7 Best Day trading Cryptocurrency Strategy for Bitcoin and Altcoins

Plus, with its robust recovery features, it’s no wonder ZenGo has never been hacked. Any investor should research multiple viewpoints and be familiar with all local – regulations before committing to an investment. Website personnel and the author of this article may have holdings in the above-mentioned cryptocurrencies.

• However, even there, investors need to tread with caution because even cryptocurrencies in the top can collapse, as happened to the LUNA coin.
• With time and experience, traders can improve their ability to predict short-term price movements and execute successful trades.
• Understanding crypto trading strategies is crucial for both beginners and experienced traders in order to navigate this digital landscape effectively.
• It’s a costly mistake to enter crypto day trading without adequate research on the market and your targeted investments.

By closing a portion of your position quickly, you will reduce the risk of an offside trade and can choose to hold for a longer period. If you’re holding a long trade, position your stop below the support zone, accounting for wicks and potential price spikes to the downside. In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning. Once you’ve plotted out your support and resistance zones and identified a potential setup, it’s time to execute.

How to Buy Crypto Anonymously

Statistically, some experienced traders can earn 100% to 200% of their investment every month. While the fee charged on each transaction is little, it can quickly add up when you trade daily. Traders use price charts to evaluate the market, predict trends, and develop trading techniques. Understanding how to read the charts helps you determine whether the market is going up, down, or sideways. It helps you determine which technique to use in each trend direction.

This plan should outline your entry and exit points, risk management strategies, and the indicators you will use to make informed decisions. John A. Bollinger developed Bollinger Bands (BB) as a technical analysis tool in the 1980s. A moving average of price action over an extended period of time is used in the middle band of the BB to divide the trading range into three bands. In addition, the lower and upper bands create two standard deviations away from the moving average, which provide traders with insight into support and resistance levels.

Proven Crypto Day Trading Strategies [2023 Guide]

There are many cryptocurrency trading robots available on the market. If you are here because you are thinking that investing in cryptocurrency is a shortcut to wealth, don’t, it’s much harder than you think. Cryptocurrency day trading has become increasingly popular as individuals seek to profit from the volatile nature of digital currencies. The good news is that most charting programs will include trend lines, so you don’t have to calculate them. On-Balance Volume, or OBV, is a technical trading tool used by investors to track the accumulation and distribution of securities. In the late 1960s, Joseph Granville hypothesized that volume precedes price changes in stocks.

• Crypto trading bots can streamline the process of looking at price movements, exchange fees, and opportunities to make short-term profits on trades.
• With careful analysis and risk management techniques, they can take advantage of short-term fluctuations to generate significant profits.
• These time frames tend to show stronger shifts in the mid-to-long-term trend.
• If you took the time to read the whole-day trading crypto guide, then you should be able to buy and sell Bitcoin and adults and make some daily profits.

You will likely be trading higher than usual leverage, and it’s a good idea to get in and out as soon as practicable. This may be where volume dies down, the market consolidates, or wicks start forming, showing that traders are taking action and attempting to push the market back towards the mean. Mean reversion positions are some of the most difficult to manage and master. In this section, we’ll cover how to place stop losses and profit targets and provide some tips on minimising risk.

Pros and cons of crypto day trading

So you have picked your favourite crypto day trading exchange and now looking for a concrete strategy that advanced traders use? With this strategy you will be able to avoid the volatility of the market and survive how does leverage trading work crypto the short-term price movements in crypto trading. Cryptocurrency day trading strategy involves entering and exiting a position in the market within the same day. It is also referred to as «intraday trading»,

• This is why day traders will typically trade highly liquid market pairs.
• However, it is crucial to use leverage cautiously and understand the potential consequences of increased exposure to market volatility.
• If you are here because you are thinking that investing in cryptocurrency is a shortcut to wealth, don’t, it’s much harder than you think.
• Normally, both the price and the RSI move in roughly the same direction.

The exchange platform (i.e. Binance) acts as a middleman – it connects you (your offer or request) with that other person (the seller or the buyer). With a brokerage, however, there is no “other person” – you come and exchange your crypto coins or fiat money with the platform in question, without the interference of any third party. When considering cryptocurrency exchange rankings, though, both of these types of businesses (exchanges and brokerages) are usually just thrown under the umbrella term – exchange. As I mentioned earlier, day traders look to make quick, short-term gains, which can be lower than 1% per trade. These traders will have a very large «bankroll», meaning that they can still make good money even if the percentage gains are small. For example, if you were day trading stocks on the NYSE (New York Stock Exchange), it is very unlikely that the prices would change that much in a 24 hour period.

What is Peer To Peer (P2P) Trading in Binance?

They can identify potential buying or selling opportunities, determine entry and exit points for trades, set realistic profit targets, and manage risk effectively. Market analysis serves as the foundation for developing sound trading strategies that align with individual goals and risk tolerance. When it comes to day trading cryptocurrencies, selecting the right exchange can significantly impact your trading success. Binance, Coinbase Pro, and Kraken are three of the best crypto exchanges that cater to the specific needs of day traders. Whether you prioritize high liquidity, low fees, advanced charting tools, or security features, these platforms offer a diverse range of functionalities to suit various trading styles.

For a crypto day trader, market volatility is an important aspect because it creates opportunities to make profits. Volatility and asset liquidity are two major elements that crypto day traders need to actively participate in the crypto market. However, crypto day trading involves more than just reading the charts.

What Should I Know About Day Trading Cryptocurrency as a Beginner?

It is also important to closely monitor market conditions and adjust your strategy accordingly. Cryptocurrency markets can be highly volatile, and being adaptable to changing market dynamics is crucial for day traders. Regularly monitoring price movements, volume, and market sentiment can provide valuable insights for making profitable trades. The other day trading cryptocurrency strategy often used is chart analysis.

For budding crypto day traders, the options and differences between the many crypto exchanges can be overwhelming. For instance, imagine Alex, a seasoned trader, who spends his days analyzing market trends and executing trades based on minute-by-minute price movements. He may take advantage of small price discrepancies and profit from – the volatility by repeatedly buying low and selling high within a single day. While long-term holding has its merits, some traders prefer more active approaches to cryptocurrency trading. Short-term strategies, such as day trading, aim to capitalize on the frequent price fluctuations that occur within a single day or short time frame.

Best Crypto Trading Strategy

But, the majority of the crypto traders using the HODL strategy are investing when the price is very low and take their profits once the price increases drastically. Staying informed about the latest news in the cryptocurrency industry is essential.

• There are no commissions on Plus500, and the platform only profits from the spreads that you pay.
• In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning.
• If there is an exodus of Bitcoin miners out of a specific country, for example, the price could tank due to miners dumping coins.
• You should make a list of cryptocurrencies and keep monitoring them.

If this happens, watch the tape closely, double-check your stop loss and prepare to take some size off if you’re uncertain. However, as demonstrated on the Waves (WAVES) chart below, stop losses should generally be placed slightly above what you perceive to be the fullest extension of the move. That said, there are key signs to look for that can help identify mean reversion setups. Once the rejection of the range boundary has been confirmed, you can sit tight and wait for the trade to play out. Day trading is a high-risk and complex trading approach that shouldn’t be attempted by beginners.

How to get started with day trading cryptocurrency

The Ichimoku Cloud provides more data points than the traditional candlestick charts. While it seems complicated at first, those familiar with reading charts often find it easy to understand with well-defined trading signals. The divergence between the stochastic oscillator and trending price action is also an essential reversal signal. Alternatively, traders should look for changes in the stochastic oscillator for signs of future trend shifts. If the RSI is above 70, i.e., overbought, it’s likely to fall quickly.

• Security breaches at centralized cryptocurrency exchanges are risks that you should understand.
• The most important thing to understand about technical analysis for your crypto trading strategies is how to read a candlestick chart.
• However, if the timeframe is higher, the level will likely be more recognisable and stronger.
• For traders looking to maximize profits in this market, they need to make moves fast.

Think of cryptocurrency trading bots as your tireless digital assistants, working around the clock analysing market data, executing trades, and managing risk on your behalf. Ultimately, the decision to engage in day trading should be made based on individual risk tolerance, time commitment, and expertise in market analysis. A good trading strategy is crucial to becoming a successful trader. A proven system helps you take advantage of all market conditions and make informed decisions that reduce your trading costs, improve profitability and minimizes the market risk. It is a type of algorithmic trading strategy used by quant traders.

IFCM Trading Academy

This is because they weigh recent data more heavily than older data, so they respond to changes more quickly. Simple moving averages are then more popular for longer periods of time. Scalping is a popular strategy among day traders who want to turn multiple smaller profits daily instead of banking on big wins. Scalping has a fast turnaround and takes advantage of volatile crypto price changes that last minutes or seconds. Unlike swing trading, which is based on movements due to market sentiments, scalping relies on market momentum. Day trading crypto refers to a trading process in the cryptocurrency market where traders enter and exit the market within a single day.

• Instead of investing all your money in a particular cryptocurrency at once you divide it into small amounts, choose a particular time and day of the week and only buy at those times.
• Alternatively, traders should look for changes in the stochastic oscillator for signs of future trend shifts.
• It’s important to research and understand each strategy before implementing it in your own trading.
• Asset liquidity refers to how easily an asset can be converted into cash without changing its price.

The 2-hour chart in the crypto market works well for the system I will teach you. Fundamentally, you need a trading plan to trade the markets successfully, whether it’s crypto, stock index, or Gold CFDs. Before we get to the nuts and bolts of a day trading crypto strategy, let’s give you a story for a clear perspective. Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks.