If you plan and are disciplined, day trading cryptocurrencies may be profitable. However, the first step to a successful career in bitcoin trading is to educate yourself on the subject.
One of the best ways to make money in the cryptocurrency market is to learn crypto day trading tactics. You can make money off the volatility of cryptocurrencies if you know what you’re doing and have a good strategy. But first, you should know a few things before engaging in crypto day trading, including several excellent tactics.
Requirements
- Day trading in cryptocurrencies requires you to meet specific criteria before beginning. Fortunately, only the ones that aren’t already common knowledge exist. But first, you’ll need access to bitcoin and a trading platform.
- Any quantity of cryptocurrencies would be sufficient to begin day trading. However, the potential for gain grows in proportion to your initial capital outlay. Keep in mind, however, that the stakes will rise as a result.
What Should I Know About Day Trading Cryptocurrency as a Beginner?
A newcomer should have a firm grasp of the fundamentals before venturing into crypto day trading.
- Begin with a bit of investment while you get your feet wet. It’s essential to keep in mind that as the size of your investment increases, so does your risk exposure. You should never put up more money than you can afford to lose since this is the “golden rule” of investing. Considering the unpredictability of cryptocurrency, this is crucial.
- When considering day trading with cryptocurrencies, it’s also essential to know their volatility. As a precaution, you should psychologically prepare yourself for considerable swings in cryptocurrency prices. The value of cryptocurrencies might fall by 80% in a single day or climb by the same amount. With practice, you may profit from that uncertainty. Meanwhile, you should train to remain calm and keep your cryptocurrency investments intact despite the market’s ups and downs.
- You will need to be aware of global events regardless of the crypto day trading tactics you choose. In addition, the crypto prices and the variables influencing them must be monitored for success. Therefore, effort and persistence are required.
How Are Trading Strategies Different for Crypto?
Cryptocurrency trading tactics vary little from those used on the stock exchange. In reality, many of the most effective crypto trading tactics are derived from methods used in trading more conventional financial markets. The primary dissimilarity is the increased volatility and reduced liquidity of the products. In addition, Bitcoin and other cryptocurrencies are traded with fewer restrictions than stocks or other financial instruments.
Is Day Trading Crypto Worth It?
- Day traders’ goal is to profit from small price fluctuations. This tactic is used when markets are very volatile and prices fluctuate rapidly. But day trading is notoriously risky and may lead to financial ruin. Putting all of your money into a single transaction increases the risk of losing that trade and your whole account.
- Making money by day trading digital currencies like Bitcoin, Ethereum, Litecoin, Ripple, etc., may be done from the comfort of home. However, day trading demands a lot of self-control and persistence. You need to know how to trade effectively and recognize when the price of a cryptocurrency has peaked or bottomed out if you want to make a profit day trading.
Tools
Day traders need to use several strategies and methods to make well-informed trades in the volatile cryptocurrency market. The following are some examples of helpful equipment:
Buy and sell cryptocurrencies. If you want to store or trade cryptocurrencies, you’ll be using this service.
Wallets for storing cryptocurrency. Your non-trading cryptocurrency is safer in a wallet than in an exchange.
Graphing software. These charts show how prices have changed over time. Indicators, trend lines, and other graphing tools are included as well. They play a vital role in technical evaluations.
Specialist’s Technical Evaluation. Specialists have conducted this technical analysis. It may save you time and serve as a jumping-off point for your research.
Information about the marketplace. Here is data on the current market value of some popular cryptocurrencies. It’s crucial for making profitable trades at the correct times.
Instead of scouring the web for the latest cryptocurrency information, you can use one of these handy tools.
All events that pertain to cryptocurrencies may be found on these calendars. Examples are hard forks, block halvings, airdrops, and other similar mechanisms.
Data on the cryptographic networks. You may use them to verify data about the Bitcoin network, such as transaction volume and confirmation times.
You have automated trading software. With the help of trading bots, you may engage in financial trading at any time of the day. This will allow you to trade even when you are sleeping.
Systems that monitor investment portfolios. A portfolio tracker may help you keep tabs on your cryptocurrency holdings, even if you trade on several exchanges.
The Best Indicators for Crypto Day Trading
A crypto day trader needs to do technical analysis, which involves keeping an eye on many indicators. These are the ones most often used among crypto traders.
Indicator of Bitcoin’s Stability (BSI)
This metric was developed to demonstrate “on-chain sentiment” with current market tendencies and potential future developments.
“Bollinger Bands” (BB)
Bollinger Bands, a borrowed indicator from other markets, may be used in crypto day trading to determine whether or not a cryptocurrency’s price has moved outside its normal range. Long-term price trends may also benefit from this method.
Calculating using Fibonacci Sequences
Market discovery benefits significantly from this indication. It helps predict how much spot rates will fall in a downturn.
Typical Movements
Unlike leading indicators, which provide information before a price change has occurred, moving averages provide information after the fact. Though basic and exponential moving averages enjoy widespread use, other variations, such as weighted and smoothed averages, exist.
Day traders in cryptocurrency may benefit significantly from using exponential moving averages, which are especially well-suited to shorter periods. This is because they give greater weight to more current data, making them more responsive to changes. However, simple moving averages tend to win out when looking at larger time frames.
OBV
Based on the number of trades, this accumulative indicator predicts future trend strength and price changes. Increases in OBV at low prices imply strong demand, whereas drops in OBV at higher prices suggest fewer purchasers.
Indices of Relative Strength (RSI)
The relative strength index (RSI) is a momentum indicator. Values from 0 to 100 represent the range of possible price movements.
Crypto-day traders consider a cryptocurrency to be oversold if its relative strength index (RSI) is below 30. Conversely, when it rises beyond 70, the market is considered overbought. While 14-period RSIs are the standard, 5- and 7-period RSIs are more frequent among day traders.
Oscillator, Stochastic
This metric examines the current high and low Bitcoin prices for the selected time frame. A number between 0 and 100 is possible. The cryptocurrency market is oversold when the RSI falls below 20 and overbought when it rises beyond 80.
A Very Simple Day Trading Strategy to Earn $50 Per Day
This is only an example, not actual financial advice.
First, you should know that day trading is a hazardous way to try to make money off of an asset. In other words, only risk money that you can afford to lose.
Example of a Working Method
Learn how to spot highly volatile cryptocurrencies by studying the most recent charts. Furthermore, pricing trends over the medium term should be rising. Shoot for an average daily fluctuation of at least 5%. For example, you might put up $5,000 and set a sell limit order to sell at $5,050. 01. Protect your investment by setting a stop-loss order below the negative volatility’s upper limit of USD 4750.
Make sure that the cryptocurrency you want to day trade is compatible with this strategy. as often as required.
Technical Analysis Basics
- Learning to interpret a candlestick chart is the most crucial aspect of technical analysis for cryptocurrency traders to grasp. The top and bottom of the candlestick’s primary rectangle represent the cryptocurrency’s opening and closing values. If the bar is green, its value increases; if it’s red, its value decreases. The wicks go beyond the central rectangle to the day’s peaks and valleys (or period).
- Familiarity with the aforementioned technical signs is also helpful.
- The use of trend lines is also recommended. These indicate the trend of a particular cryptocurrency. Using a charting application, you won’t have to construct trend lines manually.
- Understanding the degrees of support and opposition is also crucial. When buyers are eager to purchase, this is known as “support” in cryptocurrency. Simply put, support lines show where investors and traders believe it is prudent to purchase when cryptocurrency prices have dropped. Contrarily, high levels of resistance indicate abundant supply but weak demand. If individuals push back, they believe the cryptocurrency price is too high.
- Trading volumes are an important indicator of the strength of a trend. Therefore familiarity with them is essential for every crypto day trader.
A cryptocurrency’s market cap is a significant indicator of its reliability.
Best crypto to day trade
Digital currencies that depend on cryptography to safeguard transactions as opposed to centralized authorities like banks include Bitcoin, Ethereum, Ripple, Litecoin, Dash, Monero, Zcash, etc. Since people use them as currency, these digital tokens fluctuate in value often. With such swings in price, they are ideal for day trading. However, the hefty transaction fees and delayed confirmation periods of cryptocurrencies make them unsuitable for long-term investments.
Cryptocurrency market volatility is crucial for two reasons:
- Price stability is promoted as a result.
- The system enables investors to gain from price fluctuations. There is a positive correlation between volatility and the likelihood of making money trading cryptocurrencies.
What’s the Earning Potential Statistically?
- As you develop knowledge and insight into trading tactics, you may hear from specific traders that your earning potential is almost limitless. For example, expert traders have a statistically significant monthly win rate between 100% and 200%.
Difference Between an Indicator and Strategy
- Indicators are often mentioned in discussions about successful crypto trading methods. Nonetheless, there are substantial distinctions between them.
- You get information from indicators and use that information to form plans. Indicators are numbers, graphs, and charts that provide information or offer insight. You then use the aggregated information and analysis from many indications to determine your entry and exit points.
Crypto Day Trading Strategies
Given this foundation, let’s examine the most effective crypto trading tactics.
Method for Making Profits in the Cryptocurrency Market Utilizing Relative Strength Index Diverg
As the name suggests, this method depends on the Relative Strength Index (RSI) indicator. Overbought was defined as an RSI reading of 70 or above, while oversold was defined as a reading of 30 or below. The RSI divergence approach is significantly more discriminating and helpful in avoiding misleading outcomes. The basic tenet of the technique is to watch for deviations between the RSI and the price. Both tend to move in tandem, although this might change if the market conditions differ. You’re looking for such distinctions to make the right trading decisions.
Scalping
Scalping is a strategy that takes advantage of high trade volumes. Scalping is one of several ways to trade cryptocurrencies. The most crucial part is getting out of transactions as soon as possible. It would help if you got out of a transaction before the market’s mood changes to maximize your profits. This is made worse because many scalpers trade more often than usual, sometimes with automated software. Consider that some scalpers execute between 10 and 20 deals per minute to get a sense of the pace at which they trade.
Scalping may be profitable, but only for individuals with a large amount of cryptocurrency to invest. This is because the return on investment from each scalp is relatively low. However, due to the reliability of these returns, even a modest initial investment might result in hundreds of thousands of dollars in profit.
Arbitrage
Arbitrage refers to purchasing a cryptocurrency on one exchange or market and then selling it for a profit on another exchange or market. The “spread” refers to the difference between the purchase and sale prices.
Since the cryptocurrency market is not entirely uncontrolled, arbitrage has become more popular for day trading. However, this lack of oversight has resulted in many exchanges, with costs that vary reasonably from one to the next.
Having a balance on many exchanges is a practical option for those interested in arbitrage. This is due to the impossibility of timeously buying cryptocurrency, transferring it to another exchange, and then selling it before the price fluctuates. However, it would help if you also considered the commission cost while deciding whether to use this method.
Method of Averaging Expenses Over Time (DCA)
If you want to invest in bitcoin but need help to put down the whole amount at once, dollar-cost averaging may help. You schedule your cryptocurrency investments for a specific time of day and day of the week. You may buy a cryptocurrency at a discount by spreading your payments over an extended period. This process may also be programmed for efficiency.
A Golden Cross or a Cross of Death
This strategy involves comparing the 50 MA with the 200 MA. These figures represent long-term moving averages, with the corresponding time frames being 50 and 200 days.
If the 50 MA crosses over the 200 MA, it forms a convergence, also known as a golden cross. to purchase at this time.
If the 50 MA drops below the 200 MA, this is known as a divergence or death cross. There is a sell signal here.
However, this strategy works better over many trading days rather than one.
Trading Within a Comfortable Range
In range trading, you focus on how far inside or outside that range the price of a cryptocurrency often fluctuates. Therefore, when engaging in range trading, it is essential to identify oversold and overbought areas. If the cryptocurrency market is in an overbought zone, it means that purchasers have satisfied their requirements, and the price will drop. In an oversold zone, on the other hand, the price will rise.
Indicators such as the Relative Strength Index and the Stochastic Oscillator are often used in conjunction with this trading approach.
Other Opportunities to Earn Crypto
Those intimidated by the learning curve or lacking time to devote to crypto day trading should not despair. For instance, Haru Invest takes care of everything on your behalf. First, acquire Bitcoin, Tether, or Ethereum, then transfer the funds to your Haru Invest account. Then, Haru’s seasoned traders execute your trades for you based on a proprietary blend of tried-and-true crypto investing methods.
Please review Haru Invest’s recent performance statistics to solidify your belief in this strategy and its profit potential. Consider the most recent week of data (1–15 June) to get a feel for how things have been going recently. A gain of 1.0216% (24.86% annualized) in the bitcoin account per two weeks. Every two weeks, a 0.6333% gain (15.41% annualized) was seen in the USDT account. The ETH account increased by 0.8071 percent every two weeks or 19.64 percent yearly. Look at the numbers from the past, and you’ll see they’re comparable to the current performance.
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