CryptocurrencyFintech

Beginner’s guide to day trading cryptocurrency

Day trading can seem daunting for someone who isn’t experienced in this process, especially when it comes to cryptocurrency. Beginners must learn how to day trade cryptocurrency. They should also be able to comprehend all the benefits and risks involved and have a solid strategy for day trading.

Before you can start trading cryptocurrencies, you don’t need any specific certifications or qualifications. You just need some knowledge about markets and what it takes for you to succeed.

This article will cover the basics of cryptocurrency trading.

What is cryptocurrency and how does it work?

Cryptocurrency, also known as “crypto”, is a digital asset that can be purchased, sold, or traded securely using cryptographic methods.

Contrary to traditional fiat currencies that are controlled by national governments cryptocurrencies can circulate freely without the intervention of a central monetary authority, such as a central.

How does cryptocurrency work?

Cryptocurrencies are not regulated by the government or central regulatory authorities. Cryptocurrency works outside of the banking system using different brands or types of coins – Bitcoin being the prominent player.

Depending on how the cryptocurrencies are used, individual units can be called coins or tokens. Some are meant to be exchangeable for goods or services while others can be stored as value and used to participate with specific software programs, such as financial products and games.

Each cryptocurrency has a unique purpose. There are cryptocurrencies created solely for the benefit of the unbanked world population. Others offer a new way to monetize or protect assets.

Why Day Trade Crypto?

Day-trading crypto is primarily for profit. The market is more volatile than other asset classes, so traders with the knowledge of cryptocurrency markets have an opportunity to make profits.

The crypto market can be very lucrative if you have a good strategy for day trading and can analyze trends.

Day trading crypto is great as it provides short-term opportunities. Day trading crypto is a great way to make quick profits and avoid holding long positions.

What are some day trading strategies?

If you are interested in trading cryptocurrencies, a day trading strategy is a set of rules that you should follow.

These are some of the most popular day-trading cryptocurrency strategies:

Scalping

Scalping is day trading strategy that capitalizes on small price movements. This can be caused by gaps in liquidity, bid-ask spread gaps, or other market inefficiencies. Scalpers may trade on margin or trade futures contracts to amplify their results with leverage. They are more interested in percentage-based targets than dollar volume targets due to larger positions.

Fading

Contrarian investors use the strategy of fading to trade against the current trend. Although this can be risky, it is often used by experienced traders who know what they are doing and how conventional wisdom doesn’t always work in their favor. This type of investing has received a lot of attention recently.

Daily range day trading

Daily range day trading provides an opportunity to those who believe they can predict the direction of a particular crypto asset or market. This strategy works by tracking which cryptocurrency is oversold, then buying that cryptocurrency during that period and selling any at resistance periods (when there’s no clear direction in view). This strategy works best if traders can identify range trading indicators. Without this knowledge, range trading is a guessing game with no real success.

High-frequency

High-frequency trading allows traders to execute trades in fractions, using powerful computer programs that analyze market conditions and execute orders. The traders who execute trades at a faster speed are usually more profitable than those with slower execution speeds.

Averaging down

The best traders use Averaging Down to ensure that their target coins recover after some time. Sometimes, this strategy is called “buying the dip”. Although the strategy can’t be used for day trading, it may be used frequently.

Arbitrage

Arbitrage involves exploiting price differences among various exchanges or marketplaces for quick gains. If Bitcoin trades at $37,000 on Bitfinex but $36,800 on Coinbase simultaneously, a trader might purchase Bitcoin from Bitfinex for about $37,000 and then sell it to Coinbase for a quick profit.

Momentum investing

Momentum investing uses investment rules that are based on technical indicators to capitalize on market trends. Professional investors tend to avoid momentum and instead rely on traditional factors such as fundamentals and value when making investment decisions.

Fundamental analysis

Fundamental analysis uses financial and economic factors to determine the cryptocurrency’s intrinsic value. Fundamental analysts examine any factor that could affect an asset’s intrinsic value. These factors can range from macroeconomic factors like the state of the economy, to microeconomics such as the effectiveness of a specific coin’s underlying technology.

It’s a good idea to monitor major news events, such as announcements by the government, changes in regulation, and actions taken by companies that have large bitcoin holdings. It may be worthwhile to keep an eye on the Twitter account of a certain eccentric billionaire car manufacturer!

Technical analysis

Technical analysis is a method traders use to predict future prices by studying historical data, such as prices and volume activity. It involves visual inspection of price patterns and plotted prices and advanced statistical techniques.

How to get started on the crypto market

It can be difficult to get started in the cryptocurrency market. There are many platforms, brokers, and exchanges that you can choose from. Each one offers different assets, fees, tools, and other resources to help trade.

It is important to clearly define what you want, do you prefer bitcoin day trading? Or are you more interested in altcoin trading? Do you dream of day trading? Do you want to trade bitcoins? What setup would you use?

You might be asking yourself what the best crypto is for day trading. That’s a valid question. No one crypto is best for day trading. You should consider many factors, including your risk tolerance and which platform is best for you.

Is it possible to trade Bitcoin every day?

Every exchange offers the most popular cryptocurrency, such as Bitcoin, Ethereum, and Dogecoin. But some exchanges offer a wider range of altcoins.

Altcoins can be riskier than other coins, but traders who do their research and can time their entry and exit correctly can reap impressive returns.

Choosing the right exchange

To get started in day trading, the first step is to choose an exchange that suits you. This is not always easy. Every exchange has its own set of tools and assets.

If you are interested in cryptocurrency day trading, you can find a list below of platforms and exchanges.

Coinbase

Coinbase is the world’s largest and most trusted exchange. It offers unparalleled security and reliability.

Binance

Binance is one of the most popular exchanges for customers who want to convert their coins to other cryptocurrencies or vice versa. This site can be used as an educational resource. It provides information and prices for every cryptocurrency.

KuCoin

KuCoin, a cryptocurrency exchange based on blockchain technology that allows individuals and businesses to trade over 100 cryptocurrencies, is called KuCoin.

Bittrex

Bittrex, a well-known cryptocurrency exchange, offers over 190 trading pairs.

Bitfinex

Bitfinex is a huge exchange. It even has its coin Tether (USDT), which can be used to act as the platform’s stablecoin.

Once you have chosen an exchange that suits your needs, you can begin building a portfolio of diverse coins and tokens.

Conclusion

Once you have a choice of exchange, a budget, and a reliable source of timely information, you can begin to try out the strategies listed above. You can only learn day trading by actually doing it!

However, it is important to do your research (DYOR). Remember to be responsible and not invest more than what you can afford to lose.

 

 

Ayodeji Akomolafe

Ayodeji is passionate about blockchain technology. He can write effortless on blockchain topics such as DeFi, DApp, NFTs, Crypto and Metaverse. Apart from writing long-form articles, he also write on crypto news and press release.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button