Cryptocurrency is a financial asset based on blockchain technology, making it a secure and faster transaction option. Since the emergence of cryptocurrency, it has transformed the financial world. Many people have made colossal revenue with crypto, while numerous crypto enthusiasts have lost their fortune in the hands of this revolutionising asset.
There are many forms through which a person can earn money through cryptocurrency. Long-term investment, day trading, staking, and mining are a few methods that you can employ to achieve an adequate amount of money with cryptocurrency.
Investing in cryptocurrency is debatable since many fear trusting this unorthodox financial asset for investment purposes. Day trading, on the other hand, is an instant revenue-making process. It has attracted many users to sign up on trading platforms and earn real-time cryptocurrency.
Also Read: Is Cryptocurrency a Good Investment? Should I Invest in It?
Crypto Day Trading – Overview
Generally, trading is exchanging one asset with another within a specified market. Cryptocurrency day trading is making a trade of a cryptocurrency asset or pair of cryptocurrencies within the same day. It is also referred to as an intraday or one-day time horizon.
In terms of revenue and benefits, this kind of trading is lucrative, efficient, and risky. The reason is a short trading span since a trader completes many trades a day in order to get enough income. Consequently, a day trader of cryptocurrency is sharp and expert in analysing market trends and assessing the next transaction.
The entire day trading game depends on the price fluctuation, which makes sense in cryptocurrency as its price never stays stable. With the quick price fluctuation, day traders can earn quick profits or even lose revenue. Hence, practical technical analysis and robust trading strategies are crucial to success in crypto day trading.
Related: 7 Things to Think About Before Buying Crypto in 2023
3 Strategies for Crypto Day Trading
Crypto intraday trading needs effective strategies to ensure safe and productive trades. Here are a few day trading strategies to take your crypto trading game to the next level.
#1. High-Frequency Trading
High-Frequency Trading (HFT) is a day trading strategy that involves faster and more efficient crypto orders based on automated or AI-driven mathematical algorithms. The algorithms are so fast that it takes less than a second to analyse the market and execute orders considerably.
The purpose of such a strategy is to use a trading bot with the capacity to capitalise cryptocurrency on quick price fluctuation. Thus, speed and minimum transaction fees are key to an effective HFT strategy for user-friendly crypto transactions.
#2. Scalping
Scalping is a strategy that involves profit from minute price changes by trading often and acting quickly. Day traders use AI-driven trading bots to improve their trading volume. Higher frequency and extensive trading volumes are a few characteristics of scalping, as price changes are relatively smaller than longer trades.
Risks increase with scalping since it takes more time to detect and capitalise on dependable trends. Therefore, scalpers must stick to an exit plan, ensuring that a significant loss does not outweigh the numerous modest gains.
There are two main methods of applying a scalping trading strategy. The first is to engage in numerous trades quickly to profit from sudden and sharp price changes. In contrast to high-frequency scalping, the second strategy involves fewer trades, smaller position sizes, and shorter holding periods while focusing on moderate price fluctuations.
#3. Technical Analysis
This strategy is widely used among day traders since it allows users to understand every market aspect. This strategy is based on a few techniques, including the price trends and countertrends, market nature, and historical background of the market.
Simply put, a technical analyst looks up these trends and historical events about a particular cryptocurrency to take the next step. Day traders with expert technical analysis understand that the market will repeat itself under a specified pattern. They just recognise that pattern and stick to the strategy, paving their path for a productive earning outcome.
Traders use technical indicators on the basis of crypto price and volume. Traders employ two basic approaches for successful technical analysis: Trend and counter trend trading.
How to Become a Day Trader?
Getting started with crypto day trading is effortless, but having a handful of experts in this field alongside experience is vital to success. However, a beginner must follow a few tips to gain experience without losing their hard-earned money in crypto trading.
#1. Market Analysis
Knowing about cryptocurrency before starting out as a day trader is a must. You must understand how many cryptos are available and the technologies behind their functionality. It will inform you of the potential that cryptocurrency possesses for trading.
#2. Trading Platform Selection
You must create your account on a trading platform like Binance, ByBit, Kraken, etc. Such platforms enable you to overlook the market and provide you with insights regarding the various cryptocurrencies and their trends.
#3. Never Start without a Strategy
A trading strategy is as essential as the foundation of a building. Leaping into crypto day trading without an effective strategy is highly dangerous and can make you lose your money instantly. With many trading strategies for intraday trading, you can choose one that suits your wants well.
#4. Go with Realistic Expectations
Getting started as a crypto day trader and hoping to earn thousands of dollars daily does not seem practical. You must start small first to understand the market vulnerability and trends to devise a strategy to gain high profits from your trades shortly.
As crypto is a game of high profit and higher loss, you must be prepared to lose your first investment without mental stress. So, start your day trading journey with a smaller revenue and grow steadily over time.
Read More: Will Ethereum Recover? Here’s What Will Help ETH Go Up Again
Frequently Asked Questions
Is Crypto a Good Choice for Day Trading?
Day trading is profitable for traders due to its shorter trading span. It depends on the frequent price fluctuation of the financial asset that allows traders to make money out of it. As cryptocurrency is known for sudden and high volatility, it is the best option for day trading.
What Is the Best Platform to Get Started with Crypto Day Trading?
Day trading does not need a specific exchange platform to get started. A trader can start trading with any platform unless they want extra perks, such as low trade commissions, a high number of crypto assets, liquidity, etc. Binance and Coinbase Pro are the best platforms for crypto day traders.
Can I Make $100 Daily with Crypto Day Trading?
As a beginner, it seems challenging to earn a hundred dollars every day. You must trade with a considerable revenue of up to 4000-5000 USD to become eligible for such profits daily. However, experienced day traders earn more than $100 every day due to their high investments and effective trading strategies.