Bot Trading 101 | How To Apply a Scalping Strategy
Scalping is one of the most profitable forms of trading. However, it is also one of the most labor-intensive trading styles out there. Therefore with an automated scalping strategy, you get the best of both worlds: an exceptionally profitable strategy and less work.
Today we will look at what scalping is, how to scalp efficiently, and give you some examples of automated scalping strategies that you can download for free on our platform!
Scalping tips
Scalping involves cashing in quick, small, and consistent profits, letting the compounded interest work out in your favor. Scalp trades are short intraday trades that can last anywhere from a few minutes to a few hours.
Determining the entries and exits of a scalping strategy is usually done on the 5 minutes or the 1 minute timeframe (both of these are available at Cryptohopper).
A trader generally attempts to have as high a winning % as possible. Having a high winning % becomes even more critical for scalpers due to the small size of their winners. To increase your winning %, you have to trade as much as possible when the market conditions are in your favor. Thus it is generally recommended to take long positions when the market is bullish and short positions when the market is bearish. To identify a bullish or bearish market for scalping, you can use a trend following indicator such the Parabolic SAR, or MESA on a higher timeframe. In this case, a higher timeframe can be the 1h, 4h, or even 1 day. Using 2 timeframes, for example, the 1 day or 4h can be an even better choice as you are more likely to trade when the market conditions are in your favor.
Let’s now move into some practical examples of strategies that you can use to scalp the crypto market!
Scalping Strategies!
Momentum Trend Scalper
Combining momentum and trend indicators can work wonders. For this strategy, we have also selected the MESA on the 4h chart to identify the broader trend. We have then chosen Williams %R to identify when the market is oversold and then the crossover of the 1 and 15 EMA to determine when the momentum is back in our favor. We are using a higher timeframe of 15 minutes as both Williams %R, and the crossover of the 1 and 15 EMA tend to give out a lot of signals on the 5 minutes chart. It is important to note that Williams %R and the EMA crossovers are very unlikely to give out signals simultaneously. Therefore we have designed the strategy so that Williams %R signal is kept for 5 candles. For the exits, we have chosen the following sell settings:
Take profit 7%
Stop-loss 1%
Trailing Stop loss percentage 1%, arming 1.5%
You can download this strategy for free on Cryptohopper.
Pure Trend Scalping
This strategy involves using trend-following indicators on multiple timeframes. It first uses the MESA on the daily and 4h charts to make sure that the trend is in our favor. Then on the 5 minutes timeframe, we have the crossover of the 5 EMA and the 25 EMA. For this strategy, we will use the same exit settings as the previous one:
Take profit 7%
Stop-loss 1%
Trailing Stop loss percentage 1%, arming 1.5%
You can download this strategy for free on Cryptohopper.
Volatile Trend Scalper
Let’s finish with our most recent analysis on TradingView. This scalping strategy involves using the MESA on the 4h chart to determine the direction of the trend. The crossover of the 15-50 EMA on the 5 minutes chart and an ADX value greater than 20 is then used to determine the entry. For the exits, we have chosen the following sell settings:
Take profit 5%
Stop-loss 1%
Trailing stop loss percentage 0.5% and arming at 1%
You can download this strategy for free on Cryptohopper (for Hero hopper subscriptions only).
Conclusion
Scalping can be one of the most profitable styles of trading. Trading in favorable market conditions can increase one’s winning percentage significantly. Therefore adding a trend-following indicator on a higher timeframe may be beneficial. All of the strategies laid as an example in this blog can be found at Cryptohopper fully automated for you. These strategies haven’t been thoroughly tested, and therefore paper trading is recommended. Additionally, Cryptohopper offers many other indicators and settings that you can use to create your own scalping strategy.
Automate your trading today with Cryptohopper!
