Rule number 1 of scalping : Never use the entire amount in one single trade!
For example, if you're scalping with 5k hive, divide it into few different orders...1k + 2K + 2k...1.5 + 1.5 + 2...or any combination that suits you. But never in one single order.
Why?
Say you want to sell at 47 cents and buy back at 45 cents...and calculating a whooping $100 in that one single trade, you sell all 5k of your HIVE. With a drooling face and popping out eyes you wait for that $100 and the price of hive goes to 49 cents, 51 in a couple of minutes and before you know it some crazy Batshit (yes, yes, it's s stolen word) weed seeps in and HIVE is at 57 cents.
After a wick like that HIVE keeps hovering around 54-55 cents. Instead of that $100 profit, you are now looking at about $300-400 loss. All because you sold it all at 47 cents. Those long wicks are scary!
Instead if you had broken down the order, your average sell would have been higher. You'd still be at a loss, but the loss would look much smaller with a bigger chance of getting into profit than you were at 47 cents.
Now, continuing with the above "absolutely hypothetical" scenario as our example, we see after playing with your heart for a good couple of days, hive eventually does come down below the buy target of 45 cents and on paper, no loss was recorded. You have your "whooping" $100 profit.
Alas, life is not so simple sometimes.
In fact the potential loss of this trade was immense, with a diverse range of scenarios. As Dr. Strange would have said, you win in only 1 of these scenarios. You have incurred potential losses in all the remaining.
Scenario 1 : Instead of selling all at once, if you had averaged your sell price up to 51 cents for example, you would have profited $300 instead of 100. $200 potential loss.
Scenario 2 : When the price starts dancing, you decide to take a loss on the chin and buy at 50 cents (taking a loss of $150). You then recover this loss and sell at 57 cents and come out with a net profit of $200. There were at least 3 opportunities to play this out if you look at the charts, I'm not making this shit up.
Scenario 2A : You then play the patience game and buy the 5k hive back when it eventually came down to 45 cents, adding another $600 profit on your books.
You can play out as many scenarios as you like in your head, you end up with potential losses. This was an example of a very bad trade.
The one scenario where you win is, you have come out with a $100 actual profit even from this badly played trade.
The only reality that should matters is the one you've won!
Do you know which rule of scalping I break the most?
Rule number 1.
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I would like to learn to do this.
But I need more educations on scslping.
Thanks for the lesson on rule number one.