In recent years, the cryptocurrency market has witnessed exponential growth, attracting traders from all corners of the world. For those looking to capitalize on short-term price movements and take advantage of day trading opportunities, selecting the right exchange can make all the difference. The most important thing to understand about technical analysis for your crypto trading strategies is how to read a candlestick chart. The limits of the main rectangle of the candlestick are the crypto’s opening and closing prices for the day. If it is green, it rose in value, and if it is red, it dropped in value.

• Depending on your risk tolerance and ultimate trading goals, you can choose the strategy that best suits your trading ventures and goals.
• Once you’ve got answers, we are ready to provide you with the next steps.
• For instance, it’s uncommon for blue chip stocks and other tradable commodities to see a 10% rise in value within a single day.
• If you’re holding a position of significant size, it may be worth placing multiple, smaller stop losses.

It takes the emotion out of trading and instead it trades using strong artificial intelligence to perform fact-based technical analysis. In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win. You’ll find the nerves of steel and intuitive trading platform through research, research and more research. Let’s take a look at the X-factor in this gumbo, that is, the best crypto day trading strategies you can use.

How to get started with day trading cryptocurrency

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. It’s worth noting that this crypto trading method is most effective in a highly volatile market (when prices are rising or falling sharply). When the market moves sideways, however, it can trigger multiple buy and sell signals as the two moving average lines converge and diverge more frequently. This usually happens when there is a lot of uncertainty in the market and there’s an equal number of bearish and bullish traders. This is the only problem with the trading strategy, but the average gains tend to outweigh any losses incurred from periods of low volatility.

• Although this sounds like a small amount, in the long run, this will protect you from going broke.
• For this trade example, we will be scalping on the 1-minute chart using 3x Exponential Moving Averages (EMAs) to help with setup identification, trade execution and stop loss placement.
• You have to be able to accept losses when they happen, as this is a part of trading.
• You can apply different trading strategies in different situations, depending on the nature of the market and your competencies.
• 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.

A single number, ranging from 0-100, indicates how healthy and robust the network is at a given moment. Anyone interested in understanding Bitcoin’s stability and security can benefit from this. If you lose money too fast, it can set you on a path of revenge trading.

Learn Trading with IFC Markets

Breakouts can occur on any timeframe from the 1-minute to the daily and be used in combination with any trading style. Stop-loss placement for this trading style is arbitrary and will take time to master. It’s not uncommon for reversals to happen mid-way through trading zones. Make sure you don’t position your stop loss too close to the range boundaries, as you will likely get wicked out. Size your position, set your stop loss, and wait for the trade to play out.

• US-based traders can use only domestically regulated crypto-trading platforms, so this is a major factor to consider when researching the right platform.
• For instance, imagine Alex, a seasoned trader, who spends his days analyzing market trends and executing trades based on minute-by-minute price movements.
• In addition to price analysis, traders have to keep track of volume.
• They will usually use volume, price action, chart patterns, and technical indicators to identify entry and exit points for trades.

Technical trading is based on the belief that past prices have some effect on what future prices will be. It takes lots of effort to predict the rate of certain crypto even for the next 10 minutes. – If you can read charts and market signals, there is no guarantee that your prediction is correct. Like any other type of trading, day trading may bring you either considerable profit or loss.

Crypto Essentials

The bot monitors the market and, based on the given trading logic, executes trades continuously for as long as it is connected to the exchange. By instituting specific trading logic, High-frequency trading can be combined with many other strategies. The difference between gambling and trading is an effective strategy. A good strategy can be the difference between one or two lucky streaks and consistent long-term returns. You can apply different trading strategies in different situations, depending on the nature of the market and your competencies.

• We’re also going to alter the default buying and selling levels from 80 to 100 and respectively from 20 to 0.
• Are you able to handle all this weight on your shoulders while potentially losing money?
• Essentially, a trading bot is a kind of software programmed to analyze cryptocurrency market trading data.
• Every exchange will have a chart, so it is a good idea to learn how to analyze pricing movements.
• If you’re trading short, place your stop loss outside the resistance high, remembering to account for wicks to the upside.

After the rejection is confirmed, you should consider moving your stop loss to break even or trailing it with the market. This will ensure you’re not out of the money if a large order comes through and momentum swings. Depending on whether it’s a long or short setup, stop losses should be placed above or below the range with enough room for wicks and small fakeouts. If the range is compromised and a breakout occurs, this will likely happen quickly and on high volume.

High-Frequency Trading (HFT)

If a market has low liquidity and you buy at market price or are stopped out of a trade, your order will be executed immediately at the ‘best available price’. If liquidity is low, the best available price immediate edge may not be optimal, resulting in an instant offside trade or a larger-than-expected loss – this is known as slippage. This can help you gauge where to place your stop loss and get a feel for the market.

• Also, there is an additional point you should consider when it comes to trading bots.
• Overbought means that buyers have satisfied their needs and the stock is likely to sell; oversold means the opposite.
• You can allocate funds to each strategy according to your personal preferences.

However, if the timeframe is higher, the level will likely be more recognisable and stronger. While there is no ‘perfect exit’, it can be helpful to take profits incrementally. 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.

Comparison of Best Crypto Investment Strategies

They also employ sophisticated algorithms that constantly analyze market conditions and adjust trading strategies accordingly. By adhering to a plan and avoiding impulsive trades, you can minimize the emotional impact on your trading and increase your chances of making profitable trades. Staying informed about the latest news and developments in the cryptocurrency market is another crucial strategy. Being aware of market trends, regulatory changes, and major announcements can give you an edge in making timely trading decisions. Utilizing reliable sources of information and staying updated with market analysis can help you identify potential trading opportunities and avoid sudden market downturns.

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. Since the positions are smaller with scalping, traders can evaluate the gains or losses at the end of a day instead of long-term investing. Because of the volatility of the markets, traders can reliably earn small profits over time that can amount to considerable gains in the long run.

Step #1: Choose High Volatility/Liquidity Coins

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.

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. 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.

Risks and Benefits of Day-Trading

High-Frequency Traders take advantage of price movements in seconds or even milliseconds. You can book to profit because of the difference in liquidity and trading volume. To do this, you must open accounts on exchanges showing a significant difference between prices for the crypto which you are trading. This is – an active investing strategy where you identify a range in which you buy or sell over a short period. For example, if a coin is trading at $35 and you believe it will rise to $40, then trade between $35 and $40 over the next several weeks. With this strategy, both the risks and the possibilities are endless.

• Traders can take advantage of both upward and downward trends in the market throughout the day, potentially maximizing their returns.
• Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
• Before day trading Bitcoin or any other altcoins, it’s also important to check how liquid the cryptocurrency you wish to trade is.
• If money starts flowing back in and the market shifts against you, it’s better to have locked in small profits than see a once profitable trade get stopped out for a loss.

However, it is essential to keep in mind it is also by far one of the most high-risk ways to interact with cryptocurrencies. Understanding the details of how to day trade crypto is very important if you want to see long-term gains. Range trading is based on the assumption that crypto prices will normally —over a given period— only fluctuate within a certain range.

Accepting losses

Some traders will tell you that there is no limit to your earning potential once you gain experience and understand strategies. 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.

• Before you get started with crypto day trading, familiarize yourself with the requirements.
• Crypto day traders can avoid overtrading by separating rational trading from emotional trading.
• Traders can take advantage of the value difference between exchanges.
• As a crypto day trader, it is crucial to follow several indicators as a part of technical analysis.
• 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.
• They inevitably leave tracks of their activity in the market and we can read that activity through the MFI indicator.

“Trading is all about having an edge in the game and knowing the mathematical probability behind each trade”. By winning big and losing small, a single win can potentially cover 3 or more losses. If you apply this methodology in the long run, you will be a winning trader. Another important oscillator that technical analysts use in crypto is the Money Flow Index (MFI). The MFI can be used in addition with the RSI to check whether the price of BTC is trending towards a bullish or bearish divergence.