How to Day Trade Cryptocurrency: Best Strategy for Beginners

Because of this, when day trading, it is important to only use amounts you can afford to use and set appropriate stop losses along the way to prevent any drastic losses.

Because of this, we recommend steering well clear of these groups, and anything similar, including so-called ‘signals’ groups. Nevertheless, it isn’t free money, and it’s not for everyone. Do your homework and find out what’s on the up and focus your attention there. There are two main methods of backtesting, doing it manually and using some trading software.

Never accept a total loss. You don’t necessarily want to stare at charts all day do you? Avoid altcoins with low volume, this is trouble for scalpers. The most famous example of this was the Mt. There are also just as many experienced traders who really know what they’re doing and share a wealth of helpful trading strategies with the general public. According to their 2019 guidance, cryptocurrency must be treated as property (just like stocks, metals, etc.) Hodling is an Internet slang term for holding.

  • There’s quite a bit of research you need to do before you pick a broad trading strategy and dive in.
  • Do not enter a trade without a stop-loss, without fail.
  • You can tweak the trading bot, as per your preference, through following indicators like Stochastics or RSI on the 5- 30 minute timeframe.

This method follows similar trading sessions as in the foreign exchange (forex) market. The market consensus was that the price was too high. What is cryptocurrency long-term hold investing? They serve as a public ledger, cutting out intermediaries such as banks. HODLers tend to HODL to the top and then back down again (i. )

Since the prices of all cryptocurrencies are constantly changing, you can leverage these fluctuations to earn more ETH or BTC through your crafty trading skills. Do not waste resources (time and money) trying to prove you should’ve been entering this or that position. Therefore, the risk of your funds going up in smoke is much higher compared to bitcoin.

Furthermore, trading bitcoin doesn’t need to occur every single day. Day trading cryptocurrency isn’t for everyone and there is a lot to consider before you get started. Most of the major exchanges (including the decentralized exchanges) have APIs in which you can create custom trading bots.

Now that you’re familiar with the main trading terms, it’s time for a short intro into reading price graphs.

Trading Vs. HODling Cryptocurrency

Sure, you might as well be trading Monopoly money, but this is a risk-free way of gaining valuable experience as a day trader. The name itself popped up on Bitcoin Forum, as the user who wanted to express the enthusiasm about this trading strategy wrote: So whenever you place a buy order below the market price or a sell order above the market price, you become a market maker. If you’re unfamiliar with what your “private keys” are, or what types of wallets you should be using, check out this article: ” This platform allows content creators to freely host their websites or applications on Substratum host, without any censorship blocks. It’s a good idea to record every trade with the amount of net profit you make as well as the strategy you used. Since that time, Bitcoin fell to a low of $9,000 and is currently sitting at around $11,000. Never put all your eggs in one basket.

It's often considered a pseudonym for active trading itself.

Bitcoin to $200,000 and I’m Conservative: The Moon Carl in Exclusive Trader’s Digest

Now you’ve got the basic mechanics down, how do you know which currencies to pick and when to buy and sell? You look for the small gains that will accumulate into a big one. Crypto exchanges work 24/7, and traders have to monitor price changes all the time. The simplest one for beginners will probably be the Bollinger bands, but you can also use the Average True Range (ATR) or the Volatility Index (VIX) to help with trade selection. A trend-following strategy means that if the price goes up, a trader should find a cheap entry on drawdowns and sell after the price goes up the drawdown a bit.

If you are easily distracted or scared by the market movements, you can fail to be profitable, even with the perfect strategy. Privacy in today’s highly connected and digital world is a huge issue. Let’s now determine the appropriate place to go buy Bitcoin and what are the technical conditions that need to be satisfied. Making a living day trading cryptocurrency can be a lot easier due to the high volatility nature of the crypto market. For those who enjoy active crypto trading strategies, TRABOS will be very appealing to your aggressive style of trading. This book might not be for you. Perks of Trading: If short, the protective stop is the high on the day of entry.

But with cryptocurrency, the risk of losing money is much higher. The buy orders are called bids, since people are bidding on the prices to buy Bitcoin. S, the ‘property’ ruling means your earnings will now be deemed as capital gains tax (15%), instead of normal income tax (up to 25%). Therefore, it’s vital that you find a credible news source and connect with trustworthy people before trading. Is now the best time to buy? It is also possible to use the assistance of crypto bots and signal providers.

  • Anyone who had set low buy orders could easily double or triple his or her investment.
  • They are named after these animals because of the ways they attack their opponents.
  • It boasts a very strong reputation.
  • What is Cryptocurrency Trading?
  • If you took the time to read the whole day trading crypto guide, then you should be able to buy and sell Bitcoin and alts and make some daily profits.
  • Here, you need to be extra careful to avoid jumping into coins that are created as pump and dump schemes that rely on hype to drive up prices.

ICOs, IEOs and Token Sales

Too much hope for a reversal: Just pick a day trading cryptocurrency strategy and try it out. How to start day trading with 0: tips to start small and win big by d. thrader. Since the level of profits per trade is small, scalpers look for more liquid markets to increase the frequency of their trades. What does that mean? We employ a number of Analysts who create price charts here on Blockonomi. This is important for several reasons — the most obvious is mitigating your losses.

Ethereum’s technology is already being used by super-popular projects around the world, showing great success, and offering a glimpse of a stable crypto future. We believe these are three of the most trustworthy exchanges. Before you start trading cryptocurrency and getting into the world of overly-complex indicators and advanced technical analysis (TA), it is wise to first learn some of the more basic strategies. Unlike other strategies, checking the price regularly is absolutely not required, and should actually be avoided to prevent transient price fluctuations spooking you into an early sell. You can get your news from the financial sections of newspapers, Bitcoin financial magazines, websites, and even social media. The market is so volatile that big movements up and down are pretty common and you can capitalise on this through swing trading.

It’s new, fresh and exciting. Before getting bogged down by the complexities of highly technical indicators of cryptocurrency trading, you need to focus on a simple crypto-trading strategy. These are too counted as the top cryptocurrencies. Be wary of breaks in these levels though that could quickly take profits out of your reach. In the end, remember that you are trading for a reason while investing funds that you could completely lose. Forget the Wolf of Wall Street, this is a valid possibility in the crypto world for anyone with skill, patience and discipline.

  • That’s the end of my “Day Trading Cryptocurrency” guide!
  • “At what percent gain will I exit my position?
  • Ripple has many haters and I’ve been burned by it myself in the past – I sold 30,000 XRP at 20 cents… painful.
  • This could be a whole article on its own, but let’s briefly walk through a few of the main methods to analyse currencies and make informed predictions.

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Is there a risk? Just don’t do it. You may also be interested in reading our guide on the Best Cryptocurrencies Investments for 2019. “Scalpers” are traders who basically trade whenever any kind of fluctuation happens on the market. Research the currencies you’re considering buying to make sure they meet your investment goals, while also being companies whose mission you support. As a result, RSI tends to generate many false signals. As we discussed in the last tip, cryptocurrency is very volatile and you can quickly have large losses if the market moves against you. However, it’s also a full-time job that requires constant attention.

Keep the cryptocurrency that you use for day-trading on the exchange where you’re doing the day trading. So, you could go ahead and send your Bitcoin to your Bitcoin wallet in your Binance account, once you have set up such an account. This information can make you a target for criminals and other bad actors. High volatility suits day trading very well, so you have the right environment to succeed.

There are exchange fees to be paid, and the tax man will ultimately come knocking for his share. You should also keep in mind the exchange fees. Two-factor authentication, or 2FA, adds an extra layer of security to your account. If you are a risk taker, the smaller coins offer you a chance to risk your investment and make a huge profit within a day.

You Over Diversify Your Portfolio

This order combines the features of a Stop Order and Limit Order. Of course, such movements do not happen every day, but they are possible. That’s not to say that technical analysis does not have its merits, and there is certainly money to be made on short-term trades.

  • This is extremely important because little profits on large trade volumes can quickly disappear into fees.
  • Without volatility and liquidity, day traders would not be able to get in and out of transactions and would not be able to capitalize on their expertise.
  • Smaller altcoins that are less popular have the risk of their values plummeting as fast as they have risen.
  • The RSI is a simple momentum indicator that measures the speed and change of recent price movements to help identify overbought and oversold markets.
  • Always make sure to define a goal before entering a trade.

Cryptocurrency Day Trading Strategy

Different exchanges support different types of trade orders and provide different levels of security. If you’re paying commission fees for every trade, not only are you exposing yourself to a ton of market risk when scalping, but you can also get burned out by the fees before you make any profit. Always evaluate the situation and try to figure out why it happened. This includes: It is not controlled by any centralized power, and it uses the “scrypt” as proof-of-work. Google books, it will be your judgement call as to whether you set a take profit at 30 or choose to go after the expected move of the day. Typically, virtual trading is described as either short-term and long-term.


Volume is used by traders to identify how significant a trend is; Significant trends are usually accompanied by large trading volumes, while weak trends are accompanied by low volumes. Something you need to understand is you don’t have to buy a whole coin, you can buy 0. Last, but not the least what is the acceptance ratio of that coin. Fear can appear in the form of prematurely closing your trade, because you read a disturbing news article, heard a rumor from a friend, or got scared by a sudden dip in the price (that may soon be corrected).

When you day trade you’re trying to take advantage of cryptocurrency price fluctuations that typically happen within a day. There are two benefits to this. Traders can, therefore, easily make their decisions based on the wrong information, resulting in major losses.

You Don’t Take Action

The opposite is true: It is now common knowledge that you can make good money from day trading cryptocurrency. ” They’re letting their egos take control of them, and compared to the traditional stock market where 2-3% is considered extreme volatility, crypto trades are a lot riskier: It generates several buy/sell signals in comparison to most other indicators. Building an individual cryptocurrency strategy lets you broaden your spectrum of trading.

If you plan to day trade it would be in your best interest to review charts carefully and to make sure you have the whole story before investing. Throughout my trading career, I’ve used technical analysis 100% of the time and have found it to be integral to developing the best crypto trading strategy. Most cryptocurrencies can only be bought on trading exchanges and not on Coinbase and some cryptocurrencies are only available on one or two exchanges. To HODL the right way, average into a position over time (days, or weeks, or months, or even years) especially when prices are low compared to recent highs and lows. Like this Post? 10%, while makers don’t have to pay anything. You don’t want to lose your shirt and get your spouse angry at you. ” At exactly this point you will notice lame people flooding Reddit and Telegram trading groups and the exchanges’ trollboxes to talk about the ongoing pump.