Best Crypto Day Trading Strategies

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.

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.

Top Cryptocurrencies

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.

• Day traders can specifically use this strategy to buy when crypto is oversold, and sell when it’s overbought to turn a profit.
• The long straddle — also known as the buy straddle, option straddle, or just straddle — involves the purchase of both a put and call order.
• Cryptocurrency trading is the exchange of digital currency between traders.
• However, it’s essential to trade crypto assets with high volume and market cap, as they have better liquidity.
• Crypto day trading is a high-risk, fast-paced style that is not appropriate for everyone.
• The main goal of day trading crypto is to earn profits from small price moves in the market.

It works by looking for discrepancies between the price and the RSI indicator. Normally, both the price and the RSI move in roughly the same direction. However, there are times when the price is falling but the RSI is rising, and vice versa. This only happens when there’s a subtle shift in buying or selling volume and is a tell-tale sign that momentum is in the early stages of reversing.

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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 immediate edge fake 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.

• Scalpers may exit a trade seconds after entering, and many use automated bots to increase the frequency of their trading cycles.
• Scalping is a cryptocurrency intraday trading strategy in which traders seek to capitalize on increased trading volume.
• If the market starts to revert to the mean and your position moves into profit, you can add more size if you’re comfortable and your risk tolerance allows.
• Trades will come around less often, but a slightly higher timeframe is a good starting point for feeling out the pullback trade and will allow you more time to plan your entries.

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.

Crypto Range Trading

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.

• Day traders favor scalping crypto because of its ease of automation for bots, low risk, and potential profitability.
• This strategy is similar to technical analysis because it involves predicting, but with one significant difference—it’s based on human reactions and actions rather than price trends.
• Traders should set time aside to familiarize themselves with the upcoming rules and regulations taxing profits earned from crypto.

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.

A Beginner’s Guide to Day Trading Cryptocurrency

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.

• The sooner you accept the fact that there will be losses, the better.
• Crypto day traders can avoid overtrading by separating rational trading from emotional trading.
• High-frequency traders use computers programmed to host sophisticated algorithms to take advantage of price changes that occur in seconds or even milliseconds.
• Volatility is highest in altcoins with small market caps compared to the more popular and well-known cryptocurrencies like bitcoin or ether.
• So, the golden rule of trading is to focus on risk-reward instead of finding a highly accurate strategy.

It is important for both beginners and experienced traders to understand and evaluate the risks involved before engaging in day trading. Developing a comprehensive trading plan, setting realistic profit targets, and implementing effective risk management strategies are essential steps to mitigate potential losses. The stable nature of the price levels allows for quick and easy identification. That helps traders and crypto investors to anticipate and react prudently when the price levels are tested based on the market data. These levels are inflexion points where price action is expected, either a reversal or a break.

Day Trade Crypto PDF Download

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.

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.

steps for beginners to start day trading crypto

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.

• It involves shorting tops and buying bottoms – without getting caught offside.
• It demands considerable knowledge, experience and discipline to achieve consistent success.
• That lack of regulation means that there are numerous exchanges, and they tend to have reasonable differences in prices.
• Before you start crypto day trading, however, there are a few things to make sure you know, including some great strategies.
• However, it is important to remember that the above two trades are examples of a successful prediction.

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.

Is crypto day trading safe?

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.

• Scalping is a strategy for making a small profit from a large number of trades, which adds up to a larger profit.
• Essentially, a trading bot is a kind of software programmed to analyze cryptocurrency market trading data.
• It takes lots of effort to predict the rate of certain crypto even for the next 10 minutes.
• At a point, Bitcoin traded at a 40% higher price in South Korea than in the U.S., which was known as the “Kimchi premium,” and it showed up multiple times.
• Crypto day trading can be extremely difficult and EndoTech does it all for you.

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.

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• Most arbitrage opportunities are fleeting and caused by human error.
• If the RSI is above 70, i.e., overbought, it’s likely to fall quickly.
• Depending on your strategy, you may prefer to lock in profits as soon as there is a high volume push toward the prevailing trend or to scale out slowly as the market moves in your favour.
• The flip side of unprecedented price surges of several hundred percent is sudden drops.

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, – 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.