[Gate.io: For beginners] What is scalping? Advantages and disadvantages


There is a technique called scalping in trading. This method is generally well-known in foreign exchange and stock trading, but there are many people who use this method in virtual currency FX as well. So let’s take a look at the pros and cons of scalping.

What is scalping?

Scalping is an ultra-short-term trading method that completes from new transactions to settlement transactions in seconds to tens of seconds, or even minutes at the longest. This method only takes a few seconds, so trade with a fairly high lot. Traders will be in a state of mind until the moment of settlement. Since the price range targeted in one trade is narrow and the trading time is short, the number of trades tends to increase. Scalping also means “peeling off the skin”, and we will accumulate thin profits like peeling off the thin skin through small transactions.

Advantages and disadvantages of scalping

Scalping is one of the tactics used in cryptocurrency trading. What type of person is suitable for scalping?

Someone who can spend enough time trading

Scalping is a tactic to trade at ultra-high speed, which settles in a few seconds anyway. In this case, it is necessary to keep a close eye on the chart, as an unexpected move can lead to a big loss. Scalping must always keep an eye on the trading screen so as not to miss the timing of buying and selling. People who can always check the transaction screen are advantageous in scalping.

Scalping on economic indicators

In the case of virtual currency, the impact of economic indicators is not as great as that of foreign exchange, but it still often moves significantly. If you are not good at it, there are cases where it goes in the opposite direction, so there are many cases where you lose a lot if you get the timing wrong. It can be said that it is a trading method that requires experience.

Easy to gain trading experience

Scalping is done many times in a short time, so trading experience is also accumulated. However, trading blindly does not give you trading experience. Keep in mind that trades that become trading experience are limited to those that have sufficiently hypothesized and verified the hypothesis.

need concentration

Scalping is not suitable for people who can’t concentrate. You must be staring at the chart. If you are feeling impatient, or even when your concentration is low, scalping can be a big loss.

Transaction costs can be high

Due to the high frequency of transactions in scalping, there is a tendency for costs to be incurred many times, resulting in high transaction costs. The disadvantage is that the cost is inevitably high because the trading frequency is several times higher than usual.

Scalping recommended for beginners

If you are new to trading, all you need is experience. In order to gain experience, you need to do a lot of trades anyway. By doing the number of trades, you will have the ability to read the next price movement, so we recommend that you study with scalping.

depends on contract rate

Scalping is very important because momentary price movements greatly affect profits. Execution rate refers to the ability to complete a trade at the price ordered. Scalping is all about entry timing, so an exchange that has no problem with execution power is good.

Open an account for free

Gate.io allows you to open an account for free. I also explain how to open an account in the article below, so I hope you can refer to it.