How To Day Trade Cryptocurrency: Top Tips And Strategies
Day trading is among the most effective and commonly used strategies for trading. Traders are very active in financial markets, like forex, stocks, commodities, and even cryptocurrency markets. However, do you think learning how to day trade cryptocurrency is a good idea for you? How do you think traders make or gain money?
For months, Cryptocurrency has boomed in terms of trading. That's why many traders want to know how to day trade cryptocurrency. Trading and high volatility in cryptocurrencies suit trading very well; that's why I will give you some tips on how to trade Cryptocurrency in this article. You will also know new things that traders need to know, like rules in certain markets and taxes on how to day trade.
What Is Day Trade Cryptocurrency?
Day trading is a known strategy that deals with entering and leaving trading positions all on the same day. Since it happens within the day, this kind of plan may also be known as intraday trading. The objective here is for traders to use intraday trading strategies to profit from price changes in financial instruments.
However, when we say “day trader,” we know that it’s from the stock market where the trading is open only during the week's working days. That being said, day traders never exit positions that are open overnight since their goal is to take advantage of the price movements.
The Ways on How to Day Trade Cryptocurrency
Crypto Market has spawned many traders and believers in the blockchain. If you want to know how to day trade cryptocurrency, and if you’re scared of missing out, then here’s an effective approach to trade cryptocurrency quickly.
- Know if you want to hold and own Cryptocurrency. You must be open to the possibility that the value will go up or down. For instance, you want to own the currency, and you need an exchange, I suggest you try the BitMex, as it is a simple app for trading. However, if you want to gamble on the price, you need a broker.
- Of course, you need to fund your account. With that, you may be able to buy the Cryptocurrency you want, or perhaps deal or trade on its price.
If you consider these things and somehow know how to day trade cryptocurrency, you can now call yourself a cryptocurrency trader. Keep in mind that you can just run through buying or selling cryptocurrencies through a broker demo account, and you can't practice more on an exchange.
You should know that trading crypto may matter more on the price than taking real or actual coins. That being said, brokers who offer forex and CFDs can be ideal for beginners, rather than the usual buying of real currency via exchange.
Why Is Cryptocurrency Ideal for Day Trading?
There are many reasons why knowing how to day trade cryptocurrency is ideal. One main reason is that they're very easy to trade. You should always know what you're doing to make all things smooth. It comes with trading strategies used through a daily chart or even works on Bitcoin and others.
More so, there may be a belief that a day's trade will require you to have multiple screens. However, this is far from believable, so if you want to know more about how to day trade cryptocurrency, here are the easy strategies to follow.
One of the common strategies for trading is Scalping. It involves taking advantage of little price moves in short time frames. These may be gaps in bid-ask spread, liquidity, and inefficiencies in the market.
2-Hour Time Frame
Through this strategy, you will use the 2-hour chart. Using the 2-hour chart in the crypto market may seem to work well for the system. However, while anything gets higher and gets into the swing trading dominions, then perhaps not day trading.
You have to be particular about the entry criteria for a trading setup, and these are the 10-bar simple moving average; and the red candlestick bar. You should never forget about these criteria as these are significant during trading.
When you’re trading, you should also have to filter the market noise from tradeable market limits. The challenge of learning how to day trade cryptocurrency is that it raises lower probability setups while you wait for the higher probability ones.
The filtering system works as the most recently closed candle that must be red. It should also be above the 10 bar SMA, and if it’s below, it must be touching the moving average.
One of the easiest strategies for day trade cryptocurrency is ordered placing. If the closed bar turns red and one of the criteria is met, you should place an entry or place a protective and safe sell stop.
Another simple trading strategy is Range Trading. It involves a candlestick chart to analyze and look at any support and resistance levels. This strategy's idea is based on the assumption that the edges of the range will become a support or resistance until the range is broken.
Day trading is a commonly used and known trading strategy in stock trading. The same is true with Cryptocurrency, and day traders use intraday strategies to gain from the market's volatility. It will typically not stay in positions for more than one day at all; that’s why you need to keep an eye on it and learn more about how to day trade cryptocurrency.
I hope the guidelines and strategies have helped you in your trading journey. May you always have better results when you opt or try to trade. As long as you know the entire process correctly, then you’re good to go. Learn more about day trading cryptocurrency here!
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