UNDERSTANDING SPREAD LIMIT CRYPTOCURRENCY TRADING
This concept is known as scalping, or spread limit trading.
It works good on small exchanges such as KuCoin or in sideways moving markets where you can profit on an alt coin without it moving a single satoshi in price. (Please be advised this is for educational purposes only, and should not be considered as financial advice, Please always do your own research. its your money.)
THE CONCEPT
Where looking for mid cap alt coin /coins on coinmarketcap, typically between the 195-497 rank by market cap. We are looking for coins on the exchange that have a high spread (the difference between the highest bid and the lowest ask). Example - When I trade I look for coins with a 2.8% - 5% spread, with a min of a 2 BTC daily volume.
When you do find one of those coins, you want to take a look at their chart, and their order book.
Also you want a chart that is relatively stable, sideways moving, but volume is not low.
You want an orderbook that has -
Lets say the highest bid on the coin you find is 1,200 Satoshis (a non-meaningful bid is a extremely small amount that has no impact on the overall standing of the orderbook).
So you then place a limit buy order at 1,201 Satoshis, and wait for the order to be filled,remember that adjusting your limit order as needed for fluctuations in the market. With luck, your order will be filled.
Next, take a look at the lowest current and good ask, lets say it is 1250 satoshis.
You will place your limit order right around this market, adjusting as needed for fluctuations in the market. Now, you play the waiting game...
This concept is profitable by being more patient than the other traders in the market.
All it takes is one inpatient trader to come along (And there are Alot of them!), and buy at market price,
which will use the price and order of the lowest current ask (your sell order if you did things correctly) and that will start filling their buy order from there. If done correctly, your order will be filled and your coins, Sold.
You have just profited 3.8% by being more patient than the trader who placed the buy order, and have profited without the coin moving a single satoshi in price (in theory).
You can set stop limits if you see the coin becoming increasingly volatile during your trade. Also as a general rule of thumb, never risk more than 5% of your trading bankroll, ie. If you are using a 1 BTC bankroll, you should be making .05 btc trades.
With practice, you can work up to running multiple of these trades at any given time.
A friend of mine who trades full time on Idex, consistently profits .1 BTC a week using a .5 BTC bankroll and scalping.
Once again, this is just theory trading, just because Im successful and other traders are aswell with this method does not mean it is the method for you.Look if youre interested try trading on paper first, ie. write down all what you would have done without actually doing it, and seeing how the outcomes turns out or try with a demo / test account .
Hope you enjoy guys and please leave your comments with what you think .
!!!Crypto 2 Tha World !!!
