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Crypto Day Trading

Crypto Day Trading: All You Need To Know

To understand what crypto day trading is, you must first know the concept of day trading in general. Day trading, also known as intraday trading, includes a set of means and methods that aid in generating gains based on short-term price actions and development. The goal that a day trader chases is ending the day with a higher value of assets than the beginning. Crypto day trading operates on the same concept and involves putting money into a crypto asset for benefitting from it in the short term.

Day trading in the crypto domain is often considered risky since it is the most volatile financial market. Moreover, it is not a piece of cake to ace the race in this domain and requires a lot of determination, dedication, and concentration. Therefore, an in-depth and researched knowledge of the domain is required. 

In addition, one has to know several strategies and has to formulate strategic planning for every day and for every minor change in the market. Therefore, the entire process becomes highly complex. This is what the article will help you in, understanding the ‘complex’ concept better. Also, we would briefly discuss the strategies and tips one should follow for day trading in the crypto market.

Crypto Day Trading Fundamentals

Crypto day trading is an investment tactic that involves the acquisition and sale of stake within the same day in order to make a gain on a daily basis and not rely on long-term modes. Due to the short-term motive, it can also be considered a part of the swing trading crypto category. The process is relatively faster than other means of profiting from the crypto market, therefore, is too risky and complex to master.

The ultimate goal of this strategy is to take advantage of small price movements in the crypto domain. It might even involve gains that are made in just a fraction of a second. The timing and correct decision-making are crucial to minimize risks and maximize profits. However, this strategy is considered to be highly profitable despite the dangers that ensue.

Intraday trading in the crypto domain is not mere guesswork and requires a lot of other determinants to benefit from it. Strategy formulation, historical data, technical and fundamental analysis, and even studying market sentiments play a vital role. However, it is seen that a majority of day traders prefer technical analysis for planning the trading actions. Price actions, trading charts, trade volumes, and technical indicators aid in the process.

Another important point is that there is no best crypto for day trading and one should always count on more than trading investment. This acts as a barrier against the risk of gambling away all funds in a single cryptocurrency. Profits from one digital token may wave off any losses from the drop in any other coin(s).

In addition, these traders also keep an eye on the latest updates and news about crypto assets that could affect the price actions. Through social media, they often try to study the public actions that follow such updates. But they generally focus on the short-term implications of these developments.

Why Should You Day Trade Crypto?

The main reason to undertake crypto day trade operations is to profit from it on a daily basis. Moreover, it has better earning opportunities than other financial instruments or commodities as the cryptocurrency market is the most volatile.

However, not everyone should dive into crypto intraday trading and gamble away their possessions. You should only participate in crypto day trading if you have in-depth knowledge of the domain and can analyze the ongoing market trends. For day trading cryptocurrency, understanding the technical indicators is also equally important.

Intraday crypto trading is a great investment opportunity as it includes benefiting in the short term and doesn’t require one to wait for months to earn any income from the domain. Instead of waiting for months or holding stakes, one can choose to trade their holdings for profit within a single day.

A Look At The Crypto Day Trading Strategies

As mentioned earlier, one should formulate an effective day trading strategy to profit from this domain. The daily cryptocurrency trading tips will also be discussed in detail in one of our other articles that explain how to day trade cryptos. However, a brief understanding of the day trading cryptocurrency strategy list is provided here.

Scalping

Scalping refers to a trading means where the day trader indulges in multiple trades to benefit from the small gains from each trade. These profits add up to a lump sum by the end of the day.

High-Frequency Trading (HFT)

HFT strategy involves profiting from price fluctuations in a small period of time, even seconds. Traders use a trading bot to perform such trading activities as it is impossible for a human to be efficient in it.

Range Trading

Range trading uses the assumption that the crypto prices would move in a specific range. Any movement outside the range would be considered an indication of an abnormal price trend to follow. The trader can then base his trading actions on it. For instance, if the price falls below the lower limit, a downtrend is anticipated and the trader should sell his holdings.

Technical Analysis

Technical analysis involves the usage of statistical information on the crypto market. It requires numerous statistical calculations on historical price action data due to the belief that past market trends would somehow affect future price movements. The data from price-tracking websites such as CoinMarketCap is highly beneficial for such an analysis.

News and Sentiment Analysis

The news and sentiment analysis is similar to technical analysis but it involves the prediction of human reaction to a particular development and how it will affect the demand for crypto assets. This can be done by following news portals and social media posts. The day trading crypto Reddit posts are one of the major social media trends to note.

Arbitrage

Arbitrage requires the acquisition of crypto assets on one crypto exchange and selling them on another. This strategy ensures profits due to the difference in prices on the two crypto-trading platforms.

A Recap

Crypto day trading is a strategy that is highly complex and requires a lot of determination. The particular trading technique aims at profiting on a day-to-day basis. However, one must be well-versed with the crypto domain and should know its technicalities before diving in. The day trading strategy or tips that can be followed for the same include scalping, High-frequency trading, range trading, technical analysis, news and sentiment analysis, and arbitrage.


Frequently Asked Questions (FAQ)

1. How to day trade cryptos?

The first step for day trading crypto involves holding some stake in the crypto market in the form of Bitcoin (BTC), Ethereum (ETH), or any other preferred crypto token. The next step is to create an account on any major crypto exchange network like Binance, Coinbase, or eToro and deposit funds. The final and most important step is to formulate a strategy, keeping in mind the tips shared earlier in the article, and start trading. For further information refer to the above-mentioned link on how to trade cryptos.

2. Which is the best crypto to day trade?

As mentioned earlier, there is no single crypto to invest in. However, here is the best cryptocurrency for intraday trading list for consideration that counts some of the good day trade investments.

Bitcoin (BTC)
Ethereum (ETH)
Polygon (MATIC)
Solana (SOL)
Ripple (XRP)

In addition, it is recommended to check the volatility, volume, any latest update, and trading charts of the crypto asset before trading it.

3. Which platform is the best crypto exchange for day trading?

There is no single platform that is the best one. However, the crypto exchanges that facilitate day trading highly include eToro, Binance, and even Coinbase.

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