Crypto Day Trading: 4 Practical Strategies for Short-Term Gains

Crypto day trading is a strategy used by investors (called day traders) to enter and exit market positions within 24 hours. Some day traders refer to such short-term strategies as intraday trading.

Day traders plan to make a quick profit within a very short time. Day trading is becoming very popular among cryptocurrency investors with little money to buy and sell assets. With the crypto market hitting over $2 trillion in record time, day trading figures have continued to skyrocket.

So, are you planning to engage in cryptocurrency day trading to amass more profit? Do you need essential information to trade cryptocurrency with a higher chance of success? You’ve got to read this through.

Everything you need to day trade cryptocurrency is in this post. Top trading strategies and suggestions to help you succeed in cryptocurrency markets are spelled out. Get your cryptocurrency day trading started today, and leverage price moves to get more profit!

What You Need to Start Day Trading Cryptocurrency

Startup capital (fiat currency)

If you don’t have a crypto wallet, you’ve got to start with your fiat currency. Several crypto exchanges support cryptocurrency purchases with major traditional currencies.

Wallet

The current equivalent of your fiat-crypto exchange has to be stored somewhere. That’s why several crypto wallets are available to store your digital money. You need to select the best crypto wallet for storing your cryptocurrency. There are more than enough crypto wallet choices from this article.

Cryptocurrency exchange/trading platform

After purchasing your cryptocurrency asset, several platforms offer trading services to their users. Consider selecting a reliable day trading exchange that provides day trading trends and correct technical analysis. Also, most exchanges allow trades to happen 24/7, making it easy to buy and sell crypto at will.

Also, consider selecting cryptocurrency exchanges that offer regular pricing updates to help you get a better day trade. Besides, you’ll need an exchange that supports traditional transactions and P2P transfers.

A trading strategy

After getting the first three requirements, you need an effective strategy to start trading.

Without proven trading strategies, day trade volatility may ruin your investment. Also, simple and effective strategies like swing trading may not reap full rewards without correct, up-to-date information. Monitoring daily trends and technical analysis helps your day trading effort with the potential for better returns.

Can Day Traders Make a Living from Cryptocurrency?

Anyone with a smartphone, tablet, or PC, and an internet connection can make money from day trading cryptocurrencies. But cryptocurrency markets remain volatile, meaning more time has to go into monitoring trends.

Some cryptocurrencies may experience a price change in minutes, and some cases, within seconds, making quick choices important. For example, whenever a popular actor or business entity buys a particular cryptocurrency, it may boost its price. Other trends could affect the price of cryptocurrencies.

Day traders need to keep their eyes and ears wide open during trades. These suggestions should help if you plan to make a living day trading cryptocurrency:

Study latest news events

News events may be the difference-maker in some day trades. For instance, after Elon Musk or Mark Cuban announce anything about Bitcoin or Dogecoin, these crypto prices skyrocket. However, whenever a government, like Nigeria for example, bans crypto use, it may see a temporary price plummet.

Reacting to news trends about cryptocurrencies isn’t the only action you need to take. In some cases, news about plummeting stocks or spikes in the price of precious metals may boost the value of crypto.  

Checking out news trends may be a smart way to evade market volatility and get more gains.

Leverage trade on margin

Before going ahead with the trade on margin, know that it’s a 50-50 deal. Anticipating price shifts could work in your favor and amass you more value, or not.

Check out your exchange margin requirement before initiating a trade-on margin effort. Some exchanges allow you to borrow money to invest in trades for the potential to get more gains. But if the trade goes south, you automatically become a debtor.

Study important metrics

Looking at the current 24hr trading volume, active wallets, etc. can make you choose a better cryptocurrency. Making better trading decisions on market prices gives you a better chance of amassing daily gains.

Monitor historical trends

Historical charts of crypto prices help determine the next course of your trade. Predicting the future price of cryptocurrencies isn’t accurate, but may offer a better chance of profit. You need to understand technical analysis and everything it offers to help you get a better intraday turnover.

Advantages of Day Trading Cryptocurrency 

Market volatility

Volatility in the cryptocurrency world works both ways – you can make a huge profit or lose big time. Properly embracing market volatility could mean better profits after a day of trading. Day traders with ample experience go into every trade knowing losses are common.

But when the trade swings in your favor, you could rake in massive profits in record time.

Loose regulations

The main aim of cryptocurrencies is to block out regulations and the middleman common to regular trade. Such loose regulations could be seen as a threat by governments. But relaxed regulations help businesses and citizens of repressive regimes to get needed funding.  

Also, trading cryptocurrency is much easier than engaging in a stock market trade. Anyone is allowed to make a trade and there is no long list of rules determining how to trade any cryptocurrency.

Always open market

A market that never closes opens investors to a world of possibilities. Unlike the stock market, you could trade cryptocurrency on a Sunday night without any problems. Investors can make more money whenever and however they want from the market that never sleeps.

Open-source information

The free nature of cryptocurrency is evident in all aspects of operation, including data availability. Most cryptocurrency exchanges offer data relevant to day trading decisions. If you plan to get a day trade started, this information may come in handy.

Drawback of Day Trading Cryptocurrency

The free-for-all nature that can affect cryptocurrency trends could be beneficial for investors. But in other cases, it may not be ideal for skeptical investors. Any announcement from a major firm about cryptocurrencies could spike its prices. So much unpredictability may not be ideal for traders.

Top 4 Strategies for Day Trading Cryptocurrency

The right trading strategy helps determine how successful any day trader can be. Without a proven trading strategy, it becomes less likely to profit from crypto price movements. If you’re looking for an ideal trading strategy, these four offer several gains to investors in the cryptocurrency market:

1. Swing trading

Swing trading involves having a keen eye for market trends and requires lesser technical skills than other strategies. But you’ll need to understand basic charts, corrections, and price fluctuations to make it work.

The trading method involves keeping an eye out for a correction (when trends price bars overlap after a rally). Catching the ‘swing’ is easier than tracking price movements, as corrections move much slower.

Let’s assume you’ve got a 500-minute candlestick chart at a hundred point range with 50 candles. If there is a price contraction within 40 points, it’s a signal to be vigilant. Initiate a sell order when the first candle moves below the candles’ contracting range and a stop at the latest swing high.

Most day trades leverage this strategy with increased precision. If you’re keen to make day market volatility your friend, get more data to leverage fluctuations better.

2. Scalping

Most day traders prefer scalping to other trading strategies. Scalping makes use of price changes that take place over a short time frame. Scalping can leverage inefficiencies in market prices, liquidity, bid-ask spread, and many more.

Leverage trading doesn’t mean there’s no inherent risk from scalping. Successful scalp traders know margin requirements to buy and sell any asset along with correct rules for sizing. If you’re planning effective trade execution as a scalp trader, you need to understand simple formulas to guarantee success.

Reading more on how to calculate position size for trades is a great way to kick off scalp trading.

3. High-frequency trading

An algorithm is the basis of this trading strategy. Trading bots and a complete set of instructions help traders enter and exit positions in record time. In some cases, high-frequency trading affords investors the ability to switch positions in fractions of a second.

Algorithms used in this trading strategy are designed to handle highly complex market decisions. In most cases, not all beginners, or even intermediate traders, for that matter can leverage this trading strategy.

Multi back-testing, tweaks, and monitoring are necessary to ensure this trading strategy works. The cryptocurrency market is dynamic, and these trading bots need proper maintenance to work.

Also, it’s worth noting that high-frequency trading may not be accessible by individual traders. Most of these strategies remain under wraps. Public knowledge of these methods may ruin their overall efficiency. These strategies also need an advanced understanding of concepts and analytical skills.

So, if you’re not an advanced trader just yet, you should sit out high-frequency trading.

4. Range trading

Analysis of candlestick charts is one of the main parts of range trading. Investors analyze these charts to look at levels of resistance and support. Range traders usually seek price ranges within a market and trade based on these price ranges.

Generally, trading with this strategy involves buying at one level (support or resistance) and selling at the other. Range trading follows the assumption that resistance and support levels will hold until the bounds are broken.

Most day traders will decide to set a stop-loss at levels where there is a likely breakout from any range. Setting the stop-loss at a pre-determined range limits losses and keeps your day trade effort running.

Beginners and experts alike can make money from range trading. But before the range strategy can work, you need to understand candlestick chart analysis, momentum indicators, support/resistance levels, etc. Check out this article for more resources to help you become a better range trader.

Top 34 Cryptocurrency Trading Sites

According to coinmarketcap.com, these are the top 35 cryptocurrency exchanges right now:

How NOT to Engage Day Trading Cryptocurrency

Using a wallet/exchange with old security

Avoid exchanges that have a long history of experiencing serious hacks and asset theft. Some crypto exchanges have experienced hacks that resulted in losses amounting to millions (in $) worth of cryptocurrency.

Carry out extensive research on cryptocurrency exchanges that have never experienced hacks. When you’re making your selection, consider going for the most secure and respected exchanges. Coinbase, for example, is one of many long-standing exchanges that haven’t suffered hacks.

You don’t want to worry about making profits and your crypto asset at the same time. It could be damaging for your day trading going forward.

Shunning objective day trading decisions

Cryptocurrencies have several similarities with traditional financial markets, especially when it comes to investing. Any stock trading expert will tell you to keep emotions out of making business decisions.

Don’t feel pressured into entering or exiting a position when it’s not the right time. Rather than sell off your asset because of low performance, consider holding on for a little while. Market dynamics may not look friendly at the moment. But with patience, you can get more value over time.

For example, Bitcoin has seen several episodes of sharp plummets and gains over the years. Some Bitcoin holders have sold their currency for $3,000 per token only to buy it three times that amount later.

Jumping on trends

Don’t jump onto every fast-rising crypto on the market.

Joining the bandwagon of a bullish trend late because everyone is doing it may be disastrous. Make sure you have all the facts right before embarking on completing any trade. Don’t let the fear of missing out on a bullish trend push you into making wrong decisions.

What to Consider before Choosing a Platform for Day Trading Crypto

As expected, cryptocurrency trading comes with its fair share of risks. Besides the crypto market being highly volatile, other factors may affect any day trader. If you plan to trade cryptocurrency every day for profit, the risk gets a lot higher.

Your day trading investment cannot be trifled with, and that’s why considering these factors are super-important:

Technology

Day trading cryptocurrencies require constant monitoring of events to avoid missing a chance to get more profit. Some market events may swing prices in and out of your favor, so vigilance is a must-have. Several exchanges now have mobile apps designed to help you get a handle on the latest market trends.

Also, consider selecting trading platforms that have support for demo accounts. Using a demo account helps you discover useful resources and tools to boost your day trade.

Methods of payment

Several cryptocurrency trading platforms have limited forms of accepting fiat currencies for exchange. Most cryptocurrency trading platforms have PayPal as their main method of accepting fiat currencies.

But what happens if you don’t have a PayPal account?

That’s why many popular crypto exchange platforms have different methods of payment like:

• Debit/credit cards
• Bank transfer
• Wire transfer, etc.

It’s a smart decision to choose the best cryptocurrency exchanges that offer multiple methods of payment for purchasing assets.

User-friendly interface

A smooth experience when day trading cryptocurrency is important, particularly for newbie investors. With a less complex, user-friendly interface, you can get transactions completed without stress.

Most centralized exchange platforms offer users ease in signing in to accounts, complete transactions, and much more. Select crypto exchanges based on the ease they offer. Also, your selection should depend on how much experience you have and the customer service you’ll get.

Fees

Day trading cryptocurrency could come with a massive cost tag since you’ll switch positions in record time. That’s why it’s essential to look at fees charged by your preferred exchange before registering.

You need to select a day trading cryptocurrency platform that offers low prices for completing transactions. With such a platform, you can learn the ropes of trading crypto as a newbie with minimal expenses. And if you’re an expert in crypto day trades, cheap exchange platforms help you save more money.   

Trading every day will be less stressful when you choose an easy-to-operate cryptocurrency exchange platform.

Security

Adequate security isn’t negotiable when selecting a crypto trading platform. It’s important to look at features your preferred exchanges for cryptocurrencies have on offer.

Most of the common, but effective security features of exchanges are two-factor authentication (2FA) and data integrity protocols. It’s also smart to check out your preferred exchange security history, and whether any damaging breaches have ever occurred.

Asset support

Most day traders don’t put all their eggs in one basket. That’s why it’s important to select the best exchanges that support a huge number of digital assets. Most trading platforms support Bitcoin, but you need more cryptocurrencies in your wallet to have a diversified portfolio.

Final Thoughts: Why Day Trading Crypto Could be Great for Your Financial Portfolio

It’s no secret that traditional money is losing its grip with most financial markets swinging unexpectedly over the years. In-depth technical analysis into traditional markets has revealed inherent risk investors face for small profits.

But with markets trading in cryptocurrencies, it’s a new ball game. Many traditional investors in money markets and commodities are switching to investing in coins. Even if cryptocurrencies are still not at an advanced stage, a $2 trillion market is no joke.

Make the most of trading strategies at your disposal. Engage in day trading and make a profit from swinging prices of cryptocurrencies. Even if day trading in crypto markets has its fair share of risks, you could rake in more money every day.

Riding waves of the crypto market volatility every 24 hours isn’t plain sailing. But keeping an eye on current trends with an effective trading strategy could get you more profit and limit losses. As a day trader, it makes sense to remain vigilant. You don’t want to get caught in a massive bearish trend and lose your investment.