Day trading is the crypto strategy of buying and selling crypto assets on the same day. It is a short-term trading style that cashes upon the volatility of cryptocurrency.
Since crypto markets are open 24/7, unlike stock markets, you can define your day hours for trading and make profits by buying low and selling high as the prices move. To be successful, it is imperative that you find a detailed crypto day trading guide and go through it to understand all about the crypto day trading market.
Factors to Consider Before Day Trading
Market Conditions
The two driving forces in day trading are liquidity and volatility.
Liquidity determines the ability of an asset to be converted into cash on demand. It means that the asset has no discounts and premiums attached during buying or selling. That way, it is easier to enter and exit the market.
Volatility- the slightest of the variations create considerable swings in the crypto market. If you don’t account for volatility, your calculations may go wrong.
Complete Analysis
You should do a thorough technical analysis using math and technology to predict the price move. The analysis will give you valuable insights into what you should trade or when to buy and sell despite the volatility.
In short-term trading, big news can make the prices swing to extremes. A simple announcement or a piece of fake news about a company’s stock would be enough to bring cryptocurrencies to the lows.
Therefore, you must keep an eye on all news related to the crypto market and the currencies you have invested in. Ensure that you are aware of the product launches, earnings reports, breaking news, competitor announcements, and industry changes.
Which Cryptocurrency Is the Best?
Depending on its age and performance, conduct data analysis of which cryptocurrency is the best for day trading. For instance, Bitcoin ranks first when it comes to ranking, and Ethereum is next in line. A crypto day trading guide should have all the decisive factors listed to make day trading easy and profitable, helping traders make informed decisions when they want to buy Ethereum for their day trading activities.
Taxes, Fees and Regulations
Educate yourself on the tax laws, rules, and regulations applicable to your state or country and the cryptocurrency in question. You may end up losing money if you don’t make wise decisions considering the policies before stepping into day trading.
Set Your Risk Level, Goals, Entry, and Exit Rules
Risk level- How much of your investment portfolio should you risk on one trade? How much loss can you tolerate? This depends on the trading style you employ and risk tolerance. Figuring it out beforehand will help you stay in check and avoid the temptation to undertake risky trades.
Goals- Set your goals for the day to know if you are going the right way with your day trading strategies. It would help if you had clear daily, weekly, monthly, and annual profit targets and risk/reward ratios before entering day trade.
Exit rules- If the trade goes sideways, what is your stop loss level? Please write it down when you will exit the trade. It is a general tendency to delay exit because you don’t want to incur losses. However, sometimes, delaying it can lead to even more massive losses. So have your exit rules set beforehand.
Entry rules- You must have a set of conditions that will help you choose whether or not to enter a specific trade. Not every trade is worth your time, effort, and investment. So have your entry rules and conditions set before day trading.
Computers are better at doing such pre-checks since they operate on algorithms. You can set up exit points to ensure you sell your stock once you reach the desired exit levels, which would mean a profitable trade.
Knowing when to get out is very important, as you may end up losing all your money if you stay longer, thinking the prices are going further up, only for them to come crashing down. It’s better to get out early with a $50 profit, than to wait for a $100 profit and end up with just $20 instead.
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Any cryptocurrency is fundamentally different from state currencies. Its main feature is complete decentralization in the issue and accounting of the currency supply, which manifests itself, among other things, in the lack of security of money with something material or, at least, with something politically authoritative (gold reserves or the power of the state). Therefore, the exchange rate depends solely on its popularity in the broad strata of society, as well as among investors and among other professional participants in financial markets.
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I usually use only those applications that my friends or acquaintances have advised me, because I am absolutely confident in their honesty and reliability.
As I know this strategy is not so good for trading, especially if you are a beginner. I prefer only to buy cryptocurrency and wait some time for price rising.
Hey guys, I’m an aspiring gamedev who wants to try building a blockchain game using Ethereum’s Solidity and I want to try some games first. I was keen to try Rock Paper Scissors Elite from Finite Games but they’re still on Alpha. Any games you’d recommend me to try? I posted here instead on r/ethdev because there are only a few users there. Thank you!
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Have you tried it yet?
The unstable economic environment makes currency exchange transactions more relevant than ever. For a long time, there was no alternative to exchange offices. But now, with the development of the Internet, Forex trading, or Internet trading, is gaining more and more popularity. The essence of trading with Tickmill broker https://tradersunion.com/brokers/forex/view/tickmill/ is similar to the principle of operation of exchange offices – you have access to various currencies that you can change with financial benefit for yourself. However, upon closer inspection, both trading and operations at the exchange office have their own strengths and weaknesses.
It is unrealistic to draw up universal requirements for all occasions. However, it is still necessary to have some kind of “beacons”, landmarks that will not allow you to go astray while sailing on rough seas. Therefore, you can try to formulate some rules that it is desirable to always follow.
in order to successfully trade cryptoassets, it is important to learn how to read the crypto chart . The ability to read charts is a key skill of a successful trader: if you decide to enter the cryptocurrency market, knowing the price of bitcoin is not enough to make trading decisions. The trader needs to fully understand what information the chart contains.
Great read LaDonna, I have learned some new things thanks to it. The DeFi ecosystem is gaining popularity these days with day traders especially with regards to yield farming. Be great if your next article could talk about this. I work with a crypto custodian innovating in this space in terms of security, access and utility as yes still a nascent environment and for crypto mass adoption to truly happen need to make it safe but accessible. More about what we do in DeFi here. Be great to see you explain DeFi and yield farming in your next blog post.
Crypto day trading is a high risk, high reward endeavor.
Here are 5 key factors to consider when day trading with cryptocurrencies.