Buying and selling cryptocurrency to make a profit has slowly gotten a lot of people interested. Crypto assets have been on the rise, with thousands of coins now available to trade in the market. Ever since Bitcoin experienced its highest market price of about $20,000 back in 2017, a lot more people have invested in Bitcoin and other altcoins, because of the potential of these cryptocurrencies to grow in the future.
One question that a lot of people are interested in is this: Can you buy and sell cryptocurrency same day?
Since you know that traders buy crypto assets to be able to sell them in the future for a much higher price, have you ever wondered if it is possible to buy and sell within a shorter period, like a single day?
Buy and Sell Bitcoin Same Day
Can I buy and sell Bitcoin same day? The answer is yes, you absolutely can! Although many people prefer to apply the buy and hold strategy to their cryptocurrencies, buying and selling on the same day is also possible, and not just for Bitcoin! All the altcoins that are available for trading in the market can also be bought and sold on the same day.
First, let us look at the buy and hold strategy. This strategy requires traders to buy a cryptocurrency and hold on to it for a few months or years. This is an easy way to earn money from cryptocurrencies because you will simply allow the coin’s value to grow while you are holding it.
Once the value has grown to an amount that is much higher than the price you bought it at, you can then sell the coin and make a profit. This strategy is great for people who do not have the time to monitor daily charts to buy and sell their crypto assets.
In contrast, there is the strategy of buying and selling within a single day. This strategy is called day trading, where a trader buys and sells coins within 24 hours. With this type of strategy, all trades must happen within the said 24 hours. Thus, traders are more pressured to complete trades at a profit because the clock is ticking.
What Is Day Trading?
Here is a more in depth look at what day trading really is.
Day trading makes use of technical analysis to be able to buy and sell cryptocurrencies on the same day. It is a form of active trading, where traders are required to keep track of the changes in the market within a single day.
To earn a profit, day traders rely on the volatility of the cryptocurrency market. This volatility causes the market prices to constantly move up and down, creating upward and downward trends that may change every hour. Once the traders have identified trends, they then use the proven and tested strategy to “Buy low and sell high.”
Day trading is much riskier than long-term investments because price slippages or large drops will lead to a loss. Therefore, the volatility of the market will help day traders earn a profit, but it can also cause a large loss if traders are not careful.
When practicing day trading, traders must be armed with the essential knowledge and skills to perfect the trade. A lot of practice and paper trading is needed before moving on to actual trades. Although difficult, day trading can be extremely rewarding.
Factors to Consider When Trading in the Same Day
Since the cryptocurrency market is open 24/7, day trading occurs within the entire 24 hours. Traders must study chart movements, price action, trends, patterns, and coin volumes, to be able to decide when to buy or sell a coin.
Price action refers to the specific prices that the coin is valued at during the different hours of the day. Day traders must be aware of this price action, especially the range in which the price moves.
An extremely volatile coin may not be the best option to invest in during the day, because the unpredictability of the movement adds more risk to each trade. To better monitor price action, traders usually make use of technical indicators, like Bollinger bands.
Trends form within a single day, usually measured within just a few hours. Generally, traders will look to buy when a coin is on an upward trend and sell when the coin has reached a value higher than the price that it was bought at. The key to looking at trends is to be disciplined enough to know when to sell.
A lot of traders make the mistake of waiting too long before selling. Upward trends in the cryptocurrency market are very tempting. However, if you wait for too long before selling, the trend might suddenly experience a slippage, causing the price to drop and your profits to disappear in an instant.
Coin volume refers to the exact number of coins that have been traded during a certain period. This volume is responsible for confirming trends. If a certain coin has a high volume and has a lot of price movement, this price action or movement is said to be more reliable.
On the other hand, if there is a low coin volume, meaning the coin is not being traded as much, any price movement that the coin is experiencing is not as reliable. This volume will help day traders to identify when to buy or sell a coin during the day. Want more awesome tips on cryptocurrency? Go here!
Can you buy and sell cryptocurrency same day? Yes, you can! Day trading is one of the more popular strategies in the crypto market. Although it is more complicated than the strategy of buying and holding, day trading can be highly rewarding if you correctly apply the strategies and diligently observe all movements in price, volume, and trends.