The goal of any financial investment is to gain profit. If you’ve been in the traditional stock market, you know that it’s more than just letting your money sit and wait for it to grow. It needs your commitment and expertise to make things exciting and last longer in the trade. Today, the emergence of cryptocurrency lets you reap more rewards since it is a decentralized system in most locations. The next valuable question is: how much money can you make day trading cryptocurrency?
Truthfully speaking, the answer lies in your strategies. You can consistently make a fortune on a daily basis or consider it a side earning venture and get little through time. Other vital skills as risk management and decision-making on a real-time basis are also crucial in order to see returns from your crypto investments. Day trading cryptocurrency is a tricky process because of the volatile tendencies of the market. This article will teach you how to make a significant living out of your assets beyond the numbers.
Defining Day Trading
Day trading is a common habit in foreign exchange and stock markets but has recently been adapted in cryptocurrency because of its effect on one’s portfolio. This process refers to the buying and selling of crypto investments within a trading day. It happens during a roller coaster ride of price fluctuations online, to which you, as a trader, would have to watch and strategize closely. To ensure that you are starting at the right pace, you should always have a definite approach and be willing to execute that based on your limits and rules. You don’t necessarily have to trade every single day to see a significant profit.
Keeping the balance safe amidst a rapidly changing cryptocurrency trade is beneficial. You can easily take advantage of this volatility by day trading and analyzing when you should apply your plan when in between the highs and lows. With the right resources, consultants, and research work, you will achieve the profit margin you are hoping for efficiently.
Preparations Before Day Trading
Equipping yourself with an in-depth understanding of day trading is a must. You are trading your investments here, and that should be enough reason. There’s no need to jump off a cliff without the gear when you can always have access to it. Here are some important reminders before you begin day trading:
- Be patient and wait for the highest read of volatility within the day. It is relative to the asset classes you have and the asset classes you watch out for, but high reading would give you sufficient profit.
- Timing and liquidity are the combinations you need to master. You have to see beyond the numbers and determine whether your target currency is liquid enough to earn a profit. Historical charts and transactions will tell you if it is a fair trade to make or not.
- Timing and liquidity are the combinations you need to master. You have to see beyond the numbers and determine whether your target currency is liquid enough to earn a profit. Historical charts and transactions will tell you if it is a fair trade to make or not.
These tips will surely help you realize that there’s more to the process than the result. It is true when they say that every effort you make financially should be called hard-earned money.
Strategic Process
Now, you can go and day trade cryptocurrency like an expert. You have to develop a sense of rational instinct to identify the best opportunity to execute a trade for quick and easy profit. In this article, you will learn the buying side of day trading, as many would want to kick-off in this process.
The first step is to pick the coins that offer both high volatility and liquidity. Most beginners start with Bitcoin because it is a pioneering variety with a proven reputation. But, should you wish to check altcoins, keep the criteria in mind. To narrow down your choices, check the top cryptocurrencies based on market capitalization.
Next, use a Money Flow Index or MFI to accurately track buying and selling cryptocurrencies for a specific coin. The MFI tells you whether a crypto coin is overbought or oversold through its price and volume information. You can begin by indicating three periods for your preferred settings. Your default buying levels should be from 80 to 100 while selling levels should be between 20 and zero.
Then, you should watch out and be attentive when the MFI reading is at 100. That means that the numbers are in your favor, and you can track smart money through the MFI. It is best to skip the first two readings that indicate 100 to ensure the trading scene’s status for a particular day.
If you are satisfied with the third reading at 100 or above with MFI, the next essential factor to consider is the bullish candle. That refers to the candle-like image near the upper end of the 100 MFI reading.
In the last step, you need to hide your protective stop loss. Stop-loss is an essential concept you should do to limit your loss for a specific investment. Please do this below the low of the day.
You may then proceed to take your profit within the hour after your trade, as that would give you the best yield of the day. It is not advisable to wait it out and expect it to grow some more. Learn more about day trading cryptocurrency here!
Conclusion
If you apply the tips and tricks from this article on your next day trading cryptocurrency, you can surely make money. It would be best to keep a good habit and gauge when it is an excellent day to do the routine. You do not need to rush your success, it only needs to be gradual, and the positive results will just go with the flow.