Crypto day trading is a very popular trading platform used by traders around the world every day. This is a short-term trading strategy, the main idea of which is to make quick profits. Day traders are buying and selling the cryptocurrency during the same day and this is where the name of this strategy comes from.
Day trading is considered to be a high-risk strategy, which takes advantage of the high volatility and liquidity of the crypto trading market. Crypto day trading requires investors to have very deep knowledge and understanding of the market in order to make profits.
This trading strategy also requires a lot of attention and a hands-on approach on the traders’ part. In fact, many traders view day trading as a regular job and not an additional way of income.
Also, while those using buy-and-hold strategy are concerned about the long-term prospects and success opportunities of a certain cryptocurrency, day traders are heavily focused on the ability of the cryptocurrency to make short-term profits.
There are different types of tools and programs that many day traders are using to make the market easier for them. As the crypto traders using the day trading strategy are likely to do an extensive market analysis, they have to focus on every little detail about the market.
Many of the day traders are using automated trading software to make their job easier. Crypto trading robots are very helpful for day traders as it is able to analyze the market in a much easier and effective manner.
When it comes to market analysis, there is always some kind of limit that humans have. On the other hand, there is no such limitation for crypto trading robots. For example, the Bitsgap trading platform is able to directly connect to your exchange account, from which, the trading robot can trade cryptocurrencies for you.
This way, you can make sure that you do not miss desired market conditions. The trading bot can keep scanning the market at any moment, making sure that you have access to the best possible market conditions.
How does day trading work?
As we have already noted earlier, day trading is a very popular crypto trading strategy. Although it might sound a bit too demanding, it works in a simple manner.
The main idea of the day trading strategy is to take advantage of the price movements in the crypto trading market. Whenever you are trading using the day trading market, you are opening one position a day. The position that you have opened is closed before the end of the 24 hours.
In most cases, day traders are using leverage to increase their profits. Without leverage, the profits might not be that much.
Steps to start trading
There are a few steps that every trader has to take before they start using this crypto trading strategy. The first step that you will have to take is to choose a crypto exchange you want to use.
It is very important to trade with reputable and licensed crypto exchanges to make sure that your funds are kept safe in all cases. You should also keep in mind the fees that the exchange charges before you decide to trade with this strategy.
Also, focus on factors such as year of establishment, supported cryptocurrencies, deposit methods, and reviews of the clients. Considering all of these factors can be enough to give you a general idea about the exchange you are using.
Then, it is very important to choose the cryptocurrency that you want to trade. The decision should be made according to the performance of the cryptocurrency and its likelihood to fit the day trading strategy. Not all cryptocurrencies are great for this strategy, make sure to choose the one that has higher volatility. If the cryptocurrency is not volatile enough, it can be hard to make good profits with this strategy.
Simply put, understanding and accounting volatility should be your best friend. Your profits depend on how much the price changes during the day. In most cases, altcoins with small market caps tend to be more volatile, especially compared to more popular and well-known cryptocurrencies.
There are different types of strategies that you can use as a day trader. For example, one of them is the long straddle, also known as the buy straddle, which is a strategy that involves buying both a put and a call order.
Then, there is the range trading, which is the best on the sideways markets, or non-trending markets. The idea of this strategy is to buy the cryptocurrency when its price is oversold when the price is low, and sell it when the market is overbought, selling at a higher price, to make profits.
There are even shorter time-frames used by some crypto traders. For example, there are some people who want to make profits from even the smallest price movements in the market. These traders usually open and close several orders during the day, most of them lasting up to 15 minutes.
This process is called scalping, which is a short-term trading strategy. This strategy is very similar to the day trading strategy, but it takes advantage of even smaller price movements in the market.
All in all, day trading is a very popular strategy in the cryptocurrency market and it is used by a lot of traders around the world. However, you should always remember that this strategy requires a lot of attention from traders and should only be used if you are ready to treat crypto trading as a full-time job.