trend or to continue it, or as a sign that a range phase is ending.

In this article, we will discuss how scalpers can address different markets, understanding why the markets can move rapidly.

What Is Scalping Crypto

Crypto markets and digital assets are the most liquid and volatile instruments for traders to capitalize on price movements that are not significant for the overall market structure but enough to meet a financial goal.

Scalping crypto involves detecting attractive markets where the price is moving notably in shorter time frames, like the 1-minute, 3-minute, and 5-minute charts. Trading strategies based on scalping aim for rapid fluctuations, so traders applying this method are not interested in extended trades.

Cryptocurrency scalpers seek to make systematic entry trades that ensure profits on those rapid fluctuations in order to quickly exit them. Meeting that systematic application will require a simple but methodical approach, maintaining disciplined behaviors to not break rules and trading plans.

Simple techniques developed by scalping traders involve detecting specific candle patterns. Some of those can be:

• The Hammer.
• The Morning Star.
• The Shooting Star.
• The Evening Star.

Scalpers can also analyze the chart from higher time frames to spot more significant patterns while making entries inside those patterns in shorter time frames. Crypto Markets can offer different tradeable conditions that emerge repeatedly across daily sessions. Some of those can be:

• Micro Trending Markets.
• Range Bound Markets.
• Breakout Patterns.
• Markets affected by news impact.

How Do Crypto Markets Work For Scalping

Cryptocurrencies for scalping strategies are attractive primarily by the underlying liquidity caused by overleveraging and the intrinsic behavior of most participants who are novice traders. They are highly recognizable in shorter time frames.

The lack of strengthened discipline among other factors, including crafting an effective trading plan, pushes them to fall into the same mistakes over and over again, making them discernible regarding where they are likely to place their stop-loss orders and make entries, providing the market with the necessary liquidity to move the price.

The volatility also plays a role in these markets. Volatility can be caused by the underlying liquidity but often the more significant volatility seasons are caused by the impact of related crypto and economic news. Generally, the impact of news moves the price for some minutes, and then the market stabilizes. 

Trading news with scalping strategies is highly effective but carries severe risks. More experienced traders can trade those volatile markets as cryptocurrencies could be extremely affected by some news releases, allowing them to make profits very quickly.

Best Markets for Scalping

Scalping is very versatile and can be adapted to various market conditions. In trending markets, traders could spot repeated continuation patterns. 

Range-bound markets can offer simple entries based on well-defined support and resistance zones. Breakouts can be more difficult but still considerable. News scalping is an advanced approach to volatile markets.

As mentioned previously, liquidity is a factor influencing these markets. Bitcoin, which enjoys high-liquid conditions, can present the following markets.

Micro Trending Markets

Scalpers can take advantage of large and short trends, identifying ascendant and descendant support and resistance levels. They can exploit the momentum of the trend by buying near to demand zones and selling near to resistance zones.

By drawing a trendline:

• During an uptrend, scalpers can make long entries during dynamic support level formations.
• In a downtrend, scalpers can make short entries during dynamic resistance-level formations.

An easy way to find trends is by analyzing higher time frames like the 4h chart, where price movements of 1 or two candles might create significant market structures in shorter time frames offering opportunities for scalping.

Range Bound Markets

Range-bound markets are essentially phases of consolidation within a defined price channel. 

During a range, traders will find the price going sideways between key support and resistance levels. 

They can use technical indicators like Bollinger Bands for entry and exit points over the upper band for resistances and the lower band for supports within the range.

Breakouts

During trends and ranges the price will end up breaking out in clear directions, up or down.

In the case of trending markets, the price will break out through supports in uptrends and resistances in downtrends as a sign of continuation or reversal.

Similarly, in ranges, the price will break through support and resistance. Scalpers can capitalize by entering trades in the direction of the breakout.

5-minute Time Frame.

Markets affected by news impact

News releases often cause high volatility conditions, leading to sharp price movements. This can be an opportunity for experienced traders to capitalize on quick profits.

Markets Comparison

Conclusion

Scalping offers a rapid way to capitalize on different conditions, from trending to range-bound markets to those affected during news releases. In this article, we discussed what scalping crypto is and how it works for this specific market, understanding concepts like liquidity and volatility.

Detecting markets suitable for scalpers is super easy in platforms like Altrady with features like The Market Explorer. You can sign up for a free trial account and start scalping on paper trading.