Chapter 23: Here’s Everything You Should Know About Day-Trading Crypto

We’ve explored different trading strategies in the Crypto Fundamentals series before, but this time, we’ll delve more into day-trading, as well as the benefits and risks this strategy brings.

Day-Trading refers to the transaction of financial instruments every day, and it is one of the most popular ways to earn profit in the cryptocurrency market. However, we should mention from the beginning that Day-Trading is not simple and may imply a loss of capital, like any other investment.

Many traders nowadays have learned how to enter and exit digital assets on the same day to profit from their volatility. This type of trading is also called Intraday Trading, reflecting that transactions tend to be opened and closed in a single day.

Why do people choose this type of trading?

The whole purpose of trading cryptocurrencies every day is to profit from all the market’s volatility, regardless of its size. Applying this strategy to the cryptocurrency market might lead to a highly profitable outcome, unlike other traditional or any financial market, because in the crypto market, moves over 10% are standard and can be seen on the chart even on a regular day.

But, on the other hand, it may become quite stressful because alerts and price movements consume the trader’s attention. That’s why the trader has to prepare safe and robust strategies, for which technical and fundamental analysis should constantly be improved.

Some simple technical indicators that the trader should watch are the volume, chart models, and structures that identify entry and exit opportunities. Given how fast the cryptocurrency market is moving, traders who desire to Day-Trade this asset class, must watch it every day not to miss moves or details.

Over the short term, fundamental analysis and any news related to the project’s development should be considered, such as the recent news of Elon Musk buying Twitter.

What are the benefits of Day-Trading?

Day-Trading is not as simple as Long-Term Trading as it takes more time and effort. However, the benefits of Intraday-Trading are:

• The earning potential can be much higher than passive trading

Day-Trading can offer higher gains and returns, even for relatively small positions, because cryptocurrencies can rise sharply in just a few hours. If the trader manages to multiply these types of trades and increase their efficiency, the profits will be much higher at the end of the week/ month.

• Unlike other financial markets, cryptocurrencies favor small traders

The probability of success is equal, no matter the amount of money we’re choosing to enter the crypto market. Additionally, the cryptocurrency market is open 24 hours, seven days a week. In the traditional stock and equity market, only institutional investors can access the market outside of business hours, and only licensed brokers can offer access to Day-Trading. Keep in mind that the brokers’ commissions for traditional markets can be significant. On the other hand, Day-Trading’s commissions are insignificant in the cryptocurrency market, and no one is asking the trader why he wants to make more than three transactions per day.

How can I Day-Trade from home?

This trading strategy heavily depends on the trader’s risk profile because the methods differ. Cryptocurrency traders certainly need to be tech-savvy and, ideally, should use two monitors in parallel to properly analyze different technical factors and indicators simultaneously. After a thorough analysis is done, investors will have to use trading functions offered by trading platforms, such as Limit Buy, Stop Loss, and especially notifications from price changes that differ from our analysis.

What are the risks we are facing when Day-Trading?

We need to talk about the bad stuff as well if we’re going to have a complete understanding. Fortunes have indeed been made out in the cryptocurrency market, but it is vital to remember that a lot of money has also been lost.

• Unpredictability

Although digital assets’ prices may continue to rise and establish new All-Time Highs, they can also reverse into double-digit declines that will never get back. Intraday-Trading comes with a remarkable variety of risks — acknowledging them is essential to learning how to avoid them.

• Cyber-attacks

In addition to the risk that asset prices may not follow expected rates due to various global events in the crypto space or social media, there is always the risk of falling victim to cyber-attacks. Therefore, it is imperative always to double-check the addresses of the website we’re getting information from and the addresses of electronic wallets we work with. At the same time, it would be ideal to change the passwords of the accounts we’re using periodically, and even more important is to use different passwords for different accounts. Due to our increased trading activity, the electronic wallets or accounts we’re using can quickly come under the scrutiny of various hackers, so we must always remain vigilant.

• Scams

Misleading and scammy projects are a particular category when it comes to cryptocurrencies. Many dishonest actors want to pump and dump or rug-pull users to get rich overnight. That’s why we have to double-check even the addresses of the platforms and websites we’re familiar with and eventually save them in the favorites toolbar.

An informed approach to any trading strategy is essential for a trader’s success, and this is why we’ve created the Crypto Fundamentals series. Click here for the complete series and read the previous chapters to learn more.

Your Friendly Crypto Exchange supports Day-Trading activities for various digital assets in spot trading. Our market-making team and engineers ensure high liquidity, excellent performance, and great up-time. Join IXFI now and start your journey.

Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.

Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.

Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.