Day Trading is a popular tactic in the cryptocurrency world, and it is a technique many newbies love to try. Trades should be carried out with caution and not be seen as a way to get rich quickly.
A cryptocurrency is a secure virtual currency that exists only in the digital space. It is protected by blockchain technology, which makes it very difficult, if not impossible, to duplicate and reuse. It is used worldwide to transfer funds easily from one party to another without the need for a third-party to facilitate the transaction. While with fiat money a third party is always needed, with cryptocurrency you can initiate transactions directly. Moreover, crypto coins are already available in many forms. For example, you can buy Bitcoin or purchase some altcoin like Ripple, Litecoin, Ethereum, Bitcoin Cash, etc. Such coins can be exchanged on platforms like Godex.
Nowadays, Bitcoin is one of the first things to cross anyone’s mind when they hear about cryptocurrency because it is the crypto with the largest market cap. It is stored in eWallets known as “Bitcoin Wallets” and can be mined by processing some complicated mathematical algorithms.
Is It Possible to Day Trade Bitcoin?
Day Trading of Bitcoin is the process of buying and selling amounts of it in one trading day. It is made possible by implementing short-term trading techniques to make a quick profit by taking advantage of little fluctuations in cryptocurrency prices. Simply put, yes, it is possible to engage in day trading if you are ready to learn how to do it right. Bitcoin day trading can be a successful strategy for an experienced trader, but newbies might find it challenging. It involves paying rapt attention to slight changes in the exchange rates of a cryptocurrency. However, a lot of people aspire to become traders because they see day trading as a get-rich-quick strategy. Consequently, they start day trading without adequate knowledge of how the process works. Nonetheless, many traders are content with taking these risks.
Most financial experts tend to shy away from day trading because they feel the risk involved outweighs any potential profit. Nevertheless, traders that are successful in this practice take the other stance and insist that, if done correctly, day trading is a lucrative business. Although both sides have plausible reasons to believe their claims, day trading generates profit, albeit at a lower success rate. This is due to the complicated nature of it, the amount of attention needed, and fraudsters are continually luring people with offers to help them maximize profit. On the other hand, experts have noted that a long-term strategy might give the best results. Therefore, you should know that note that while many traders have success stories, day trading is not for everyone. That being said, you could be a successful day trader as long as you combine skill, right timing, and luck.
How to Day Trade Cryptocurrency
Firstly, you need a comprehensive knowledge of the cryptocurrency market to excel in day trading. Trade ideas can be generated with Technical Analysis. The entry and exit points for each trade are often identified using volume and trends of the chart. In addition, risk management should be involved in all trades. People in day trading often do not bother with fundamental analysis, because essential events play out over a long time. A lot of day traders, however, pay attention to cryptocurrency news and use received information to develop a winning strategy. This is done by exploiting a sudden hike in cryptocurrency trades, which results from an announcement made on the news.
Profits in day trading are made from the volatile nature of the market, which implies that volume and liquidity are essential to day trading. Also, a significant slippage in a single trade could ruin a lot for a day trader. Hence, they prefer highly liquid market pairs.
- Range trading requires traders to pay attention to the candlesticks in order to identify support and resistance levels. All trading movements are based on the analysis of what areas are oversold and what are overbought.
- High-frequency trading is a method build on math algorithms. It is performed with the use of trading bots and other automated tools. This type of trading seems convenient from afar, but it is more challenging to execute. Furthermore, the algorithm requires intense monitoring and regular adjustments and tests to cope with the changes that always happen in the market.
- Scalping is another method used in day trading. It is all about making a profit of rapid changes in cryptocurrency prices. Leverages usually boost results here, but risk management strategies are used too. Additionally, margin requirements should be taken into attention. This technique is high-risky, and traders have to react quickly while using it.
Which Crypto Coins Are Good for Day Trading?
Picking a suitable cryptocurrency for day trading is just as important as any part of the trading process. This is because if an asset with low liquidity is chosen, the resulting profit would not be worth the time you invest in the trade. For the best day trading results, let’s take a look at the best cryptocurrency options.
This is the most popular cryptocurrency in the world at the moment. Information about this virtual currency is always on the cryptocurrency news, as traders often deal with it. Hence, it can be traded anytime.
Tron is a rapidly growing cryptocurrency that is becoming more and more reputable amongst day traders. Furthermore, it is relatively cheap and is ideal for newbies because they do not need to put a dent in their pockets to obtain them.
- Binance Coin
This cryptocurrency has been developed by Binance, which is a well-recognized exchange platform. Hence, the virtual currency is trusted by traders, and this results in high volumes of trade and stability in its value. Consequently, it is an excellent asset for day trading.
This coin is believed to be one of the best cryptocurrency options out there, mostly because its value is stable. Also, it is in the top 5 of the virtual coins’ list, which makes it a decent option for day trading.
What Percent of Day Traders Are Successful?
Unfortunately, only 10% of day traders are successful in the long run because a lot of people do not study the market carefully enough to manage risks well. Therefore, sometimes, the market does not go in their favor, and they end up losing their money.
Depending on your trading strategy, luck, and the cryptocurrency you use, day trading can be either profitable or a nightmare. However, if you take the time to study the market and understand how to enter and exit positions in the best way, chances to succeed would be high enough for you.
Originally posted at https://godex.io
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