How to day trade cryptocurrency: How to Trade Cryptocurrency Overview, How To Start, Strategies

How to day trade cryptocurrency

How to day trade cryptocurrency

Holding the trade longer than one hour will result in a lower success rate. CoinMarketCap is a good free resource to read and gauge the market volume of any particular coin. Non-custodial wallets provide better security than exchange wallets since you have complete control over your money. Nevertheless, crypto meant for active trading can remain on the exchange wallet.

In the crypto markets, the same factors have a dramatic impact on certain crypto assets. You understand there are no best times to trade the cryptocurrencies market. The most important premise is that you create a consistent routine for day trading cryptocurrencies.

When choosing a cryptocurrency to trade, it’s important to consider several factors. First and foremost, you should choose a cryptocurrency that has a high trading volume and liquidity, as this will make it easier to buy and sell quickly at a good price. Additionally, you should consider the volatility of the cryptocurrency, as more volatile coins may provide greater opportunities for profit, but also carry greater risks. This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits. IQ Option for example, deliver traditional crypto trading via Forex or CFDs – but also offer cryptocurrency multipliers.

How to day trade cryptocurrency

Double your demo account balance – when you set up your demo account, choose the amount closest to the dollar amount you will be depositing. It makes trading more realistic than setting up a $50k demo account. Your mind needs to become disciplined at generating small regular profits from day trading cryptocurrency. To trade crypto, you need a day trading cryptocurrency strategy.

It is important to think about what kind of cryptocurrencies you are looking to get involved with. The always-open nature of cryptocurrency means there are fewer patterns in the day where predictable trades are being made. Crypto day traders may find themselves glued to the charts looking for the right time to execute a trade longer than they would have to in the traditional markets. This can make trends much harder to find, and a quick day trading session can turn to night trading sessions.

Today, Ryan consults with various agencies, crypto platforms, and FinTech companies. In that article, we explain many different strategies that can be suitable for active traders, for example, swing trading. Getting familiar with these strategies can help you make a better choice when trying to find your trading style. Developing HFT bots requires an understanding of advanced market concepts alongside an acute knowledge of mathematics and computer science. Many uneducated traders randomly buy and sell cryptos without the knowledge you have, so it is worth keeping up to date.

How to protect your Stop Loss during rapid trend reversal

Many crypto traders allocate a portion of their capital to smaller altcoins. Although small mid-market cap cryptos are riskier than large-market cap cryptos, they offer higher upside potential. Many small altcoins have risen over 1,000% in a matter of months, making them attractive investments for risk-tolerant investors. Some crypto traders believe in contrarian trading strategies, based on the idea that a crypto asset whose price has been steadily rising or falling is due for a correction.

Range trading capitalizes on non-trending markets by identifying stable high and low prices, represented on candlestick charts as resistance and support levels. “Resistance” is a price above and “Support” is a price below the current price. When the price ranges between the resistance and support level, traders can purchase at the support level and then sell at the resistance level. Day traders using this strategy for day trading cryptocurrency buy a crypto asset when it’s oversold, and sell when it’s overbought to make profits.

The crypto market, on the other hand, is accustomed to wild price swings. It is pretty normal to see double-digit percentage swings in a matter of hours. The stock market has been around for a long time now, and there is a bunch of literature on the topic. But, how different or similar is it from or to the nascent cryptocurrency market?

Scalping Strategy for Crypto Day Trading

Never take out a loan to invest in crypto; never trade money you can’t lose. As stated above, there’s no place for greed and overconfidence in crypto day trading. Crypto day trader in the UK interested in a crypto-to-fiat pair. If you buy an order at $5,000 but don’t want to risk more than 10%, you’ll have to set a stop-loss order at $4,500. If things don’t go as planned, your broker will exit on your behalf before the value of your pair goes down to $4,500.

How To Day Trade Cryptocurrencies For Profit

Note that scalping is incredibly tedious to carry out without significant assistance from automated bots to handle the trade execution. The first step towards your day trading journey is to pick a marketplace. Different marketplaces offer different fee structures, coin pairings, trade amounts, etc. This is extremely important because making small profits on a large number of trades can quickly disappear in fees charged by exchanges.

The smallest unit of measurement for Bitcoin is called a Satoshi, and it’s 1/100 million of 1 bitcoin. The correct ledger is determined by the majority of miners’ records. In theory, you could hack a blockchain by controlling 51% of the cryptocurrency’s network in a process called a 51% attack.

The techniques have existed for generations and have successfully been implemented for traditional financial assets. Often they are used complementary to each other, but it is possible to apply either independently. Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks. Remember, crypto prices can crash just as fast as they have risen.

Always check reviews to make sure the cryptocurrency exchange is secure. If your account is hacked and your digital currency transferred out, they’ll be gone forever. So whilst secure and complex credentials are half the battle, the other half will be fought by the trading software. Which cryptocurrency platform you opt to do your trading on is one of the most important decisions you’ll make. The exchange will act as a digital wallet for your cryptocurrencies, so don’t dive in without considering the factors below first.

This will give you an idea of how crypto works and what its intended use is. ETFs try to mimic the performance of the underlying cryptocurrency. Trading is approached with discipline as those who are most successful carefully manage their exposures.

Range trading

Once you’ve found a trading strategy that works for you, start looking for an exchange to trade on. Consider factors like ease-of-use, on and off-ramp options, fees, reputation, state of financial health, and the team when picking a crypto exchange. You can do this by analyzing price movements, what other people are trading, potential risks, and the most popular trading pairs. Moreover, examine the projects and the teams behind the coins that are on your radar. Depending on the type of trader you want to be, you can look for investment strategies that fit your category of choice.

You can check Reddit and other relevant places to read reviews about a platform’s customer support efficiency. Now that you understand the kind of risks you are most likely going to encounter, you should factor them every time you are about to make a trading decision. Scalping is a part of day trading but typically involves concise trading periods.

Of course this volatility also incurs significantly more risk than less volatile assets. Another popular cryptocurrency trading strategy is called Scalping, which looks to use frequent, but smaller trades that are closed once it shows a small profit. These trades may be held for a few minutes before being closed out and scalpers may trade many times a day.

Limit sell order is another important concept in cryptocurrency trading. Unlike the stop-loss order, the limit sell order automatically closes a trade one once your digital asset hits a specific high price. For instance, if the said digital asset is on an upward trend, and you perceive the top market price to be $300, you can set a limit sell order of that amount. Once the asset hits that price point, the limit sell order will automatically sell your asset.

There are makers and takers on either side of the purchase coin. There are makers for both buy and sell orders, and consequently, there are takers for both buy and sell orders. An order book is the ledger on which available orders yet to be fulfilled are recorded.

The speed of crypto price moves can be frustrating and cause you to over-trade, trade impulsively or increase your risks. Once the momentum starts for a cryptocurrency, you’re too late to catch the move and will have to either wait for the next move or choose another cryptocurrency to trade. Ethereum has seen large growth due to the development of DeFi and NFTs with other altcoins also seeing a significant increase in value over the past year.

Before you start trading, do your homework and find out what type of tax you’ll pay and how much. Short-term cryptocurrencies are extremely sensitive to relevant news. When news such as government regulations or the hacking of a cryptocurrency firm comes through, prices tend to plummet. Fees – This is how much you’ll be charged to use their cryptocurrency software.