Before we proceed with cryptocurrency day trading strategies, there’s something I want you to know. If you’re interested in day trading cryptocurrency, then taking an online course can help you. I’m not telling you this because I serve as a coach for them, but The Better Traders’ 15 Minutes to Financial Freedom course is worth it!
You’ll be on the right path with The Better Traders. I personally love their modules aimed at learning the essentials of generating passive income. You’ll never have to wander around the crypto market process. This course provides everything you need, from analyzing charts to growing your account and setting trading tools efficiently.
Besides the stuff I mentioned, you’ll also learn different crypto day trading tips. It’s the most popular technique traders use, especially newbies. Let’s talk about the day trading strategies I use at present. I’ll share my insights, tips, and tricks too!
What is Day Trading?
Day trading refers to a short-term practice of buying and selling stocks to earn profit slightly higher than what traders paid for. When I refer to “stocks,” I mean different financial instruments, such as currencies, futures, and options.
Day trading takes place within the day, unlike other strategies that happen overnight. I want to add that day trading can occur in whatever marketplace, but it’s the most common in the foreign exchange (forex) and crypto markets.
This process can be very risky, especially when you don’t know how the markets work. Yet, most successful traders treat day trading as their full-time job. They earn a good profit from it in just a few days! It’s the shortest strategy that traders use to earn small profits minute by minute.
Let me give you an example of how cryptocurrency day trading strategies work:
Imagine you have a 3,000 USDT in your account. Based on your market analysis, the coin is expected to grow in a few minutes. You traded your 3,000 USDT in exchange for 1,000 coins (this means that coin is worth 3 USDT). After some time, you see that the coin’s price went up to a value of 3.5 USDT. You sell your current coins quickly and gain a profit of 500 USDT. Not bad with just a few minutes of work! Day traders do this each day, aiming to produce the highest value marked possible. And the cycle continues.
We are fortunate that even ordinary people can take part in day trading, as the process was initially available to financial industries alone. Well, thanks to technology and the internet. We’re now able to see the exchange data that those financial companies use to trade globally!
Cryptocurrency Day Trading Strategies
It’s not enough that you know day trading. You need to be aware that there are different trading styles. And the best part of it? 3Commas simplified our research. It identifies the best strategies when trading cryptocurrencies:
Scalp trading is the best process commonly used today. When I refer to scalping, I mean buying and selling stocks multiple times a day in exchange for a small profit. People who utilize this technique are called scalpers. They place trades at least ten times a day, earning even the smallest profit they can gain from each trade enacted.
Personally, I use the scalping technique as one of my strategies. Aside from earning profit each day, I am less exposed to risks and greed associated with cryptocurrency investment. Yet, a downside of scalp trading is that you’ll not earn big wins. Instead, I collect those “little wins” and gather them to create big wins.
Another great strategy I learned from 3Commas and The Better Traders course is the force technique. It’s a practice where you put technology, news, and sources at hand. I make the most out of this strategy by ensuring that my stocks move around daily.
What makes force strategy different from 3Commas’ commended day trading strategies is that you need to set a plan based on credible news and resources. The highs and lows of declarations affect your digital assets as well.
The last strategy is the inversion. Other terms for inversion are pattern trading, switch trading, and pull-back inclining. This strategy implements technical indicators to purchase or sell signals. But when it comes to inversion, you must have an understanding of anticipating pull-backs quality.
What’s more, price doesn’t have a fixed pattern. It comes in various shapes and sizes. I have cryptocurrencies now and know the specifics to deploy the inversion strategy. Commonly applied terms include “uptrends,” which means increasing price, while “downtrend” is the exact opposite of it.
Know Your Competitors
Part of investing my time, energy, and effort in cryptocurrency day trading is knowing my competitors in the market. And with my experiences with day trading, I can classify competitors into three:
1. Trading bots
Monitoring your stocks all day long can stress you out! This is why trading bots exist. Traders use algorithmic trading bots to replace them virtually. You only need to enter your logic (like the price and volume) manually, and your bot trades your stock automatically based on your programmed strategy.
So why do I see trading bots as the biggest competitor of day traders? The answer is simple because machines are programmed to make tasks easier, simpler, and faster! Unlike manual day trading, where you monitor the market data and apply trades, trading bots execute them at hand. If you’re looking for one, I suggest 3Commas. It’s one of the powerful cryptocurrency automated trading I’m using today.
If you’re interested to learn how to use bots for your crypto trading, I highly suggest following the Better Traders advanced course Mastering Passive Income, where you will learn how to become a master of these wonderful automated trading bots.
The term “whales” came from casino gamblers. They are the people who can cause a big “wave” in the market with their massive capital amount. It’s common to experience those waves in the market. But the existence of whales in the competition levels the game up. Based on my experience, whales can easily sway prices towards their preferred direction and earn from it shortly after.
The saying “if you can’t beat them, join them” works well in this case. If you’re looking for a piece of advice, I recommend spotting the whales early and joining them for a ride of profit. Not only you’re benefitting from earned profits, but you’re avoiding being crushed by those whales as well. This strategy doesn’t leave me with any losses.
3. Other human day traders
Aside from the two mentioned above, you’re also likely to compete with other day traders. But this time, with real humans –not using bots or machines to execute stock trading. The crypto market serves as a gamble to humans. Your loss is another man’s earnings!
Things to Consider About Cryptocurrency Day Trading
Now that you know the day trading strategies and potential competitors, it’s now time to embark on your cryptocurrency journey. Good thing you’ve stumbled on my article. I’m an experienced trader and here are my 2 cents when considering cryptocurrency day trading today:
1. Open accounts with centralized exchanges
Acknowledge the differences between various cryptocurrency exchanges. It’s much better if you’re aware of the variables in the market. This includes withdrawal, deposit limits, and transaction fees. I also take the time to search for approved exchanges and list them. This way, I’ll grow my trading opportunities quickly.
If you started with a decentralized system, start shifting to a centralized one. It offers more security and liquidity features.
2. Choose your marketplace
Aside from opening an account, pick a suitable marketplace to grow your cryptocurrencies. But take note that marketplaces have different pricing tiers, trade amounts, and coin pairings. You need to keep your eye on these fees, as they can amass all your hard-earned profit by charging your trades.
A smart trader doesn’t invest all his or her money in a single marketplace. Consider researching an additional marketplace where you can trade your cryptocurrencies. Finding a supplementary crypto market and registering an account gives more flexibility in controlling your profit.
3. Make a plan
To become a better trader, it’s crucial to create a solid trading strategy. You might ask how I do them, but the very specific answer to it is the endless research and self-discipline.
When analyzing markets, I examine the data. This is a long process, but it provides remarkable opportunities. If you make a plan, stick to it. After all, we don’t want to risk big and lose big!
4. Create an exit strategy
One of the mistakes I made in the past is relying on my emotions (doubt, fear, and greed). And I might say that they messed up my whole strategy.
I create an exit strategy by setting my stop-loss limits. As a trader, it’s important to act fast to place the order. There’s no time for second-guessing, so you need to stick to your plan! Being greedy with profit crumbles your profile. You eventually stopped following your strategy. And you’ll start to create stupid things. You shouldn’t be one of these guys, so create a stop-loss limit to minimize your risk of losing all your cryptocurrencies.
5. Analyze charts’ technicalities
Examining market data can take various forms. And you can use the market data to understand the coin pattern even more. I believe that learning the coin market process increases your competitive advantage in the global market.
Charts provide great data in helping me to create a feasible decision for my coins. This knowledge comes with better trading decisions, increasing my trades and profits successfully.
6. Be open-minded
I assure you, the crypto market has lots of competitions. There are so many that it can overwhelm traders. Joining forums with the same niche can expand your knowledge about cryptocurrency. But never rely on these platforms to base your decisions for your coins. This is where my first rule comes handily. Let the market alone tell you what’s going to happen next!
7. Use crypto trading bot
Crypto trading bots aren’t a new strategy today. As I’ve mentioned earlier, it’s one of the commonly used cryptocurrency day trading strategies, sometimes outperforming humans’ capacity.
Trading bots grow my profit without monitoring the market all day long. I only provide the logic for my bot’s preference in buying or selling stocks. The strategy is tempting, of course. But since trading bots will have direct access to your cryptocurrency, make sure that your chosen bot is secure, effective, and reliable. I’m using 3Commas bot, which is intuitive and easy to set-up.
Know the Risks of Cryptocurrency Day Trading and How to Minimize Them
By now, you should know that cryptocurrency day trading has potential risks. In this section, I’ll explain three of those risks. I’ll also provide tips to minimize them.
Day trading can be addictive, especially when you don’t know how to stop your game at the moment.
I’m sure for a fact that generating profits in the comfort of your homes is a great thing. You earn money just by trading your stocks online. No sweat at all! You’ll feel enthusiastic when you hit the profit you aimed for. At one point, you’ll feel greedy, putting your funds at greater risk. Wanting to earn more will make you want to gamble all your stocks onto it. And once you lose, you cannot take them back easily. You see, it can damage not only your life but your relationships as well.
To reduce the risk of psychological addiction, you must be aware that day trading isn’t always a win-win situation. That’s why traders call it a big gamble. To ensure you’re going to the right path, stick to your initial plan, and follow your stop-loss strategy.
2. False information
False information is everywhere, and day trading isn’t exempted from it. The rise of technology makes it easier for us to read online articles about the ins and outs of the market. And people assume the next “big” thing just by analyzing its patterns. I believe that this is a bad example of treating the market’s uncertainties.
This might be contradicting with being open-minded I have defined above, but what I want you to know is to not let your guard down. Don’t base your trading decisions with speculations you’ve read on the Internet. Instead, find credible resources that give you the right data regarding the market’s movement at present.
3. Pressure and stress
When day trading, you need to commit your time to it 100%. Similar to common work settings, day trading can be implied as a full-time job where you put all your time and energy into it. So by the end of the day, you earn what you worked for.
This is a big gamble if you’re not into using a crypto trading bot, as you need to monitor the marketplace all day. You can minimize your stress by managing your time and educating yourself with the tweaks of the market.
Cryptocurrency day trading provides traders with plenty of opportunities to earn financial gain. However, cryptocurrency day trading strategies come with risks and vulnerabilities, which means that only the smart, well-informed traders can pursue them.
If you’re a newbie and want to experience day trading, you can follow the steps above to gain a solid foundation of how the process works. You can ask for help from me as well.
For more tips and strategies, you can take The Better Traders’ course, The Smarter Trader.