Steem/USDT Scalping – Mastering Short-Term Trading Strategies.
Trading has been a no man's game, even trading experts flip thousands of dollars to cents, some to nothing. I was introduced to trading around this time last year, with the fear of incurring losses we were depending on crypto experts for signals (pairs, stop loss and take profit points), I was never a fan of long-term trading, I wouldn't rest if I don't see the yield or fate of my trade. My friend would mock us saying we are scalpers and not traders, because we take any little profit we get and this trade last up to 20 mins.
This week's SLC is interesting and challenging, since it focuses on establishing knowledge, I have gained more knowledge already on scalping and I will not need to wait on any crypto expert before I could execute any trade.
The term "scalping" in trading is used to describe a kind strategy in which trades are executed under a short period of time, this strategy is used to make profit from any small movement, either an upward or downward trend in the price movement. A good scalper makes use of certain indicators to study the price movement and find a good point to make an entry. There are many fundamentals of scalping which makes it differ from other forms of trading.
Taking small profits: scalpers make use of any small market trend they find, any little profit gotten from the trade is collected. This is done repeatedly throughout the day which could bring in a huge commutative profit.
High number of trades: scalpers often open many positions of trades in a day, and they get small profits from them, these trades are being monitored closely for profits.
Trends: this is a very important fundamental of trading, market most times moves with trends and news. i was able to enter an "ADA" trade when the last news from the president of the US made a news. scalpers makes use of trends in trading to get huge profits.
scalping is different from other trading like swing and day trading mainly because of the time frame. In scalping, it takes minutes to execute and close a trade while in day trading the time frame can be a single day which is much longer than scalping. In swing trading, the trader takes time to study the market and hold trade for days/weeks.
The STEEM/USDT pair can be considered suitable for scalping if it ticks off certain boxes like; volatility which is important in scalping, it brings in quick and at the same time can liquidate you if you forgot to add your stop loss.
I have learnt about so many indicators and other scalping strategies which are efficient from this course. Carefully studying these indicators will make it quite easy to scalp the pair.
This is a very efficient indicator that makes use of the market momentum to determine the changes in price. The Relative Strength Index(RSI) when the line moves above the 70 mark, it simply means that it is overbought, when it goes below the 30 mark it means that it is oversold, many scalpers find a good buy entry when they see an "oversold" and also go for the sell once it crosses the "overbought" mark. This indicator is often combined with other indicators for efficiency as after an oversold is being marked the RSI, the market might still be in the down trend, which will be a big lost to the scalpers.
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The (MACD) Moving Average Convergence Divergence consists of two lines which are the MACD line and the signal line and also has an histogram involving two colors of candles, the red candle facing downwards from the center and the green candle facing upwards. How efficient is this indicator? it is quite easy to understand that when the MACD line crosses above the signal line, it indicates a bullish signal and when the signal line crosses the MACD line then there is a bearish signal.
This consists of different lines, a 20-period simple moving average which is located in the middle of the two lines, the upper and lower line shows the standard deviation. This middle line shows how well the market moves, if the line moves gradually upwards it shows the price is having an uptrend. If it moves downward then it shows a downtrend in the price. these two standard deviation lines shows how volatile a market is, if these two lines contracts, then the market has low volatility, if it expands then it is in its high volatility period. This helps scalpers know when the market is volatile and make good use of the volatility.
This shows the trend of the market; an upward movement of the line shows the uptrend or increase in price while the downward movement of the line indicates the downward trend in the market. When combined with other indicators, it gives scalpers enough room to detect the next immediate upward or downward trend in the market.
With this knowledge we have gotten about indicators used in trading, a good combination of these indicators will give us the lead to know when to make an entry and also when to exit a trade.
Market Selection: Taking enough time to study the market and trends and using many indicators to make that happen like the RSI, MACD, BOLL and so on, helps know when to make a good entry. using my MACd indicator i was able to notice a reaction from my MACD line which responded to the contraction between the standard deviation line, the MACD line was moving towards a down trend, and i took that opportunity to find a good entry
Find a good Entry: using my MACD indicator i was able to find a good entry point in the downtrend, using my demo account i made a sell other, set it to limit, made the quantity and placed my stop loss and take profit points
Position sizing, take profit and stop loss points: one thing i never forget to do when trying to enter a trade is to set my stop loss point, even when i don't set a take profit point, since i am scalping i can take my profit anytime i am okay with . a market might just go down or up rapidly and with a stop loss, you are liquidated. Setting a point for stop loss placement is very important in trading. position sizing on the other hand is very important to avoid risks in a trade, you need to know to required amount you need for a trade.
 using this method will ensure a safe trade execution and give the need profits required |
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We should not forget we are scalpers, take profit when we are okay with it.
Almost everything has risks involved in it, sometimes we can be very careful but still fall a victim to risks. In trading, many professional traders now have one or two lessons they have learnt in crypto, many of them fell to risks and they have learnt from them. Risk management in scalping is very necessary in order to avoid unnecessary losses in trades.
Do not think the market will go in your Favor every time, that's why you need to follow a risk management strategy while scalping. First thing to do before executing a trade is to set a Stop loss, this helps to control or minimize the losses you get in a trade if it does not go in your favor. postion sizing is very crucial as well, study the market very well and know the capital you should put in a single trade.
If a market is too volatile and you still insist on making an entry, do well to monitor that trade closely and do not forget to set your stop loss. Since you are scalping always monitor your trades and take profits when necessary, do not keep holding and regret at last.
In an hypothetical scalping scenario of the STEEM/USDT pair, whereby a trader uses the bollinger bands indicator to study the market and make a buy or sell using mean reversion. If it is a 6 mins trading and the volatility of the market is just between high and low which makes it moderate.
using the trading strategies as mentioned and answered in number 3, this trader finds a good market by study the trend and finding a good point to make an entry. If the position sizing for the trade is just 10% of his balance, his exit strategy is to take profit at 1% above or below the entry price and not forgetting the stop loss which is placed at 0.2% below/above the entry price.
if the trader uses makes his first trade by making a buy when the bollinger band was lower, with buy 100 STEEM/USDT at 0.1300 the exit point which will be at 0.1313( 1 percent) will yield a profit of 0.0013.
The key takeaway gotten from this hypothetical scenario is that the trader used a risk management strategy, used just 10% of his balance for the trading, without risking it all, made a good entry using the bollinger band the trader did not go when the market was very volatile and also made use of the stop loss.
Always trade with what you can afford to lose, do not be in a hurry to trade unless you are an insider with market news.lol.
i would love to invite my friends, @johnmitchel @bossj23 to take part in this SLC
cc,
@kouba01