Crypto Scalping Signals – Definition, Explanation & Strategies (Complete Guide) - FX Leaders FX Leaders

Crypto Scalping Signals – Definition, Explanation & Strategies (Complete Guide)

In crypto trading, there are many different strategies at your disposal. One of the most popular is scalping, the practice of taking tiny profits throughout the session to slowly accumulate winnings. 

As an advanced strategy, it can be challenging to consistently scalp successfully. However, there is a way to utilize experienced traders’ knowledge: by using signals. These signals are services set up to share recommendations with others, usually for a fee. But how can you ensure you’re getting the most for your money?

In this article, we’ll discuss crypto scalping signals, the best times to use them, whether they’re worth it, and the questions you should ask any signal provider before handing over your hard-earned cash.

What are crypto scalping signals?

Crypto scalping is a strategy used by daytraders to take advantage of tiny market movements, capturing minuscule profits to build substantial gains. Scalpers often make dozens or even hundreds of trades daily, rarely staying in trades for more than a few minutes, with some trades lasting just a few seconds. 

The result might only be a few cents of profit, but the returns soon stack up when the strategy is used effectively, especially when using leverage. Beginners may find scalping appealing due to its dynamic and fast-paced nature; however, staying consistent and avoiding trading on emotion can be tricky.

New and experienced traders alike use crypto scalping signals to take their trading to the next level. Using a combination of technical and fundamental analysis, signal providers identify opportunities manually or algorithmically to take advantage of the crypto market’s extreme volatility. They then issue a trade recommendation, often distributed through messaging apps like Telegram, Whatsapp, and Discord. These signals usually include the critical information needed to take the trade, like the instrument, entry price, and where to exit.

Due to the fast nature of scalping, it can be tricky to use scalping signals and for the signal provider to post signals in a timely fashion. Some signal providers rely on automated systems to post what trades they’re taking or use an algorithm to recommend trades to assist with this issue.

When to use crypto scalping signals?

Whether you’re a scalper or prefer to swing trade, crypto scalping signals can be incorporated into your existing strategy to make the most of your time spent trading. Acting as a backup, scalping signals can provide some insurance against the more challenging trading conditions.

Trading in quiet markets

During periods of consolidation or when the market isn’t particularly active, it can be tempting to overtrade and look for opportunities that aren’t really there. However, this generally leads to losing money on bad trades because you were impatient. 

Crypto scalping signals can work in your favor in these scenarios. By highlighting where you can make little profits frequently, you’re much more likely to focus on viable opportunities rather than making bad trades. You can scalp small amounts rather than waiting for a big move and hoping you’re on the right side of it. This tends to be a lot better for traders’ confidence, as making small wins is much more psychologically positive than trying to anticipate where the markets are headed next.

A quiet market, a perfect time to scalp the range.

Trading in high-timeframe ranges

While the market can be quiet, it usually picks back up within a few hours or days. But what about when the market is ranging and has been for days/weeks? If you’re a swing trader with a target that the market seems to be taking an age to reach, crypto scalping signals can provide opportunity in the meantime. 

When you rely on trading as a source of income, you don’t want to wait while the market resolves itself. You need to be looking for opportunities that can supplement your trading balance. This is why scalping signals are an excellent alternative; you can build up your balance slowly while waiting for your longer-term trade to play out.

Trading in uncertain markets

Sometimes, the market might be very active, but you’re struggling to form a hypothesis of where the market will go next. We’ve all been there: the daily chart points to weakness, but the hourly looks positive. Instead of forcing an opinion (and potentially a bad trade), you can stay neutral and scalp while observing the market. 

If you’re finding it difficult to form a bias, you can play both sides with crypto scalping signals. Even if you finally develop a bias and it’s wrong, you have some of the profits made by scalping to soften the financial and psychological blow. 

Trading in volatile markets

It can be immensely frustrating to set a logical, reasonable stop loss, only for it to be wiped out due to increased volatility. There are two commonly touted solutions to this problem: find better entries, or move your stop loss further away. We’d all love to find the best entry possible, but sometimes it’s simply not feasible. And while moving your stop loss away can work, it either increases the risk you’re taking or decreases the amount of profit you can make (if the position size stays the same).

But what if there was a third solution? What if you didn’t participate in the volatile moves and just scalped the bits in between? By doing this, you reduce your risk substantially. No more wide stop losses, just playing the ranges in between legs. Again, this is where crypto scalping signals can come into play. You can simply receive instructions on how to play the range while everyone else tries (and likely fails) to use the volatility to their advantage.

Are crypto scalping signals worth it?

It can be tricky determining whether crypto scalp signals are worth it because it depends on many factors: the provider’s experience, the trader’s experience, the strategy, implementation, etc. But, provided the conditions are right, they are worth it. 

As mentioned previously, there are some difficulties with crypto scalping signals due to the brief window that they can be used. Automated signals that use computer software to determine whether a trade should be taken will likely have the greatest window of opportunity, signaling instantly once its conditions are met. However, scalping signals rely on low timeframes, where price is much more random than, say, the weekly timeframe. This randomness increases the possibility of false positives, which can hurt your profitability in the long run. 

Some scalping signal providers are discretionary traders, meaning they identify and post signals manually. While this can reduce the impact of false positives, it also reduces the length of time the trade is valid. 

Many new traders start out with scalping, as it’s an exciting way to daytrade. Crypto scalp signals can be even more seductive, offering an easy way to consistently make money without needing technical analysis. The problem is, however, that these signals are useless if the trader doesn’t understand them. They are often tricky to comprehend as a new trader, with targets changing and quick adjustments needing to be made. This can lead to a new trader becoming overwhelmed, unsure of what to do, and potentially losing their hard-earned cash.

Long-term viability also depends on the quality of the signal provider. Some strategies might work for a while, then become unprofitable once market conditions change. A good provider can switch tactics and work with changing market conditions, but many struggle to keep up. This can lead to poor signals and wasted money, so it’s essential to know how to identify the best crypto scalping signals. 

How to find the best crypto scalping signals

With the number of crypto signal providers growing every day, it’s essential to perform proper vetting before handing over your cash. There are hundreds of unscrupulous low-quality and scam providers waiting for the ill-informed to sign up for their services. Take note of the questions below and apply them to any crypto scalping signal provider that’s caught your eye.

  • Transparency: How transparent are they? Do they post their past performance data? Do they update subscribers on their losses or just their wins? Do they acknowledge their win rate? Any worthwhile provider should be 100% transparent about their signals.
  • Track record: Speaking of past performance data, what is their track record like? Is it consistent? Are people making money with this provider, or do they have plenty of dissatisfied customers? Their track record and testimonials won’t be perfect (in fact, this is also a negative sign!), but they should demonstrate they know what they’re doing. 
  • Age: How long have they been around? Are they promising crazy results, yet have only been a signal provider for a month? While new providers aren’t necessarily going to be low-quality, going with an established crypto scalp signal provider generally yields better results.
  • Live trading room: Do they have a chat for their subscribers? Not only are trading rooms useful tools to learn and grow as a trader, they allow subscribers to voice any concerns they might have. By seeing what the community is saying, you can truly gauge how satisfied their customers are.
  • Offerings: What else do they offer besides signals? Many of the best providers will offer interaction, trading rooms, and justifications for their trades. These are often just as valuable as the signals themselves, as they provide an opportunity to learn and develop your skills as a trader in the long term.
  • Free trials: Do they offer a free trial? How long for? Crypto scalping signals are usually expensive, so a free trial is a good sign that the provider truly believes they offer a decent service. By testing out their signals, you can much more easily determine whether their paid service will be useful to you.
  • Time zone: Are they in your time zone? It’s easy to look over this one. Pick providers that post during the times you’re awake and trading, otherwise you’ll be wasting your money.
  • Best for you: Is their style the best for you? Is there something lacking? You’ll likely have your own criteria for deciding whether a signal provider is for you, and it’s important to stick to it. There’s no point going for a provider who posts the bare minimum if you know you’re going to be frustrated with the lack of justification for the trade.
  • Your gut: How do you feel about this provider, deep down? Hundreds of scam or low-quality providers exist, and plenty look legit. If it seems too good to be true, or there are hundreds of positive testimonials that seem fake, it’s probably a scam. Many services can easily be verified with a quick Google search. 

Conclusion

As we’ve seen, crypto scalping signals are definitely suited to more advanced traders. That’s not to say new traders won’t be able to use them effectively, but they may struggle to keep up. If you’re unsure whether this applies to you, switch on a demo account and sign up to a provider’s free trial. 

That being said, crypto scalp signals can be a very effective tool in your trading arsenal, especially if you’re prone to overtrading. They profitably satisfy that itch to trade when markets are quiet and can be a great confidence builder when every trade seems to be going against you. 

By now, you should be able to confidently determine whether crypto scalping signals are for you and how to find the best providers. If you’re eager to learn more about crypto signals, we’ve got a few handy articles for you to explore further:

Happy trading!

About the author

Marco Steiner // Marco Steiner Financial Trader and Technical Analyst
Marco Steiner Financial Trader and Technical Analyst Marco holds a BA in Economics from the Wirtschaftuniversität Wien, Austria. Since 2017 Marco has been writing for Monday investor, Kryptoflash, and other financial websites.