Have you ever wondered about leaving your job to do trading full time? It may be a great idea, and maybe not because of the pros and cons. You may have heard about day trade as well, wherein you can trade anytime since the market is open for 24 hours every day. Since cryptocurrency is becoming a thing nowadays, you might be wondering, does cryptocurrency count as day trading?
How Does Cryptocurrency Count As Day Trading?
Cryptocurrency day trading has been on the rise in recent months. Since cryptocurrency has high volatility and the volume had increased, considering these factors, it became a good idea for day trading. It could come by incredibly profitable investment to those who work hard and with the golden rules of trading in their mind all the time.
First, let us know what is day trading, and how does cryptocurrency count as day trading? When you say trading, the first thing that comes to mind is buying and selling assets to profit. Like in stock exchanges, people trade everything. You can buy stocks or share in a company like Google, currencies, and even metals like Gold. In anything you trade, your goal will always be the same. Buy, sell, and profit from it. It would be best if you sold it higher than the price you paid for it. This is what trading cryptocurrency is all about.
There are two types of trading: short-term or long-term. Basically, it is how long you are going to hold the asset you bought before selling it. With day trading, which is a very short-term kind of trade, you will hold an asset in a very short time, like seconds to a couple of hours. You will have to sell it within the day and hopes to gain profit quickly, no matter how small it is.
For example, John bought some XRP thinking it would eventually go up since he heard some good news, and the charts showed him it would skyrocket up. He then bought 100 XRP at a price of $17. People are now trying to buy it since the price is going up. A few minutes later, it begins to go back down. John sold his XRP for $21. He made a profit of $391 within that day.
Although it is an example of successful speculation, there are days when prices will not be on your side and may take downturns, making him lose money. This example is an answer on does cryptocurrency counts as day trading. It really does; you just have to ride the market’s volatility with the hopes to profit from it.
Things You Should Know About Cryptocurrency Day Trading
Knowing that you might be dreaming of living in a penthouse, driving your first Lamborgini, and traveling to different countries now, but before you place your first trade, here is the thing you should know about day trading cryptocurrency.
The market is extremely volatile.
The volatility of cryptocurrency is significant between crypto day trading and real-world assets day trading. Since the cryptocurrency market is highly volatile, it may succeed for any trader or extreme fail when everything goes down. For example, in real-world assets day trading, the prices are unlikely to move within 24hours, and if it does, it would only be a minimal amount.
Meanwhile, since it is super volatile in cryptocurrency, the price can just go up and down up to 50% in just a day. Once you buy the coin at its highest price, you would make a lot of money, but if you bought it at its highest value, then it goes down eventually, you will suffer a significant loss.
It would be best if you accepted your losses.
Some studies show that more than 80% of day traders experience losses in their first year. Generally, most of them suffered big time while they were starting and eventually move on and make profits. One of the many reasons is that they lack knowledge, experience, and insights, including risk management systems. It is like putting your toddler to play his first basketball and expect her to clean up herself. It is not like that. Research is a vital part before proceeding with anything, especially in crypto trading. You have to expect losses at some point and accepting that fact would make it easier for you to bounce back.
You may suffer psychological addiction.
This kind of investment can be pretty interesting and exciting for traders. And that thought of making millions through day trading cryptocurrencies can make you feel alive, especially when you experience mostly gains. And if this persists, it might not be suitable for you in the long run since winning or good profits is not consistent and losing might make you lose yourself more other than losing your capital.
Since you have some ideas and theories on how to make day trading work for you, you must put it to the test. The practice would make your trading better without risks. Use demo accounts so you can try making trades in a real-time scenario. It is a great way to gain valuable experience without any risk. You will eventually develop strategies and how wins and loses can prepare you for the real thing.
Tips For Successful Trading
To successfully trade cryptocurrencies, there some tips you should follow. These actionable tips talk about practices, the selection of assets, and your attitude.
- Determine how you want to do day trading cryptocurrencies.
- Choose popular cryptos.
- Fund your account adequately.
- Trade less demanding cryptos if you have low capital to start.
- Improve your outcome by using correlations.
- Take note of what you hear from the news.
These can improve your chances to succeed in crypto day trading. Understanding the risks and learning more about it, does cryptocurrency count as day trading. Indeed, the risks are all there though you can actually make more profits or experience more significant losses; that is why preparedness is essential before making any move. Do your research. Practice while you can and expect less so you can appreciate your wins more. Does cryptocurrency count as day trading? Find out more here!