Day trading cryptocurrency can be very profitable with the right knowledge and skills to go about it. Although it can be scary and intimidating at first, learning how to do day trading cryptocurrency can earn you a good enough profit to make a living out of it.
Day trading will require your time and hard work, but it will pay off nicely if you stick to your strategies. This article is a simple guide to day trading cryptocurrency, which includes choosing the coins to trade, and a few recommended strategies for those who are just starting.
How To Pick Crypto For Day Trading
Choosing the cryptocurrency that you will invest in is a difficult task because of the many options available. In general, it is recommended to choose a coin based on its market capitalization. Coins with higher market values tend to be more stable and more widely adopted, meaning further growth is on the horizon.
When choosing which coin to first invest in, there are a few factors that you must consider. These factors will help you decide which coin to pick.
Cryptocurrency Exchange
There are numerous cryptocurrency exchanges available these days. Make sure that you will choose a reliable exchange that has a wide portfolio, including all the top coins as well as the up-and-coming altcoins.
The exchange that you choose will matter when you begin day trading, because all your trading activities will happen here. Selecting a reliable exchange will make sure that you will be able to trade your coins for other crypto assets that also have good market value.
Another advantage of selecting a dependable exchange is the security features offered. There are a lot of websites and apps popping up that claim to have the best safety features for cryptocurrency trading, but if these websites only have a few coins listed, it would be safer to pass on them.
Other exchanges also have different transaction fees, depending on the amount that you are transacting. You must also consider these fees before signing up with any exchange.
Volatility
Volatility refers to the price movements within a single day. The cryptocurrency market is highly volatile due to it being a newer market. The decentralized networks that cryptocurrencies use also contribute to this volatility, as well as the smaller market size.
Day traders capitalize on the market’s volatility to execute trades that take advantage of low prices. When choosing a coin to trade, you must also check the volatility of the coin. Coins that have an increasing volatility are a great opportunity to make a profit.
Volume
Along with the volatility of the coin, you must also consider the volume. The volume of the coin represents the number of coins that were transacted within a definite timeframe. For example, if you want to get the volume of an altcoin in one day, check the number of coins that were traded in that day,
Good volume means that there is a lot of activity. Coins with good volume are a good investment, as volume will also influence trends in the market.
Dev Team
When choosing cryptocurrency, one factor that is important but easily overlooked, is the team of developers behind it. This team of developers is responsible for building the coin and regularly updating it to reflect newer security features, updates, and more.
If there is a mature and qualified dev team behind a coin, chances are, the coin has the potential for further growth in the market.
Best Crypto for Trading in 2020
Now that you have all these factors in mind, it would be easier for you to choose a coin that you want to first invest in. If you could go for one of the top coins in the market today, that would automatically be a good investment.
For day traders, you want coins that experience volatility daily, but also without sudden slippages that can make you suffer a loss. Some great coins to invest in the market include Ethereum, Ripple, Tron, Litecoin, and of course, the number one Bitcoin.
Day Trading Strategies
Are you wondering how to day trade crypto in 2020? Aside from choosing the right coin to invest in, there are several strategies that you can use in day trading. Check out just a few of these below.
Scalping
Scalping is commonly used by day traders to make a quick profit. To do this, traders capitalize on small price movements within short timeframes. This strategy will require you to familiarize yourself with technical indicators, because the trades happen within just a few minutes. If done correctly, scalpers can execute several small trades within the day and earn a profit.
Range Trading
To successfully execute range trading, traders make use of the support and resistance levels on a chart. These levels will indicate when a price is either high or low during a certain time. The basis of this strategy is the existence of a price range that the coin is moving at during a certain period.
Once you have identified the range of price movement, you will observe that when the coin hits the bottom range, the tendency is to shoot back up, and vice versa. Therefore, day traders can start buying whenever the price is about to shoot up and start selling when the price is about to go down. Want more awesome tips on day trading cryptocurrency? Go here!
Conclusion
When first starting out as a day trader, learning how to do day trading cryptocurrency is essential for you to minimize your risks while trading. Due to the volatility of the market, it is also important that you know which factors are affecting the coins, so you can decide on which coin to invest in.
Day traders employ their own strategies to become successful, and for beginners wanting to begin day trading, a piece of great advice is to make each strategy your own. But remember, it is better to smart small with every investment that you make. Never risk more than you can lose.