How to day trade Cryptocurrency
Strategies you need to be aware of if you want to start day trading crypto
Cryptocurrency trading is on the momentum owing to the rising assurance of great returns & minimum deposits needed. Successful day traders rely on innumerable resources and tools — some of them being the Money flow index, Moving averages, and Stochastic oscillators — to capitalize on short-term price movements. This process of trying to profit on price movements & discrepancies within a short time window can be challenging, but with more than 4000 decentralized currencies floating in the market, traders really need to manifest their choices.
No matter what your focus is, a day trader must possess an exhaustive familiarity with crypto and trading principles. And if you are the one who’s got nerves of steel and brilliant risk managing skills, this is the article you need to read to get started on your crypto day trading journey.
Leverage the opportunities that crypto has thrown in the market as we bestow the tips you need to put in place to make bigger profits quickly.
Choose your trading platform
The first step towards Crypto Day Trading is to decide on your trading platform. For budding traders, the available options and differences in crypto exchanges might seem overwhelming; however, to maximize your profits, you’ll have to make your move fast.
Quick Tip: Fees, Exchange, and Asset liquidity are the top checkpoints when choosing your platform call.
While the first choice can’t always be the best, one has to start somewhere to get some familiarity. Right?
Pick virtual coins with high volatility & liquidity quotient
Once you are on a platform, it’s time to build your equation of digital currency trading.
When deciding what crypto asset to invest in, consider market liquidity, volatility, and trading volume as they are the necessary evils you need to participate in actively. The common strategy here is to invest in top virtual coins by assessing the market cap. But even here, you must tread with caution as not all coins on the list may work for you!
Include technical indicators in your game
Want to make ‘profitable’ use of your fixed Daytime? Here are the technical indicators you must include to save your time!
Indicators like Bollinger bands, Fibonacci Retracements, Relative Strength Index (RSI), Ichimoku Cloud, etc., can actually help you measure the depth of the market. And if you feel that the market’s condition is favorable, it’s time to show around your cool trading moves!
Have a conducive trading strategy
While beginning your investing game, it’s important to remember that cryptos are highly speculative in nature. And just because your investment has worked in the past, it will continue to do so.
For investors who are genuinely interested in Day Trading, there are numerous strategies to try your hands on. Be it Scalping or Range Trading, an entire community of traders is sprung around these strategy thoughts. Well, one thing’s for sure, having some thumb-based trading strategy is a must for short-term traders.
Below are the strategies that can help you in Crypto Day trading.
Day Trading strategies
Scalping
High trading volumes and you’re unsure of any Day trading strategy? Well, Scalping may do the trick for you!
Scalping is among the best and most common trading strategies to help you leverage the small price moves within the fastest turnarounds. Often these gaps can be market inefficiencies such as gaps in bid-ask spread and liquidity.
Scalpers often trade on futures contracts or margins to amplify their gains; however, trading with leverage need not imply that you should throw risk management principles out the window. A few bad trades and your trading account is inclined to blow up!
That said, due to the associated high-risk and fast-paced nature, Scalping is better suited for experienced traders.
Range trading
The caps of cryptocurrency are fragile and can manipulate with a slight influence on the market. If you can learn from those assumptions and create great trade ideas, profits are at your disposal!
Range trading techniques let you capitalize on the sideways market by pin-pointing the support & resistance levels on candlestick charts. As a crypto trader, you may eventually favor Range trading as it can work beyond the crypto space, thus allowing you to make profits over other markets.
One can identify the correct asset zones using several chart indicators such as Stochastic Oscillator or other available online screeners.
News & Sentimental Market Analysis
A big news item can highly manipulate the crypto market.
Well, this may seem to be amongst the less popular strategies; looking at headlines can actually help you get an idea about the overall market sentiment. Note down the websites that track the sentiment of most talked cryptocurrencies by analyzing Twitter chatter — The more positive the tweets, the more bullish will be the sentiments and vice versa.
High-frequency Trading (HFT)
Popularly known as Bot Trading, this Day Trading strategy involves using automated software tools to trade financial instruments quickly.
Though Crypto trading bots can itself streamline the process to maximize gains, this doesn’t imply that an HF trader just has to sit back and let a program do all work. Trading with bots involves developing the best strategies, monitoring, updating the algorithms, and backtesting to keep up with the changing trends.
Final Takeaway
Any crypto investment comes with its share of risks and rewards. And with the new classes of digital assets becoming popular, it’s always better to keep in mind the possibility that any crypto investment is capable of evaporating.
Setting time aside to familiarize yourself with the upcoming trends and construct fully-fledged strategies is the pivotal factor that separates Cryptocurrency Day trading from gambling. And if Crypto Day trading doesn’t work for you, remember this is not the only avenue to maximize your profits; there are tons of opportunities in the digital currency market.
