In the above section, I briefly discussed what day trading cryptocurrency actually is and some of the crypto trading strategies people use. This section is going to talk about the mental side of trading, which is probably the most important thing to consider. Day traders need to know what the cryptocurrency does, its governance, network size, and protocols to help them assess the overall condition of their preferred investment. Therefore, it’s equally important for investors to learn a lot and follow news on their chosen assets’ blockchain updates.

• The most important element is to exit trades just seconds after opening them.
• In today’s lesson, you’ll learn how to day trade crypto using our favorite crypto analysis tools.
• If there is an exodus of Bitcoin miners out of a specific country, for example, the price could tank due to miners dumping coins.
• There are no commissions on Plus500, and the platform only profits from the spreads that you pay.
• In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning.
• You should make a list of cryptocurrencies and keep monitoring them.

Most arbitrage opportunities are fleeting and caused by human error. When traders notice the price differences, their trades balance the difference. I love the crypto market because short-term trading strategies, which I typically use on a daily chart, work like a charm on intraday.

Which Cryptocurrency is Best for Day Trading?

These characteristics suit such cryptocurrency exchanges as Binance, Huobi, HitBTC, and many others. Unlike the regular stock market, the crypto industry never sleeps so that crypto exchanges work 24/7. Immersed in the world of finance, one has probably tried to trade cryptocurrency at least once. Cryptocurrency day trading is different from the one provided by a traditional stock market.

Traders should set time aside to familiarize themselves with the upcoming rules and regulations taxing profits earned from crypto. Crypto is not exempt from short-term capital gains tax, for example. For day traders, the sale of any crypto held for less than a year is taxed as marginal income.

Can You Make Passive Income with Cryptocurrency?

When comparing offers or services, verify relevant information with the institution or provider’s site. Identifying setups is relatively simple when using the 3 EMAs – which also help with stop-loss positioning and precision executions. When trading pullbacks, there is no right or wrong way to take profit.

Its massive volatility is a good opportunity to make quick profit day trading cryptocurrencies. As a result, crypto day trading is the most extensively used strategy across all financial markets, including commodities, stock, Forex, and crypto markets. Day traders favor scalping crypto because of its ease of automation for bots, low risk, and potential profitability. Programming trading bots can take the anxiety and stress out of trading.

Copy Trading Crypto ─ A Beginner’s Guide to Investing in Cryptocurrency

Originally used in traditional stock markets where trading was limited to business hours, day trading has now extended to cryptocurrency markets that operate round the clock. Trading too much and changing ideas quickly can end in unnecessary losses. To avoid overtrading, you should always have a risk management strategy and a good trading plan in place. Avoid overtrading by distinguishing between emotional and rational trading decisions and backing up them with straightforward analysis. Day traders devise a winning strategy fund on research with well-laid plans. Depending on your competencies and the nature of the market, you can apply different day trading crypto strategies.

• It is up to you to understand the market and decide when it is appropriate to apply a given strategy.
• Some day traders will only trade one market pair, such as BTC/USDT.
• And one of the best ways to learn this is through price action; the technique that the majority of professional traders use.

While it is good to monitor higher timeframes and understand what’s happening on a macro level, these examples will focus on day trading and scalping. The long straddle is one directionless volatility strategy using Bitcoin options. – To initiate, you buy a call and put option at the same time for the same strike price and expiration date. The Bitcoin straddle is profitable when Bitcoin falls or rises away from the strike price by more than your premium.

Best for Leverage Trading With Many Instruments: IFC Markets

There are different types of trading goals, which are normally split into short-term trading and long-term trading. This is determined by how long you like to hold an asset before you sell it. Developing HFT bots requires an understanding of advanced market concepts alongside an acute knowledge of mathematics and computer science.

Day traders can specifically use this strategy to buy when crypto is oversold, and sell when it’s overbought to turn a profit. The forex market is the primary market for day traders because of the relatively low volatility. Cryptocurrencies are more volatile than forex, so I propose trading the mainstream crypto——Bitcoin.

Crypto Essentials

I know I have given you lots and lots of information, but I think it is really important for you to understand all of the risks involved. As you will see in the above screenshot, currency the trader is looking at the pricing movement of USD/BTC. The green bars mean that the price has gone up, while the red bars mean that the price has gone down.

• Instead of constantly monitoring price movements and trying to time the market, you choose to hold onto these assets for an extended period, perhaps years.
• At its core, cryptocurrency uses blockchain technology to generate code segments that are unique for each transaction, just like serial numbers.
• Alternatively, this sets off buying or selling signals for observant players who jump in and are rewarded with instant profits through careful news and sentiment analysis.
• It’s the only self-custodial wallet that eliminates the concern of private key vulnerability, thanks to its innovative MPC technology.

Moreover, regulatory bodies closely monitor HFT activities to ensure fair and orderly markets. With range trading, you pay attention to the typical range that a crypto’s price stays within over time. Overbought zones show that buyers fulfilled their needs already and the crypto will sell off, and oversold zones are the opposite. Some traders will tell you that there is no limit to your earning potential once you gain experience and understand strategies.

New to crypto trading but don’t know how to get started? Here are 3 simple long-term strategies worth considering.

However, before starting day trading, don’t forget to do your own research. Remember, trading – is a risky business, no matter how professional the trader is. In layman’s terms, a cryptocurrency exchange is a place where you meet and exchange cryptocurrencies with another person.

• Experts recommend a daily risk maximum of 1% to ensure traders don’t risk more than they can afford to lose.
• For instance, it’s uncommon for blue chip stocks and other tradable commodities to see a 10% rise in value within a single day.
• Like other security markets, including stocks, indices, and Forex, day trading crypto has its challenges.
• Day traders who scalp may follow systemic scalping, where technical indicators trigger trades.
• Day trading cryptocurrency is a fruitful endeavor if you know how to use it strategically.

The higher the BSI number, the more secure and reliable the network can be. On the other hand, a low BSI may indicate a higher level of stress and instability. Bitcoin’s health and performance can be measured over time using this useful indicator. You can also use this strategy to find smaller changes in a trend – for instance, spotting a pullback in a downward trend. If we look at the circled area (white) more closely on the 30-minute chart, we can see there was another divergence that showed momentum was changing back to bullish. You can also click on “style” and change the colors (blue arrow) so you can distinguish between the two lines.

#3 Trading beyond what you can afford to lose

When it comes to cryptocurrency trading, one cannot underestimate the importance of market analysis in creating effective trading strategies. This analysis provides valuable insights that can shape their trading strategies and increase their chances of success. One of the fundamental principles of technical analysis is the concept of support and resistance levels. Support levels are price levels at which an asset tends to stop falling and start rising, while resistance levels are price levels at which an asset tends to stop rising and start falling. By identifying these levels, traders can set their buy and sell orders accordingly, taking advantage of potential price reversals in the crypto market.

• However, it is crucial to use leverage cautiously and understand the potential consequences of increased exposure to market volatility.
• The main difference is that the instruments are more volatile and may have less liquidity.
• If you are here because you are thinking that investing in cryptocurrency is a shortcut to wealth, don’t, it’s much harder than you think.
• Normally, both the price and the RSI move in roughly the same direction.

In addition to providing a comprehensive view of the current state of the Bitcoin network, the Bitcoin Strength Indicator (BSI) is an incredibly useful tool. A single number, ranging from 0-100, indicates how healthy and robust the network is at a given moment. Anyone interested in understanding – Bitcoin’s stability and security can benefit from this. If you lose money too fast, it can set you on a path of revenge trading. If the order is triggered, we prepare to protect our trading position. 2018 will forever remain memorable due to the great crypto bull market.

Best Crypto Trading Strategy

Remember that while larger investments increase your potential profits, they also increase your risk. Because cryptocurrencies are so volatile, this is especially important. The RSI divergence strategy is more advanced than this and can be used to identify when the price trend will change direction before it happens.

• One major advantage of long-term holding is its potential to generate substantial profits over time.
• Before you even think about depositing funds into your new trading account, it is really important that you practice first.
• It goes to show how clueless most crypto investors were back then; I’m sorry to say.
• Common indicators used for this purpose include the Stochastic Oscillator and relative strength index (RSI).
• This will allow you to see your position and profit margin at all times, which is important for a confident trading mindset.
• In the United States, the legal classification of cryptocurrency as securities, commodities, currency, or property remains somewhat ambiguous.

Bitcoin and cryptocurrency trading is profitable if you understand how to analyze the market. Making a living day trading cryptocurrency can be a lot easier due to the high volatility nature of the crypto market. High volatility suits day trading very well, so you have the right environment to succeed. You may also be interested in reading our guide on the Best Cryptocurrencies Investments for 2019.