5 Strategies to Start Day Trading Crypto
Day trading is an investment method that makes money by making multiple trades of one or more securities throughout the day. While traditional buy-and-hold investors are focused on a company’s long-term performance, day traders are looking for more immediate profit chances.
To profit from short-term price changes of stocks, bonds, and other commodities and currencies, skilled day traders use a variety of resources and tools, such as stock screening or trading simulator software.
Day trading is a challenging process that involves attempting to profit from price differences and fluctuations in a short period of time. The risk connected with day trading is substantial.
Day traders employ a variety of strategies to profit on short-term changes in the crypto markets. A crypto day trader should develop a profitable strategy based on research and have well-defined plans for entering and exiting positions.
The following are some of the most popular crypto day trading tactics:
Scalpers, known as the fastest-turning trading style, take advantage of high volumes of liquidity to profit from minor price swings. Buying and selling bitcoin or altcoins over the course of a few hours and cashing out on minor percentage gains by the end of the day – or putting up a bot for high-intensity and frequent transactions based on signals or technical indicators – are examples of this investing technique.
Scalping cryptocurrency is popular among day traders because to its simplicity of automation for bots, low risk, and potential reward. Trading bots can reduce the anxiety and tension associated with trading. Scalping allows traders to analyse their gains or losses at the end of the day rather than investing for the long term because the positions are smaller. Because of market volatility, traders can consistently earn small profits over time, which can add up to significant returns in the long run.
2. Range Trading
Range trading takes advantage of sideways (or non-trending) markets by identifying consistent high and low prices, which are depicted as resistance and support levels on charts. Day traders that use range trading strategies choose a period of time when a crypto asset is oversold (at a low price) and sell it when it is overbought (at a higher price) in order to profit.
Online screeners can help crypto day traders find the proper crypto asset to range trade. Range trading, like the bulk of other trading strategies, can be used in markets other than cryptocurrency. Range trading is used by crypto day traders because it has clearly defined entry and exit points, which can reduce losses. The range trader minimizes losses caused by negative news cycles or market conditions by making small profits over a short period of time.
3. Technical Analysis
In crypto day trading techniques, technical indicators are a common instrument. Indicator methods typically make trades based on secondary sources of data like as MACD (Moving Average Convergence Divergence), RSI (Relative Strength Index), Bollinger Bands, and other indicators.
Technical indicators can assist you avoid day trading at unsafe price points while also opening up new possibilities. Of course, you can also use Trading View to sign up for market signals based on indications suggested by other traders.
You can trade manually in our multi-exchange trading platform using technical indicators. You can also use technical indicators and high-frequency trading by using an automated trading bot like MACD or Bollinger Bands.
4. Long Straddle
The long straddle, also known as the buy straddle, option straddle, or simply straddle, entails buying both a put and a call order. In a long straddle, the call and put orders are on the same cryptocurrency, strike price, and expiration date.
Because of the volatility of the crypto market, the long straddle is a popular strategy in crypto trading. This approach involves a crypto day trader betting on the price of a crypto asset changing. In the long straddle, the day trader makes money whether the price increases or falls. The trader will lose money if the price does not move.
5. Bot Trading
A trading bot is a software application that allows investors to purchase and sell financial instruments at a predetermined time or when certain conditions are satisfied in order to optimize earnings. Crypto trading bots are intended to boost profits while lowering losses and risk.
Crypto trading bots can speed up the process of analyzing price changes, exchange fees, and potential to benefit from deals in the near term. Bot trading software has been a feature of stock exchange brokerages for decades. Traders that are familiar with software development and APIs should consider using this knowledge to their advantage as day traders.
Pros and Cons of Day Trading Cryptocurrency
- Anyone with a crypto exchange account is free to trade. There are no further hurdles to entry for retail investors or day traders to access, research, and participate with the crypto markets aside from authenticating their identification and paying their exchange account. Those who wish to acquire bitcoin but cannot afford to pay $60k or more can buy and sell a fraction of any cryptocurrency.
- Cryptocurrencies and the blockchain technology that supports them are decentralized and meant to keep users anonymous while also allowing them to conduct payments without the involvement of an intermediary. The lack of government taxes and fees makes dealing crypto incredibly cheap for day traders on a centralized exchange.
- It’s so simple to get started trading cryptocurrency, a rookie or inexperienced trader might suffer catastrophic losses just as readily as they can profit.
- You could be a victim of pump-and-dump schemes or wash-sales if you trade cryptocurrencies. This happens when a group of people work together to artificially inflate the price of a cryptocurrency in order to entice in unsuspecting traders. After profiting, the traders sell the cryptocurrency, causing the price to plummet.
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What is day trading?
Day trading is an investment method that makes money by making multiple trades of one or more securities throughout the day.
What are the Pros of Day Trading Cryptocurrency?
Anyone with a crypto exchange account is free to trade. There are no further hurdles to entry for retail investors or day traders to access, research, and participate with the crypto markets aside from authenticating their identification and paying their exchange account.
What are the Cons of Day Trading Cryptocurrency?
It’s so simple to get started trading cryptocurrency, a rookie or inexperienced trader might suffer catastrophic losses just as readily as they can profit.