How To Do Day Trading Cryptocurrency: Effective Strategies For Newbies
Cryptocurrency day trading is a lucrative market that can earn you a lot of profit. Whether you are a full-time trader, or you are trading to earn some extra income, day trading can be highly beneficial for you.
To be successful as a cryptocurrency day trader, you need to study and understand the market. Are you interested in getting into day trading? This article will help you learn some basic rules and discover helpful tips on how to do day trading cryptocurrency.
The cryptocurrency market has boomed since the introduction of Bitcoin in 2009. From the success of Bitcoin, other coins have been developed, called alternative coins or “altcoins.” Altcoins are the thousands of other cryptocurrencies that are not Bitcoin.
Since the cryptocurrency market is new compared to the stock market or the foreign exchange market, there is still a lot of volatility. This is seen in the constantly changing price actions, and the extreme highs and lows that different coins experience.
Some new coins can easily drop from the market and cease to exist, while other coins can “go to the moon,” or experience a large increase in the price point. This kind of volatility is almost non-existent in more mature markets.
Coins that have been in the market for a longer period and already have high market valuations, like Bitcoin or Ethereum, are relatively more stable compared to newly developed coins. For a long-term investment of a couple of years, traders should go for these more stable coins.
On the other hand, the constant price movements in the market also have an advantage for traders. These small price movements can make day traders highly successful, by capitalizing on these changes to earn a profit with successful trades during a single day.
Cryptocurrency Day Trading Rules
Day trading occurs within the 24 hours of a single day. Traders attempt to make a profit by watching price movements and trading when the prices are on an upward trend.
There are no set rules on how to do day trading cryptocurrency. There is no official handbook or law that covers all international trades done in the cryptocurrency market. However, these daily cryptocurrency trading tips and rules will be helpful for both seasoned traders and beginners alike.
If you have just started day trading, or you want to improve your game, follow these basic rules and tips that can be helpful to you.
By any means, do not start day trading without a proper strategy. Choose the charting platform that will best suit your needs, as well as the coins that you want to buy. Never go in without a plan because this can just lead to bad trades and losses.
Sell When You Can
In trading, there will always be winners and losers. You must accept the fact that you can’t win it all. The important thing is that you have a strategy, and you stick to it. This strategy must include selling when you can.
A common mistake of day traders is waiting to sell. Since you are executing a trade within a single day, you need to grab every opportunity that you can if the technical indicators that you use are pointing to it. Don’t be afraid to just make small trades, because these small wins add up and can earn you a good profit at the end of the day.
Trade with the Trend
A great tip for beginners is to trade where the trend goes. Don’t put all your money on the highest or lowest coins in the market, because it will be too risky for you. Trading with the trend is an excellent way to do day trading. Additionally, the likelihood of trends continuing is more than 50%!
Trade responsibly. Don’t put in more money than you can afford to lose, be safe with your private keys, test your own strategies and see how to improve on them with each trade.
Strategy for Beginners
Are you ready to start? Here is an easy scalping strategy that you can use to begin day trading. For this method, you will need to look at the 1-hour charts. You will need to use three main indicators:
- Weighted Moving Average (WMA) – Set to 144.
- Smooth Moving Average (SMA)
- Stochastic (Stoch) – Set to 533.
- Be sure that you are looking at a 1-hour chart.
- Identify the trend. Once the WMA and SMA lines have appeared on the chart, check the trend for when these lines will cross. The SMA should go towards the upward direction when crossing the WMA. This means that the coin is about to go on an upward trend.
- Once you have identified when the WMA and SMA cross, further decrease your chart’s time frame to 5 minutes. Again, wait for these lines to cross in the direction of an upward trend.
- Keep watching the chart until the WMA and SMA cross and stay closed until the next candle appears on the chart.
- Now set your stochastic to 533. You will see another chart appear at the bottom of the main chart. This stochastic chart will have two lines and a rectangular shaded area.
- If the two lines cross outside this shaded area, the coin is either in an overbought or oversold position. Wait for the two lines to cross below the shaded area, which means the coin is now in an oversold position.
- Once the coin is in an oversold condition, this is the time that you can buy. This method works well for most cryptocurrencies. The best way to find out if it will work for you is to first test it out, before executing the actual trade. Learn more about day trading cryptocurrency here!
This article is just a simple guide on how to do day trading cryptocurrency. Always take the time to study the market and its trends. Don’t forget to test your strategies to see what works for you, before beginning to trade any of your money.
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