Scalpers take calculated risks because they take time to analyze the market before trading. The crypto market is volatile, but traders who know what they’re doing can make profits despite the volatility. Actually, the love the wild volatility.
Scalping is a trading technique that requires keen attention to market movements and price changes. In this article, we’ll learn what scalping bots are and the best bots for crypto high-frequency trading.
Let’s dig right in!
What is Scalp Trading?
Scalping is a form of trading where traders thrive on high volatility in the market. The traders benefit from small trades that happen within minutes or even seconds. To benefit from these trades, you need to make at least several trades in a day. You do need to have significant funds at your disposal to earn profit from high-frequency trading.
How Does Scalp Trading Generate Profit?
Traders use their intuition to make moves with scalp trading. Each trader formulates a personal system to guide their decisions. One common thing among traders is that they trade frequently and take between 5 – 10 minutes to make a move.
Some scalping traders trade manually, while others use automatic systems and software. Manual traders have to analyze price charts and market volatility before making any move by using charting tools like TradingView or Coinigy. In this situation, a trader has to know the market movements, possess great analytical skills, and closely monitor the trades. And he has to be glued to his chair so he doesn’t miss a good trade or slip into an unprofitable position.
Traders who use automatic systems can mitigate risks likely to occur due to human error. And more importantly, automatic trading software or bots can trade on behalf of a trader even when they aren’t at their desks. With an automatic trading system, no chance for a good scalp is lost.
Best Crypto Scalping Bots
There are many good crypto bots on the market right now, but these 5 are especially good fit for high-frequency trading and scalping.
Cryptohopper is an Amsterdam-based platform. It is by far the best cryptocurrency bot that offers traders a seamless experience. Cryptohopper allows you to set your take profit and stop loss positions expressed in percentages. You can also use a protection mechanism like a trailing stop loss which is great for preserving profits while squeezing as much profit as possible in one trade.
Determining the position 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).
Cryptohopper offers 3 scalping strategies:
- Momentum Trend Scalper – combining momentum and trend indicators like Williams %R and EMA. You first need to identify the macro trend (bullish, bearish or neutral).
- Pure Trend Scalping – using trend-following indicators like EMA on multiple timeframes.
- Volatile Trend Scalper – using the MESA, 15-50 EMA and ADX indicator to determine the direction of the trend and the entry.
Traders using this bot can eliminate any human errors because it has pre-programmed algorithms and trading strategies. The platform is compatible with over 75 cryptocurrencies, and it works with most of the major exchanges like Binance and KuCoin.
Cryptohopper also incorporates a range of tools, such as a backtesting feature. The feature enables you to experiment as much as you want without risking your fund while you learn how the bot works. With enough practice, the robot becomes better and more effective in its functionality.
Cryptohopper offers maximum support to all users when it comes to customer support. There are many tutorial videos on the site. You can also submit a support ticket or read the FAQ section.
Creating an Account at Cryptohopper
Creating an account with Cryptohopper is straightforward. You only need to access the official Cryptohopper website, and at the top left corner, you’ll see a sign-in icon. Click on it and fill in your name, email address, and create a unique password. You will receive an email to confirm your account, after which you’re ready to start scalping.
But first, you’ll also need to add your API keys to connect your account with the exchanges. You can also take advantage of the huge marketplace of outside signalers that allow you to copy their trades and signal buy and sell positions. A wizard will help you make all these configurations.
This Miami-based crypto bot is designed with traders who aren’t tech savvy and lack financial background. The platform is intuitive, with many programmed strategies to get you going. It is also possible to devise and customize your own strategies using the 3 Commas platform. Some of the pre-programmed strategies are Stop Loss, Take Profit, and the Trailing Take Profit strategy.
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3Commas makes scalping trading very easy with their Smart Trades. You can set your Entry, Take Profit and Stop Loss. There are also Trailing Buy and Trailing Take Profit feature for the event when the price experiences a sudden dip and “wick” back up, we can take advantage of this with trailing buy as it may get our trade a much better entry price. Trailing Take Profit will follow price above your set target, in order to try and catch a little extra profit should price pump past the original target.
Currently, 3 Commas works together with 13 exchanges such as BitMex, KuCoin, Coinbase Pro, Binance, and Bittrex. With the variety of exchanges, you can compare and trade on an exchange offering the best rates at a particular time.
3 Commas is also very reputable, attracting many users. It is also safe to use the web-based platform. Besides, your money isn’t stored on the trading bot, and the bot doesn’t have any access to your funds.
How to Get Started on 3 Commas
The first step is creating an account by simply registering with your email. You will then receive an email requiring you to verify your account through a link. After verification, you will gain access to the 3 Commas dashboard.
You will see a “my plan” icon at the bottom left corner of the dashboard. Click on it and choose a suitable subscription. You can add funds to your exchanges at the top right, and these funds can also be used to pay for your subscription plan.
You need to get an API key that will help you connect your exchanges to the 3 Commas platform. Once you’ve chosen your exchanges and configured the API keys, you can then create a bot for trading purposes. You can read and watch tutorials on the website to help you set up your bots on 3 Commas.
Haasbot is a platform that appeals to beginners and experienced traders. The user interface is friendly, and you can configure bots to trade all day long. You can access the platform both on Windows and Linux operating systems. It is installed and run locally, unlike the rest of this bots list which are all cloud-based bots.
The platform allows you to interact with over 50 indicators and real-time backtesting features. You also have access to 13 insurances and 21 safeties to ensure your trades are safe. Currently, HaasOnline is compatible with about 20 major exchanges.
The scalp trade bot makes scalping strategy happen by quickly initiating and closing a series of small trades. Over the course of your bot’s trading session, the profit from each of the trades can generate steady profit margins. All setting are pre-set and if you want to do customizations, you will have to use the Haasbot’s standard bot to do so.
Haasbot is technologically advanced and offers users a chance to customize their bots. Alternatively, you can make use of the 15 available bots, such as accumulation bots, inter-exchange arbitrage bots, and flash crash bots.
The bot system offers maximum customer support to all users through the FAQ sections, live updates of profits and losses on Telegram, Twitter, and Facebook. You can also submit a support ticket on their website for quick assistance.
Creating an Account on Haasbot
The first step is to register by entering a valid email. In the next step, you need to configure a Haas Trade Server (HTS) with your devices. You can find lots of videos to guide you through the process whether you’re using a Window or Linux OS.
Having your settings fully configured, it’s now possible to navigate the website and even confirm your assets. Finally, select a suitable bot from the list of available scalping bots.
Bitsgap is another great bot that is especially good for arbitrage and scalping. The platform features numerous order-types to give you more control over your scalping activities. Such orders include the shadow order, market orders, stop-limit orders, and the stop loss and take profit orders.
The bot automatically adjusts to ensure you buy and sell at the set range. This way, you’re guaranteed small profits throughout the day. Bitsgap also incorporates external signals that monitor any fluctuations in the market. You get alerts on any slight changes in prices so that you can take the most appropriate action.
If you’re a beginner, you can also take advantage of the Bitsgap demo account. Using the account, you can learn the ropes of the trade without incurring any loss. The demo account features some money and has access to 5 exchanges.
Get Started with Bitsgap
The first step to getting started on the platform is creating a user account. For this process, you need to register using your email and then create a password. You’ll then have to confirm the email using a link automatically sent to the email you use to register.
In the next step, you should configure your unique API exchange keys. This step is crucial because it ensures that you’re the only one to gain access to your account. Now, you can start scalping!
Types of Crypto Scalping Strategies
As a scalper, you cannot afford to make the wrong decisions when trading. Indecisiveness or procrastination is also an enemy of scalp trading. We recommend that both experts and beginners adopt a certain strategy to guide their decisions. Here are the five best known scalping strategies.
Crypto Range Trading
Range trading means identifying the highest and lowest selling points of crypto within a certain period. As a trader, you can either take a long or short position depending on which brings the most favorable outcome.
Once the trader identifies a favorable range, they can manually buy crypto at the lowest price when the market is at the support level. Traders can then sell the crypto at the highest price when the market is at resistance.
The bid-ask spread strategy refers to the difference between the asking price and the bid price. As a scalper using this strategy, you need to open a position at the bid price or ask price. You should then swiftly close the position a few points lower or higher depending on what move will give you more returns. There are two ways you can execute this strategy, as shown below.
- A narrow bid and ask spread
When buyers are more than sellers, the asking price will be lower while the bid price will skyrocket. As a scalper using this strategy, you need to balance out the selling pressure.
- A wide bid and ask spread
In this scenario, buyers are more than sellers, making the asking price high and the bid price significantly low. When these happen, the crypto prices will rise, making it possible for scalpers to sell at high profits.
An arbitrage strategy means that a scalper takes advantage of the highly volatile crypto market to buy and sell in different situations. The buying and selling happen almost simultaneously because a scalper will take advantage of even the slightest changes in pricing.
A scalper can either make use of spatial arbitrage or pairing arbitrage. The trader buys and sells on different exchanges and hedges against fluctuations in spatial arbitrage. The pairing arbitrage strategy involves a trader using only one exchange platform to mitigate against risks. In most pairing arbitrage strategies, traders will also capitalize on specific pairs, for example, USD/ BTC.
The price action strategy is no different from the others. It involves a scalper studying the market and price fluctuations before selling or buying.
Margin trading involves trading using funds belonging to a third party to maximize your returns. Some exchanges allow traders to use up to 100 times their investment to conduct margin trading. Albeit risky, this strategy enables scalpers to have more capital gains on their moves.
How to Set up a Crypto Scalping Trading Strategy
If you’re just starting as a scalper, here are the steps to follow to create a trading strategy.
- Choose your trading assets/pairs
The Crypto market is diverse, with thousands of digital currencies that differ. Some are more popular than others, while other trade more than others. It’s therefore essential to choose your trading pairs wisely.
- Find a favorable trading platform
Your choice of the trading platform will, by a large extent, affect your trading actions. You need to find a platform with a good reputation. You can determine if a trading platform is reputable by reading online reviews.
Secondly, you need to know whether the site has a good user interface. As a beginner, you want to make sure you find a trading platform that gives you some good user experience. Scalping requires fast trading, which can only happen with exemplary mastery of the said platform.
Lastly, you need to confirm the fees charged by your chosen trading platform. Ensure that the platform doesn’t have any hidden charges that will affect your profits.
- Have a trading bot
We aren’t against manual trading by any chance. However, we recommend having a trading bot to facilitate faster trades and significantly reduce any human errors. Bots are also ideal as you don’t have to facilitate a trade manually. You can earn even when you aren’t working on your desk.
- Don’t be rigid in your strategy
Don’t stick to one strategy as you start. Experiment with different strategies on small transactions. Over time, you can examine which strategies work best for you.
With the above tips, you can start scalping and enjoy the benefits.
The Pros and Cons of Crypto Scalping
Scalping doesn’t come without its fair share of pros and cons. We look at them here.
- Easily automated using bots
- Lower risks as you can setup smaller positions
- Works non-stop so you don’t miss out on good trade opportunities
- Steep learning curve in order to know what you’re doing
- Fees eat up your profits if you do too many trades
- You need a good amount of starting funds in order to have this method work for you
Is Crypto Scalp Trading for Everyone?
Scalping is risky and requires a lot of technical analysis; otherwise, you could end up with a lot of losses. It is, therefore, not for everyone, especially not for beginners. If you’re just starting out, we recommend only occasional trading until you get a solid grasp of the market. However, if you feel you’re ready to start scalping, you can cast your nets in the ocean and start fishing for those profits.
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