Did you know that one of the most straightforward and rewarding methods to profit from cryptocurrency is through day trading?
You'll need an intelligent and winning trading strategy if you want to thrive in the competitive world of crypto since day trading requires a thorough understanding of blockchain technology and cryptocurrencies to prevent needless losses.
You can learn about the best crypto day trading methods and get any questions you have regarding the subject resolved by reading this post.
What is Day Trading?
Day trading is buying and selling safely on the same day for profit or loss. The objective of a day trader is to profit from the stock's transient price fluctuation. One-day trade is when someone buys a stock and sells it for a profit on the same day.
In the stock market, where trading is only possible during regular business hours, the term "day trader" originated. Day traders seldom hold positions open overnight in this scenario since their primary objective is to profit from intraday price fluctuations.
Day Trading Strategies
Scalping
Scalpers make up the majority of trading on all financial markets. Scalpers benefit by taking advantage of the rising trade volume. For instance, a scalper may terminate a position shortly after opening it.
Most scalpers employ programmed crypto trading bots to increase the frequency of their trading process. The goal is to profit from minor price variations that happen quickly.
Range Trading
Range trading is when a stock is tactically bought and sold during a brief period. Range trading has dangers and restrictions you should be completely aware of. You must have a plan outlining your goals and the limitations of applying this tactic in your whole portfolio.
Some technical analysis techniques utilised with range trading involve support and resistance, volume patterns, and exponential moving since range trading entails recognising basic price levels.
Arbitrage
Using this day trading method, you would purchase cryptocurrencies on one market and then sell them at a profit on another. The spread is the distinction between the buy price and the sale price.
Anyone may open an account on an exchange platform because the cryptocurrency business is mainly unregulated. Due to the variations in trading volume and liquidity across multiple exchanges, this can lead to enormous spread disparities.
High-Frequency Trading
High-frequency trading, or HFT, is a type of trading that moves many orders quickly using powerful computer algorithms. It employs sophisticated algorithms to evaluate numerous markets and take orders based on market circumstances.
Generally speaking, traders with the quickest execution times are more successful than those with slower times.
How To Day Trade Crypto?
Use a momentum indicator to determine whether bitcoin is overbought or oversold while day trading it or any other cryptocurrency. Typically, it's an oscillator with 0–100 range fluctuations. MFI or RSI indices are two examples of such indicators. Let's explore day trading with RSI in more detail.
Typically, RSI readings above 80 are regarded as overbought and below 20 as oversold for a coin. As a result, a day trader's entry point would be when the RSI drops below 20. The exit might occur when the intended Take Profit is attained, or the RSI reaches the overbought level.
Risk management in day trading is crucial. Consider losing $200 on one coin while making $100 on another. Your total day trading performance would become red as a result. Say you earn 5% on each trade. To give the coin a chance to rebound and avoid going into hostile territory simultaneously, it would be a good idea to set the daily Stop Loss at 2% to 3%.
Last but not least, remember to account for the coin's instability while setting a stop loss. If you place your stop loss too near and the currency is particularly volatile, you might lose money.
The Takeaway!
Cryptocurrencies are still new, considering their comparison to regular currency. Therefore there is still a lot of learning to do. The entire sector is still learning to deal with security, leverage trading, and government regulation issues.
CScalp, a scalper trading software, is considered the best trading terminal for trading crypto. With almost 12,000 traders using this platform, it has helped them in efficient day trading.
