Because of the volatility, liquidity and speculative nature of the market, day trading with crypto from your mobile or computer is a risky venture. However, it can be very lucrative if you have an extensive understanding of how cryptocurrencies work, follow the market indicators and news extensively. You also need to have clear crypto day trading principles and follow them.
With new digital currencies emerging daily, anyone who invests in them should also consider their extreme volatility. If you wish to trade crypto but don’t know where to start, we’ve got you covered. This Crypto Lists article will discuss how to go about it and even make profits from your efforts.
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- 1 Set up a strategy and follow it
- 2 Have you tried crypto day trading in a range?
- 3 Technical Analysis
- 4 The Scalping trading strategy
- 5 Always use stop-loss and take-profit
- 6 Follow relevant news
- 7 Which are the best crypto pairs to trade?
- 8 Crypto day traders secrets
- 9 Conclusion
Set up a strategy and follow it
As a cryptocurrency day trader, you need to devise an effective trading strategy and follow it consistently. Nevertheless, the strategy should be backed by research and constitute well-laid plans on when and where to implement it. There are various crypto trading strategies you can use, and here are the most common ones among outstanding crypto day traders:
Have you tried crypto day trading in a range?
The range trading strategy is based on the premise that cryptocurrency prices will only fluctuate within a defined range over a certain period. Therefore, any fluctuations beyond this range will be assumed to be an indicator of abnormal price change. For instance, if the price drops below the lower mark of the range, that could be the start of a downward swing, thus, it might be the perfect time to sell your coins. Check out the latest crypto price estimates for coins such as ETH, Bitcoin, Solana and MATIC.
With Technical Analysis, a trader performs statistical calculations on past cryptocurrency prices in order to uncover current market trends. This crypto trading strategy is based on the assumption that previous prices have a significant effect on future prices. Many different strategies can be used for day traders, such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci, Stochastics or Moving Average Convergence/Divergence. Try to read up and do some back testing before you try it yourself.
The Scalping trading strategy
This strategy aims at making a small profit out of a big number of trades, which can eventually result in bigger profits. Scalping involves leveraging large amounts of liquidity to take advantage of tiny price fluctuations over a short period. Usually, the duration may range from a few seconds to a couple of hours. It’s crucially to have a well defined trading range together with advantageous stop-loss and take-profit levels. Many professional crypto day traders use between 2.5 and 3 times bigger potential profit compared to the maximum loss you can get from each trade.
Always use stop-loss and take-profit
Stop loss and take profit is a risk management technique that crypto traders use to protect themselves from huge losses. It involves deliberately selling cryptocurrencies as a way of locking in gains after a certain period of appreciation. Usually, a stop-loss and take-profit move is executed when the price of a cryptocurrency reaches a predetermined level. Additionally, it can be considered as part of an exit plan for each trade that is made.
As a crypto day trader, always use a proven loss-stopping and profit-taking plan when trading. This way, you’ll limit potential losses while raking handsome profits even in a highly volatile market. Nevertheless, you must first study the market to know the appropriate time to make such a move.
Follow relevant news
News can be crucial for day traders in both cryptocurrencies, stocks and forex. Make sure to follow some prominent news sources that deliver breaking news for the cryptocurrencies you trade. You can set up a Google alert, to get notified when something happens with for instance Bitcoin. If you use “Cryptocurrency + price” (example: Bitcoin price) in Google alerts, then you get a notification when something significantly happens with the price. Or you can add words such as “breaking news” or whatever you might be interested to know as a crypto day trader.
Which are the best crypto pairs to trade?
In crypto day trading, the term “trading pairs” refers to two kinds of cryptocurrencies that can be traded with one another. Having knowledge of which pair to use is important to maximise gains and expand your investments.
The following are the best crypto pairs according to many advanced day traders, since they have among the highest volume and are trending in a more stable direction than many other smaller cryptocurrencies:
Ethereum (ETH) is a good choice for trading as it’s popular, just like Bitcoin. Its smart contract functionality allows for more features, making it quite lucrative. Moreover, ETH has a good liquidity rate and is available at most exchanges, meaning you can trade it anywhere and anytime. The current main risk and upside is related to the implementation of proof of stake.
On the other hand, Tether (USDT) is among the most popular stablecoins for day trading. It’s used worldwide, and its exchange rate correlates with the USD, making its demand pretty high. In fact, you can start trading with 100 USDT and make great profits. Thus, a combination of ETH and USDT can make a formidable pair in crypto day trading.
Undoubtedly, Bitcoin (BTC) is the most well known digital currency. It’s the most integrated with the cryptocurrency market, with huge daily volume, making it the great for trading. Besides, it has high demand and lots of newspapers write about it, meaning you can easily get buyers anytime.
BTC makes a good trading pair with USDT. As a matter of fact, many crypto analysts strongly advise novice traders to use the BTC/USDT pair as it offers the best liquidity. Additionally, you can start trading with a low budget and hopefully – close with big returns. But you should be aware that the crypto market can move in opposite direction for days, weeks or months – making it important to always keep a reasonable stop-loss and take profit level.
One of the newest cryptocurrencies, Solana (SOL), has grown in popularity in recent times. It’s known for its incredibly short processing times of transactions. Furthermore, Solana is regarded as the biggest rival of
Ethereum regarding the execution of smart contracts
Combine this with the lucrativeness of USDT, and you get a formidable SOL/USDT trading pair. Though Solana is yet to be listed by many crypto exchanges, we believe it will be more accessible to traders in the coming years.
Crypto day traders secrets
Some crypto day trading facts or secrets, depending on how you see it is the following:
When picking a crypto pair, it’s best to consider the following:
+Analyse which crypto coins & token pairs are popular and have huge trading volumes at most exchanges.
+Ascertain the demand and liquidity of individual cryptocurrencies. High demand means high liquidity, hence more trading opportunities and easier to get our of an unsuccessful trade and quicker to sell when reaching a good profit.
Some other secrets that many successful day traders have that you can copy is:
+Find you own niche: Is scalping for you? Do you get best results from 5-minute charts, hourly charts or daily graphs? Is it best to only go long when BTC or ETH is also positive? Whatever you believe in, set a strategy and follow it.
+Control your emotions: Principled and thriving day traders in the crypto space don’t put their emotions into play. So make sure that you don’t do that either.
+Manage your risk – Have a great risk-reward strategy, so you only enter positions with a potentially good reward and low risk.
+Don’t exhaust yourself – A few hours a day can be enough! Stay up-to-date with the most important news, and have your stop-loss and take-profit in place. and you don
Although cryptocurrency day trading can be a profitable activity, it’s also quite risky. You must understand how the market works, manage your risks, and implement an appropriate trading strategy. However, applying the different strategies mentioned in the text above will make it easier to reach your goals. Never invest more than you can afford to loose.