Cryptocurrency profitability has become a great deal for investors around the world. The crypto hype is for real and millions of people are already dealing in cryptocurrencies directly or indirectly. When it comes to making a reasonable return by investing in the crypto market, the most appropriate option for beginners would be day trading.
The emergence of the crypto industry has attracted many investors and traders. Day trading enables traders to make a profit from price discrepancies and movements that are hard to find in other more mature markets. Day traders are different from other types of traders, as they will often buy and sell any financial assets for several hours or less, and earn a great profit from short-term price speculation.
Day trading is the process of earning quick profits by speculating on financial products and assets over a span of a single day. Most of the day trades stay tuned with what’s happening in the markets in the short term. They can even place hundreds of orders in a single day to earn a profit in the long run.
How do day traders make money?
Experienced day traders will have a deep understanding of the crypto market. They typically use a technical analysis approach to create trade ideas. They will usually use price action, volume, chart patterns, and technical indicators. Proper risk management is essential for success in day trading.
Crypto day trades look forward to profiting from market volatility. As day traders require good liquidity to execute quick trades, hence volume and liquidity are very crucial for day trading. It is important to note that a large slippage on a single trade can have an adverse impact on day traders’ trading account.
Another important aspect to understand is that many day traders will prefer trading in highly liquid market pairs. Some day traders consider it better to trade one market pair such as BTC/USDT. While others create a watch list based on fundamental or technical attributes or both.
Day trading strategies
Scalping comes under common trading strategies in cryptocurrency day trading. This is the simplest way to earn a profit, as it involves taking advantage of small price movements taking place over a short time frame. These can be the bid-ask spread, gaps in liquidity, and other market inefficiencies.
Scalpers often prefer to trade on trade futures contracts or margins to enhance their results with leverage. As the percentage price targets tend to be smaller, hence larger position sizes make more sense. This does not only apply to only this trading strategy but generally happens in most of the trading day trading.
However, the risk management factor is still intact with trading with leverage. A successful and experienced scalper will be aware of applying proper position sizing rules and margin requirements. Scalpers may also use strategies such as volume heat maps, order book analysis, and technical indicators.
Range trading is not complicated to get your hands on, it heavily depends upon candlestick chart analysis, resistance, and support levels. Range traders focus on the price ranges within the market structure and then come up with ideas based on those ranges.
It is important to note that the whole idea of range trading is based on the assumption that edges of the ranges as support and resistance until the point comes when a range is broken. This indicates that the lower edge of the range will probably push the price up, while the upper edge work will push the price down.
However, as more times the price touches a support and resistance level, it is more likely expected that level will break. This is the reason why range traders are well prepared for the chances that the market can break out of the range. This typically means setting up a stop-loss at a level where the breakout from the range is confirmed.
High-frequency trading (HFT)
High-frequency trading is a little bit tricky, as it involves trading bots and developing algorithms that can quickly enter and exit multiple positions over a short period of time. This trading strategy is typically used by quantitative traders also known as “quant” traders. HFT is much more complicated than it may seem, as it involves monitoring, a lot of backtesting, and tweaking algorithms.
Another thing to understand is that high-frequency trading is an exclusive industry. Such high-quality information is quite hard to come by the general public. This trading strategy is more suitable for advanced traders.
The world of day trading excites many crypto users, and there are millions of people who have invested huge amounts of money in cryptocurrency day trading. You can check some well-reputed trading sites like britishbitcoinprofit.org that offers a friendly trading interface for beginners.