What are the best ways to start crypto day trading? Investing in crypto is one of the most attractive assets to the investors today.
This is because this particular commodity is not tied to any government or bank which means that the value of the coin reflects the particular market in which it is traded.
However, the value of crypto assets increases and decreases rapidly which makes investing in crypto coins quite risky and therefore you will need to follow the right ways to start investing and day trading with them.
You may not know the right ways to start day trading crypto, which, ideally is one of the most exciting investment openings out there available in the crypto market today.
However, there is no need to worry if you plan to invest your time in crypto day trading because you are in the right place to know about it all.
4 Best Ways to Start Crypto Day Trading
Day trading crypto can be a very lucrative option but only to those who possess the right skill set.
This is required to do away with the challenges posed by the volatility of the crypto market.
For this, you will need to perfect the art of it and do proper technical analysis to build some productive trading strategies.
In this article you will come to know about the best ways in which you can make the most out of cryptocurrencies, which is a commodity that is extensively traded today.
1. Find the Best Platform
Just like any other crypto trading options, you should start with choosing the right platform or crypto exchange to start day trading your crypto coins.
This may not be as easy to do as it is said because most of these crypto exchanges are usually unregulated.
This means that there is no single centralized place where you can buy and sell crypto coins.
Also, there is a wide variety of such exchanges to choose from which will make the process even more overwhelming.
There are several different factors to consider while choosing the right platform to day trade.
Some of the major factors that you should look into include:
- Years in business where more the number of years the better
- Exchange and asset liquidity
- Trading and other fees
- Crypto coins supported and
- Deposit methods.
You should also go through the user reviews by visiting different websites and crypto communities in order to evaluate a crypto exchange correctly.
2. Select an Investment of Interest
Once you have selected your preferred crypto exchange for day trading crypto, you should now focus on the particular asset you are interested to invest in.
For this, you should not only read the charts of the coins but along with it you should also consider the volatility, liquidity and trading volume of the particular coin you want to trade with.
Apart from that, there are a few other aspects that will affect your investment or trading results and therefore you should consider them as well. These are:
- Knowing about the blockchain
- Size of the network
- Governance and control and
This will allow you to know the uniqueness of the blockchain on which the particular crypto coin works.
3. Follow the Right Strategy
Next, you will need to choose the right strategy for crypto day trading among several that are available and equally good.
- Arbitrage – You can use this strategy especially with crypto pairs. This process will allow you to buy a particular crypto from one exchange and sell it immediately on another at a higher price thereby making profit from the price difference.
- Bot trading – This is also a good strategy to follow. You will have automated software and use it to buy and sell crypto coins at a predetermined time when the predefined price requirements are met. This process reduces the risk in trading and amount of losses.
- Long straddle – This process is known by several names such as option straddle, buy straddle, or simply straddle. This process involves buying a put and call orders both for the same crypto, expiration date and striking price.
- Range trading – In this process you will be able to capitalize on the non-trending markets by indicating a high and a low price that is quite stable. You can do so by analyzing the resistance and support levels on the charts. Typically, this strategy is followed by those crypto day traders who want to buy a crypto coin when it is oversold at a lower price or and sell it when it is overbought at a higher price allowing them to make profits.
- Scalping – This is a crypto day trading strategy that will provide you with the fastest results since you will be able to leverage a hefty amount of liquidity to make the most out of the small price swings. Most day traders favor this process because they can automate the process with bots. It is also a process that is less risky and comes with potential profitability.
- Technical analysis – TA or Technical Analysis refers to studying the historical price of the coin as well as its volume data. This helps the traders to predict a trend and the opportunities to make profits.
- High frequency trading – If you can create a computer program you can use this strategy for day trading crypto. This program typically comes with algorithms that will not only help you to analyze market data but also know the right time to enter and exit the market. The time is most accurate since it is represented in milliseconds. However, you better avoid this strategy if you lack technical competence.
- Money Flow Index indicator on the 5-Minute Chart – This is a specific strategy wherein you will use only one indicator to find out when the institutions are buying or selling crypto coins. However, the best time to trade is when the MFI reaches the 100 level.
- Hiding protective stop loss – Another good strategy to trade your crypto is to hide the protective stop loss in the most obvious place which is below the low of the day. If it breaks below, it will indicate a swing in the market sentiment when you should get out of your trade.
No matter whichever strategy you choose for day trading crypto, you should never start it until and unless you are prepared for it.
In order to do that, you will need to analyze the market based on the available price charts, trade patterns, price of coins, trading volumes and other technical indicators.
This will ensure that you pick up the right coins with high liquidity and volatility.
In addition to that, you should stay abreast with the latest happenings in the crypto market to know the market sentiment.
You can do so by visiting several crypto news sites and social media platforms.
4. Know the Pros and Cons
Any type of crypto investment or trading comes with a fair amount of risk and reward and therefore you should know the pros and cons of crypto day trading as well.
As for the merits of crypto day trading, it will allow you to trade freely only if you have access to a crypto exchange.
The exchanges do not have a high barrier to entry.
You will also be able to buy or sell particular types of crypto coins such as Bitcoin in small fractions if you do not have large capital to invest in.
And, you will be able to make anonymous trades from anywhere and anytime of the day since the crypto exchanges are open 24/7 for 365 days in a year.
As for the downsides of it, there is a high chance to incur huge losses just as you can make profits in crypto day trading.
You will also not have too many patterns to analyze the behavior of a token since the market is open all around the clock and year.
For whatever is available, you will need to stay glued to your computer screen.
And, there are chances of scams, technical glitches and hacking of accounts, all of which may result in the loss of your money, often permanently.
Also, timing your trade can be difficult which is necessary to make profit in day trading crypto.
Apart from that, making too many trades will involve a small fee but it will add up soon to a high amount which will eat up your profits.
Crypto day trading is lucrative but comes with high risk. It is only when you know the right way to start and carry on with it you will be able to make profits in this form of crypto trading. This article must have helped you in that matter a lot.