With the rise of cryptocurrency, the various methods of investing in it have increased. Among these is day trading crypto. Day trading crypto can lead to gains if you know what you are doing, but there is a learning curve.
Explore what is involved in day trading Bitcoin or any other crypto and some of the strategies that you should consider following.
What’s Day Trading and Is It Worth It?
Day trading crypto or any other asset is when you buy and sell the same security in a single day of trading. It is typical for forex and stocks and increasingly popular for cryptocurrency.
Day traders have to pay attention to the various events that can lead to short-term market movements. They frequently trade based on news, although they also use other methods.
Benefits of Day Trading Crypto
To give you an idea of why so many investors believe that honing a day trading strategy for crypto is smart, consider the advantages of this type of cryptocurrency trading:
- Market open 24/7
- High volatility leads to opportunities
- Unregulated so fewer restrictions
- Data is open and transparent
- Plenty of novices as the market is new
Just keep in mind that this type of day trading also has disadvantages, such as the lack of liquidity.
How to Day Trade Crypto – How to Become a Crypto Day Trader
To become a successful crypto day trader, you need to dedicate some time to learning about the market movements and hone some other skills. The following are all crucial elements of becoming a crypto day trader:
- Discipline: Any day trader needs to ensure they have plenty of discipline as well. This is necessary to ensure that you follow your strategy and minimize losses.
- Funds You Are Willing to Lose: Because of the risk associated with day trading, you should only start day trading Bitcoin if you can afford to lose the amount that you invest. This helps prevent potential losses from significantly impacting your life.
It also typically helps to have access to a large amount of crypto or fiat you can convert into crypto. That is because day trading typically takes advantage of smaller market changes. As such, the more you can invest, the larger the profit you will make from these fluctuations. If your capital is small, your gains will be as well.
- Market Knowledge and Experience: You are much more likely to lose money when day trading crypto if you don’t have enough market understanding, including the market fundamentals. You should be able to read charts and conduct technical analysis.
- News Sources: When day trading crypto, you need to ensure you have access to several reliable news sources. This will ensure you find out about the latest news affecting crypto right away so you can take action.
- Software: It is also wise to have some analytical software to day trade. This will help you complete a technical analysis. Luckily, most crypto exchanges have at least basic charts with the most common technical indicators. Even so, you may have to pay extra to access the types of analytics that are the most beneficial.
- Strategy: One of the essential parts of becoming a crypto day trader is to have a strong day trading cryptocurrency strategy. Without a system, you are less likely to succeed as you will not have a reason for your decisions. This could leave you vulnerable to emotional trading or simply making poorly-informed trades.
In addition to all of that, if you want to become a cryptocurrency day trader, it is wise to start small. This will allow you to begin testing your strategies without risking too much capital. As you become more comfortable, you can increase your investments.
Can You Make Money Trading Cryptocurrency?
You can make money trading cryptocurrency, but you should not expect that you will automatically make money if you start trading. Trading crypto, especially day trading it, requires a fair amount of knowledge.
You should also be aware that day trading increases the potential rewards, but it also increases the potential risks. It is unfortunately common for beginners to get in over their heads and lose funds. Those who make money from day trading tend to have knowledge and experience, and they have at least some luck.
Further reading: Crypto Trading Strategies
Simple to Follow Day Trading Strategies
Many of the day trading strategies for crypto are similar to those used for other securities, including stocks or forex. The following are some of the most popular.
Arbitrage is when you buy or sell crypto to profit from the variations in prices between various markets. Essentially, it involves taking advantage of variations in pricing across multiple exchanges.
This type of trading involves using the signals when a given cryptocurrency goes below the support level or above the resistance level.
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This type of trading, abbreviated HFT, involves using algorithms that take advantage of short-term or small inefficiencies in the market.
This is among the most common strategies, and it is excellent for beginners. You follow current trends and make decisions based on their strength. So, when the price is going up, you buy. When it is going down, you sell.
Moving Average Crossovers
This strategy helps you spot the beginning of a trend. You use simple moving averages and exponential moving averages for short and long periods and look for when the lines cross.
As the name implies, this type of crypto day trading involves looking at news events for potential market volatility. Then traders take advantage of that volatility.
This type of trading looks primarily at support and resistance levels to decide when and what to buy and sell.
Relative Strength Index (RSI) Divergence Trading
This strategy uses the relative strength index to look for trend reversals.
These are among the riskiest. The strategy involves trying to spot a trend reversal immediately before it happens. This requires a great deal of experience so that you can spot the opportunities and reversals.
Scalping is a day trading cryptocurrency strategy that tries to take advantage of small price movements during the day. The idea is to accumulate a lot of minimal profits.
Technically, swing trading is not a type of day trading. It is an intermediate step between day trading and long-term trading. Swing trading involves making trades that can last days to months. It tends to have a lower potential for profit than day trading.
This crypto trading strategy uses candlestick charts to look for indications that a trend will continue.
This is similar to trend continuation, but you look for patterns that indicate the trend is likely to end and reverse.
Use the following tips to complement the mentioned day trading cryptocurrency strategies.
What You Should Know About Indicators
Indicators are calculations that you can plot on your crypto price charts. They help you identify trends and signals. You should have a basic understanding of indicators if you want to day trade crypto. You may also want to familiarize yourself with a few particular indicators, including:
- Bollinger Bands: They are oscillator measurers, letting you spot volatility levels and if the market is oversold or overbought.
- Fibonacci Retracement: It predicts resistance and support levels.
- Ichimoku Cloud: It has five lines, each of which shows averages over periods you choose.
- Moving Averages (MA): It smooths out past price action.
- Moving Average Convergence/Divergence (MACD): It is a trend following indicator to help you predict trend changes and continuations.
- MYC Trading Indicator: It uses momentum oscillators and trend analysis to predict bullish or bearish phases.
- Relative Strength Index (RSI): It helps spot future market corrections.
- Stochastic Oscillator: It compares closing prices to high-low ranges, showing momentum.
Why It’s Important to Choose the Correct Exchange Platform
In addition to developing suitable strategies for day trading Bitcoin, you need to be careful when choosing the exchange you want to trade on. This is for several important reasons.
One of the most important factors is security, as you don’t want a hack or other security flaw to result in the loss of your crypto. Remember, crypto transactions are irreversible, so you are unlikely to get your funds back in the case of a hack. That irreversibility also means that you want to ensure you don’t choose an exchange that is a scam looking to steal your crypto.
You also want to be careful of various fees and hidden costs as you choose a platform. Confirm that they don’t have excessive spreads or trading fees. Either of those can add up quickly, cutting into your potential profits. Don’t forget to pay attention to fees for trading, account maintenance, deposits, and withdrawals.
It is also smart to pay attention to other details of withdrawals. For example, confirm how long it takes for them to be processed and whether there are any complaints about them.
Depending on your skill level, you also want to ensure that the exchange you choose has what you need. For beginners, this might be educational materials. For experienced traders, it may be advanced technical indicators. Ideally, the exchange will have what you need to grow as a trader, including the most common indicators.
What to Look for When It Comes to Exchanges
To avoid issues when choosing a crypto exchange for your day trading or long-term trading, look for the following traits:
- Availability in your region
- Overall reputation
- Exchange security
- Transparent and low trading fees
- Available cryptocurrencies
- Charting tools and indicators
- Educational resources
Best Cryptocurrency for Day Trading
When choosing which cryptocurrencies to day trade, you want to pay attention to volume, volatility, liquidity, availability on exchanges, and recent news. Some of the best options for day trading crypto include the following:
- Binance Coin (BNB)
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple (XRP)
- Tether (USDT)
- Tron (TRX)
Haru Invest Offers a Simpler Alternative
If you want to benefit from day trading crypto but are overwhelmed by the learning curve or the need to create and execute strategies, Haru Invest offers a convenient alternative. You essentially let the experts at Haru take care of the investments for you. As they are already experts with plenty of experience in trading and crypto, there is no learning curve for them.
Strong Track Record for Performance
Although there is never any guarantee in trading or investing, Haru Invest has a strong track record that indicates they are likely to continue doing well. The latest performance numbers showed a return of more than 16%. That return is just for the quantity of crypto held. People with Haru Invest accounts also get to take advantage of the increase in the cryptocurrency value itself.
There are no requirements except to have at least the equivalent of $10 to invest in opening a Haru Invest account. This makes it a very accessible option, as you don’t need to have any financial knowledge or skills. That is a stark contrast to the vast experience and expertise you would need to successfully day trade crypto yourself.
Those minimum requirements also contrast with other similar options, as they tend to require you to be an accredited investor and have at least $25,000 to invest.
Let the Experts Handle It
Instead of developing your skills and strategies, as you would with day trading, the experts at Haru Invest take care of everything for you. They create and adjust algorithms that monitor the crypto market 24/7 to buy or sell at opportune times automatically.
To offer alternatives to day trading crypto that appeal to everyone, Haru Invest provides a choice of several investment options.
“Earn like the best” involves investing in Bitcoin. This strategy has a target return rate of over 25% and has you invest for three months or more. This type of investment relies on the most profitable strategy from top trading firms in the world.
Or you can opt to “Surf with the volatility” and invest in USDT (Tether). This strategy has an investment period of at least one month and a target rate of 22.5%. This strategy increases your return as the market volatility increases.