Trade Mania : A Scalping Cookbook!

in LeoFinance3 months ago

Scalping is traditionally defines as :

a trading style that specializes in profiting off of small price changes. This generally occurs after a trade is executed and becomes profitable. Scalping requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains the trader worked to obtain.

To say it in simpler words, scalping involves a trader to identify a repetitive price range and buy the lows and sell the highs.

Sounds quite straightforward, but as a beginner trader, you'll see this isn't the easiest to execute from the get go. First step is to choose your poison wisely and then observe it for days and weeks and months if necessary to understand the pattern your coin of choice follows. This is absolutely essential. I can not stress this enough, if you want to scalp successfully, you HAVE to identify and understand the pattern, and you have to trust the pattern no matter what.

I have been scalping HIVE for nearly a month now and my entire trading volume has been generated from the profits of scalping HIVE over the last month. But I have been observing HIVE for longer, much much longer to get a good idea of the pattern it follows.

If you're a day trader, you can of course scalp with something with a very high volume like Ethereum. But that requires you to have enough time to stay on top of the market constantly, on a daily basis. But if you're unable to do that, like myself, I find something more sparsely distributed like HIVE to be very suitable. Why?

See the repeated high and low spikes, you'll hardly see them occurring with high volumes, let alone getting these on a regular basis. But with HIVE, I relied entirely on taking advantage of these spikes to make $25-40 per trade.

So what really worked for me?

  1. The first is of course observing the charts for a long long time.
  2. Then I'd say Gut Feeling. Might sound like vague garbage, but gut feeling goes a long way. I'll give myself a 70-30 on gut feeling, meaning 70% of the time my gut feeling about my buy and sell orders were correct, 30% of the time it fell agonizingly short.
  3. ALWAYS recovering back my position. I never got greedy. My target was always the 2-2.5 cent window. Despite knowing there was a very good chance of the price of HIVE going below my targeted re-buy, I never waited. I ALWAYS filled my position at a difference of two cents. This lesson comes from dada : Find out your strategy, write it down, follow it religiously.
  4. Wise distribution of the USDT profit.

Okay, this last point needs a bit of explanation.

Say for example, you are scalping with 2000 HIVE. So every 2 cent profit margin gives you an absolute profit of $40. Sure you can divert this entire profit to open a position in another trade. And that's what I did, mostly. But for a few of the trades, I didn't move the profit into another trade. Instead I put all of it back into buying HIVE. Question must be asked, why is this important.

First off, I'm a HIVE fanatic regardless of all the sarcasm we spread on discord. Secondly, you don't kill the golden goose!

A bit too cryptic?

Let's say you wanted to buy hive when it was 12 cents...13 cents..15 cents. But now the price has shot up to nearly 30 cents. and it seems a bit out of reach for you. You can still use scalping to gather more hive.

You have successfully done a cycle of scalping and you have a nice amount of USDT sitting in you balance. As I said above, you could use this USDT to get into another trade. Or, instead of buying back only your original position...you put the entire amount to buy whatever HIVE it adds up to which will be higher than your original position.

Essentially you're pulling extra hive out of uranus nowhere into your account.

So being a HIVE fanatic, you could ideally still be accumulating "cheap" hive at 70 cents if you can master the art of scalping. And that's what we fanatics want, don't we! MORE HIVE!

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Let's address the golden goose theory. This is very interesting, and I will back this part up with real trade example. (The rest of my scalping real trades, I already discussed in an earlier post, so didn't wanna sound repetitive.)

On 15th february, late afternoon I started creating the draft for my contest post...basically me brainstorming and typing down points...specific words I wanna use (for example "choose your poison wisely" is something I really wanted to incorporate at some point). I had most of the draft ready, I'd say 70% (no pun towards my 70% gut feeling score). The Golden Goose Theory was still not in the draft.

It was time for Magrib, so I finished my prayer and went for a cup of tea. My sell order was at 28 cents and HIVE decided to do this in the meantime.

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Needless to say, I panicked as I remember how I sold almost 90% of my liquid at below 30 cents last time HIVE went to knock the $1 door. This time it wasn't 90%, coz you know....নেড়া বেলতলায় যায় কবার? So I had a bit of liquid stored, in a land far far away from exchanges!

By now we have established the golden goose is HIVE, yes? Right.

So, the golden goose was dying little by little as the price of HIVE rose every cent and panic started to grow a bit more. There will be pullback, there will be pullback, I kept telling myself.

After a few long hours the price started to pull back. But I was not confident of the price to go much below my sell of 28 cents (and after two days, it still hasn't stayed substantially below 28 cents). But remember point number 3 in my strategy? ALWAYS buy back your position, don't be greedy!

Now this is the Fun Trade we've been building up this post for!

I caved in, admitted I sold off too early and decided to take the blow and buy back at 31 cents... higher than where I sold without waiting too long to avoid the risk of further compounding my loss...(because eventually I was always going to buy back HIVE...be it at 30 cents, 40 cents or 50 cents).

So I did a Burl (I hope @burlarj will forgive me for the reference hehe) and Sold Low, Bought back High!

Sell low, buy back high = Loss, right?

Wrong.

Sell low, Buy back high = Still profit!

Remember the HIVE I was pulling out of uranus thin air from time to time, they compounded in and I managed to save the dying golden Goose and still have my initial position back, a bit more than that actually!

And once the storm settles, I can start scalping again. Right now we are in uncharted territory because hive hasn't stayed in this price range for long enough periods in the past. We're back at square one, Observe!

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I invite @udezee and @rehan12 to participate in this week's Trade Mania.

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lol. well i did something similar with twt, i dump the one i got from airdrop and buy back at 2x the price i sold, but no regret as it did triple

Ha ha, I actually remembered you telling that which is why I called it doing a burl 😂

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What's your favorite exchange to trade your hive? Have you considered WLEO? Just an idea, or are you long-term holding LEO? Which is what I do. Nice article. sure there is a lot of traders interested. Thanks.

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For hive I trade on bittrex and binance. But bittrex is somehow better for hive because it gives the spikes much more often, on binance It's a lot more steady.

With leo I'm just holding 😄

Thanks for dropping by, do consider participating in the contest 😉

thanks for a quick response. I've had some bad luck signing up for Bittrex and in the US so Binance is a pain to use. I'll look into the contest.

Ah right, bittrex has some issues for US citizens signing up. I've heard of it, not entirely sure what's the issue though.

Wow... Thanks for sharing your experience. I will definitely look towards scalping more in future. It was helpful :)

Glad you found it helpful :D

Start with small amounts first to test the water, Good luck :))

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hola

Speechless! Strategy is so easy. We know hive better than any the other coins we run after. So everyone should follow this one and it has the high possibility of winning the expectations. Helpful one bro!

Right, the strategy should always be simple. Yes the implementation is difficult, but if we try out complicated strategies from day 1 we are already at a disadvantage to the pro traders who are also trading on the same exchanges. Staying simple never hurts ;)

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Scalping pays at a level but may be not the best trading format

I agree to a certain extent. There's no easy way to label any one strategy as the "best" strategy. Every trader has a different strategy that works, depending on what they're looking to achieve. I'd say a combination of strategies would give the best result.

That's right, I concor

This was a lot of information, thanks for sharing.

Cheers! :))

A lot to learn from you, Doc. Way to go.

Thanks Sayee, I myself am still learning and experimenting! :)

I love trading, I don't, but I would like to get someone to teach me. I have some notions and technical terms but I don't know how to enter and exit a trade. I know it is difficult and risky but I find it fascinating after you learn well. They should give some classes, what do you think of the idea?

To trade the best way is to dive in, but with an amount you can afford to lose.

Unfortunately there aren't any official "teachers" who teaches but there are a lot of pro-traders on the platform talking about the technical terms...so try reading their posts and picking up on the basics. I can suggest you to look at azircon's posts. He is like a mentor to us and I have learned so much from him that I can not begin to tell! And he will respond to comments when you ask him questions.

Good advice, good advice, thank you. I'm looking for him right now and I'll start to follow him. Thanks a lot.

Many moons back, when I was a kid trading Jap Yen, I used to do something similar to this. Currency typically trades anywhere from 50X - 200X leverage. I typically used to trade at 100X leverage (I know! its Haram! :)); but the volatility is similar. My point is that it is a perfectly workable strategy. Any strategy can be workable for that matter (withing reasons of course), but there is only one cautionary item I will tell you, and you already got a hint of it. But still saying it in a sentence so that I hammer it home :)

If you sell a position; you don't have it anymore.

I know I have said that on discord several time. But think about that statement a bit deeply. It is not so much applicable for hive, but it is highly applicable for anything in a strong bull market, which lot of the crypto currently is. It is easy to say that statement, but hard to execute, even for me :)

I totally agree dada, but it's very difficult to implement merely because I don't have enough capital to lock up all of it. But you know, I'm always looking for solutions :D My solution to this is (tell me if I'm doing it wrong), First, I am pointing out a few coins to always keep my position no matter price goes up or down. I already have ETH on the list, you know that. Now I have BNB too. So now every time I exit a trade, I'm taking $15-20 and buying a portion of something I want to hold and the rest of the amount goes into another trade.

I know by doing this, my cost average might be higher than the current market price given how everything is going up, but I will have something over a period of time rather than not having any of it because of "not having enough capital."

The solution to not having enough capital is something you have told us countless times, Write! Just got to stop being a lazy Bum!

Very educational my man. I really do like that you trust your gut. I also trust in mine. The day I don't trust it. It's over. I guess we share the same superpowers in that regard. It's like you say, observing the charts constantly gives you the clue about patterns. Hive's pattern is not hard to follow of you have been enough. It was my pleasure reading this mate. Cheers!

Hey Jon! thanks for dropping by :D

The Power of The Gut, eh mate! I like the sound of that xD

Hive's pattern is not hard to follow

I agree, this is the one coin almost every single one of us looks at the price chart of at some point or another during the day. So it's easier to familiarize ourselves with how it moves.

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I will definitely look towards scalping more in future