buy walls</a>.</strong> This happens because the buy walls make it difficult for the price to drop lower.</p>\n<p>Therefore, a support level is typically triggered by a big supply of buyers in a particular price range. Besides, <strong>it operates as a &ldquo;floor.&rdquo;</strong> Overall, the price can only decrease under heavy selling pressure when it is at a support level.</p>\n<p>Usually, traders construct support lines based on prior lows because it helps to identify probable price reversal points. The reversal points can suggest good buying options.</p>\n<p>Support levels are mostly portrayed by <strong>straight horizontal lines.</strong> However, they can also be represented by <strong>diagonals</strong>. Though diagonals are mostly interpreted as <strong>trend lines.</strong></p>\n<p>When a support level is breached, it&rsquo;s more likely to become <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-resistance-line-level/">a resistance level</strong></a>. 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The traders that engage in this strategy are known as scalpers.","content":"<p><strong>Scalping is a trading strategy</strong> used by investors who <strong>buy and sell the same asset or stock several or even hundreds of times in a single day</strong>. It&rsquo;s common among day traders who are looking to make a smaller profit that accumulates over time through multiple trades rather than going all in and making fewer big trades.</p>\n<p>Traders that participate in scalping are known as <strong>scalpers</strong>. They rely heavily on <strong>short-term market performance</strong> and typically focus on intervals lasting around <strong>1-5 minutes</strong>. Typically, a scalper sets a daily profit goal and works to achieve it throughout the trading day, often executing trades in very short timeframes.</p>\n<p>Setting up a scalping strategy requires both financial and technical resources. Having a <strong>fast and reliable internet connection</strong> is one of the prerequisites for this trading strategy, as it requires continuous tracking of the most up-to-date market data. Furthermore, scalpers need to ensure they have <strong>sufficient funds to pay for all market positions that they open</strong>.</p>\n<p>Scalpers work with various <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-are-technical-indicators/" target=\"_blank\" rel=\"noopener\"><strong>market indicators</strong></a> to support their exit strategy. Although scalping works with smaller trades, it can still be considered to be relatively risky as one wrong investment move can write off all gains of the day. <strong>It&rsquo;s highly recommended to not leave any positions open to carry over to the following trading day.</strong></p>\n<p>Scalping is a legitimate strategy used in both traditional and crypto markets. However, in some instances, scalping is used as a <strong>market manipulation technique</strong>. A common manipulation tactic is buying an asset and then utilizing social media, e.g., Twitter, to recommend it for investment, leading to its price suddenly increasing.</p>","level":"easy","meta_title":"What is Scalping? Definition & Meaning | Crypto Wiki","meta_description":"Scalping meaning: Scalping - a day trading strategy where investors buy and sell the same security, stock, or asset several times throughout the same day. 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It&rsquo;s used to determine the <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-roi/">Return on Investment (ROI)</a>. </strong>The Sharpe ratio compares possible gains to the risks.</p>\n<p>To put it simply, the Sharpe ratio suggests <strong>whether you should take a risk with an investment or not.</strong> However, from the more technical side, it&rsquo;s a measure of the average ROI. Though only in the case when ROI exceeds the harmless rate per unit of deviation of a specific asset.</p>\n<p>Thus, when two assets are evaluated based on their Sharpe ratio, the asset with the greater ratio is deemed better. This implies that the asset has a higher potential for profit in relation to the risks. Thus, <strong>an investment strategy is more appealing when it has a higher Sharpe ratio.&nbsp;</strong></p>\n<p>However, note that <strong>negative values of the Sharpe ratio aren't very useful.</strong> This is because the calculation of the Sharpe ratio can get close to 0 when the returns are rising regularly or there is too much <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-volatility/">volatility.

/n

The Sharpe ratio is used by various banks and large fund managers. They combine it with other techniques to evaluate portfolio performance. In addition, the Sharpe ratio can be used to analyze financial markets (e.g., the stock market).</p>\n<p>Though keep in mind that <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-ponzi-scheme/">Ponzi schemes</strong></a> can also have a high Sharpe ratio. However, Ponzi scheme data is deceptive and doesn&rsquo;t show the actual returns. Thus, always check if the data is accurate before using the Sharpe ration.</p>","level":"easy","meta_title":"What is Sharpe Ratio? Definition & Meaning | Crypto Wiki","meta_description":"Sharpe Ratio meaning: Sharpe Ratio - a ratio used to assess the potential Return on Investment (ROI).","meta_keywords":null,"language":"en","created_at":"2022-05-24T10:46:34.000000Z","updated_at":"2022-06-07T11:49:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-sharpe-ratio"},"currentChapter":"S","currentSection":"what-is-support","chapterTitle":"S","readingLevel":"easy"},"url":"/crypto/learn/crypto-terms/what-is-support","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">

Crypto Terms: Letter S

What is Support?

Support MEANING:
Support - a technical analysis term that refers to a level that keeps the price of an asset stable and prevents it from going down.
Easy
1 minute

Let's find out Support meaning, definition in crypto, what is Support, and all other detailed facts.

Support is a price level that keeps an asset's price stable. Usually, support levels are formed by significant buying pressure in a certain price range. However, support levels can also be created by large buy walls. This happens because the buy walls make it difficult for the price to drop lower.

Therefore, a support level is typically triggered by a big supply of buyers in a particular price range. Besides, it operates as a “floor.” Overall, the price can only decrease under heavy selling pressure when it is at a support level.

Usually, traders construct support lines based on prior lows because it helps to identify probable price reversal points. The reversal points can suggest good buying options.

Support levels are mostly portrayed by straight horizontal lines. However, they can also be represented by diagonals. Though diagonals are mostly interpreted as trend lines.

When a support level is breached, it’s more likely to become a resistance level. The resistance level has the opposite impact in comparison to the support level. Thus, it would operate as a “ceiling.” This means that it would stop the price from climbing any further. Usually, when resistance or support levels are breached, great trading options develop.

Keep in mind that you should always consider at least two previous lows when creating support lines. The level of trustworthiness of your claim depends on the amount of evidence you have to back it. When drawing resistance and trend lines, the same rules apply.