The only indicator I ever employ is a short-term simple moving average. Let's look at the simplest day trading strategy in the world. Timeframes 2 hours. I am going to use a 2-hour chart. Anything lower than this IMO has far too much random noise. Whilst anything higher and you’re getting into the realms of swing trading, not day trading. Apr 03, · What Is Day Trading? Day trading is a type of short-term trading aimed to bring quick profit in a short period of time. As the opposite of day trading, there is long-term trading which implies such a strategy as hodling. Pretty much every cryptocurrency can be traded in short and long positions if you know how to ‘read’ the market/5(). Sep 26, · So, you need a day trading cryptocurrency strategy to protect your balance. The high volatility nature of Bitcoin and other cryptocurrencies has made the crypto market like a roller-coaster. This is the perfect environment for day trading because during the day you’ll have enough up and down swings to make a decent profit/5().
Day trading bitcoin strategiesLearn How to Day Trade Bitcoin: a Guide with Winning Trading Strategies
Well before you do, I think you should read my guide first! This will start by explaining exactly what day trading is, followed by the things you need to consider. By the end of reading my guide from start to finish, you will have all the information you need to decide if day trading cryptocurrency is right for you.
When people talk about trading, they are referring to buying and selling an asset with the aim of making a profit. For example, in real-world stock exchanges, people trade all kinds of things. This can include stocks and shares like Apple, currencies like U. Dollars, and even metals such as Gold and Silver. Whatever is being traded, the objective is the same. Buy an asset and then sell it for more than you paid for it!
This is exactly the same as trading cryptocurrency. There are different types of trading goals, which are normally split into short-term trading and long-term trading. This is determined by how long you like to hold an asset before you sell it. Day trading is very short-term trading, and it can mean holding an asset for just a few seconds, to a couple of hours. The idea is that you sell your asset before the end of the day, hoping to make a small, but quick profit. However, it is important to remember that the above two trades are examples of a successful prediction.
On another day, the prices could have easily gone the other way, which would have meant that both Peter and John lost money. The main idea is that when day trading, you look for opportunities to make a quick profit. If you are planning on holding on to a cryptocurrency for longer, this is called long-term trading. It literally just means to hold a coin or token for a long time and resist selling it.
There are lots of different methods that people use today trade, but the main two are based on either speculation or chart analysis. Speculation is when a trader believes a price will go up or down because of a certain event.
In the above example of Peter, he purchased Ripple because he saw a positive news story. There was no guarantee that the price would go up, but he speculated that it would be based on his own opinion.
The other day trading cryptocurrency strategy often used is chart analysis. This is where traders study the price movement of a particular cryptocurrency and try to guess which way it will go, based on historical price movements. When analyzing charts, you can look at how a price moves every few seconds, minutes or even hours.
In the above section, I briefly discussed what day trading cryptocurrency actually is and some of the crypto trading strategies people use. This section is going to talk about the mental side of trading, which is probably the most important thing to consider.
Firstly, there are one major difference between day trading cryptocurrency and day trading real-world assets. The reason for this is volatility. Volatility is when the price of an asset moves up or down really quickly, meaning it can either be a great success for the trader or alternatively a great failure.
For example, if you were day trading stocks on the NYSE New York Stock Exchange , it is very unlikely that the prices would change that much in a 24 hour period. This is because they are safe companies that have been operating for a long time. Of course, prices still go up or down, but compared to cryptocurrencies, it would generally only be by a small amount.
On the other hand, the prices of cryptocurrencies are very volatile. In some circumstances, even more. Anyone that bought the coin towards the start of the day would have made a lot of money, however, the people that bought it at its highest price would have lost the majority of their investment.
The E-Coin example is why it is important to understand that day trading Bitcoin and other cryptocurrencies will not always go to plan. You have to be able to accept losses when they happen, as this is a part of trading. Even the most successful traders in the world make losses, as it is impossible to always make the correct prediction. Chasing losses is the act in which a trader experiences a bad loss and they attempt to make it back by taking really high risks.
This is one of the main reasons why the majority of traders fail. You have to accept that you will always make losses at some point! Before you even think about depositing funds into your new trading account, it is really important that you practice first.
Although none of the major cryptocurrency exchanges offer a demo account, a good place to start would be Coins2Learn. Coins2Learn offers a trading simulator that allows you to trade using fake money. The platform is really good for beginners and they even offer tips and how to become successful. You can access their website by clicking this link!
Once you have a better understanding of how the markets work, the next step is to do the real thing. This is why it is important to start off with really low amounts. In fact, the amounts must not be any larger than you can afford to lose.
At this stage of your day trading cryptocurrency career, you will be learning about the highs and lows of the markets and most importantly, improving your skills and knowledge. Once you have figured out how the markets work and you feel you are ready to start trading with real money, you now need to set yourself some targets.
This is really important as if you are planning to do this as your part-time or full-time job, you need to have expectations as to how much you hope to make. These traders will have a very large "bankroll", meaning that they can still make good money even if the percentage gains are small. Although this sounds like a small amount, in the long run, this will protect you from going broke.
Another important aspect to day trading cryptocurrency is that you set yourself a stop loss. A stop-loss is when you enter a price that you want to automatically exit your trade. This protects from you a sudden decline in price, or if you were not at your computer to do it yourself. If you feel that you will not have the mental desire, time or patience to become a day trader, you could always consider long-term investing instead.
Long-term trading is far less stressful, as once you buy a coin you can leave it to grow over a longer period of time. This could have been achieved without you needing to sit at your computer all day to check for any price movements. You can also apply the same trading techniques too, such as setting stop-losses or market limit-orders. However, if you are certain that you want to become a cryptocurrency day trader, then the next part of my guide is going to show you how to get started!
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Take a look! Learn how to make money with Bitcoin in the latest making money with Bitcoin guide. Trezor VS Ledger: the complete overview of the two hardware wallets. Now that you know what day trading cryptocurrency requires, as well as what you need to consider, I am now going to show you how to get started! The first step when looking at how to day trade cryptocurrency will require you to find a good exchange.
A cryptocurrency exchange will allow you to buy and sell coins 24 hours per day. It is important to think about what kind of cryptocurrencies you are looking to get involved with.
If you are looking to day trade full time, then it is well worth choosing an exchange that has lots of difference pairings listed. Note: A pairing refers to the two coins that are being traded.
Fundamental analysis involves the evaluation of mainly both economic and financial variables along with several others. The purpose of this is to determine the true value of a security. In doing this, investors can see, for example, how scaling challenges may affect the value of Bitcoin. Using fundamental analysis in evaluating Bitcoin may be complex and it has taken the development of a new set of metrics to refine the art thereof which resulted in the starting point for Bitcoin fundamental analysis being the supply and demand that derives prices.
User adoption is important as it is crucial to the long-term viability of cryptocurrency, and the driving force behind user adoption is the fact that money has various uses.
Money is not only a store of value but a medium of exchange along with being a unit of account. Bitcoin has never quite been used as a unit of account, but it has, however, managed to gain significant traction as a medium of exchange due to the increasing acceptance since its inception.
There has been a steady increase in the number of confirmed transactions per day with transactions surging in with a steady rise to more than 7, transactions per day. Despite the informative nature of such data, it is unfortunately not the best indicator when applying fundamental analysis. This is due to blockchain transactions which are generated by automated systems and therefore cannot represent actual economic activity.
Traders rather face having to figure out which transactions consist of an actual participant sending to or accepting Bitcoin from another person. When considering that the demand for Bitcoin is a complex study, supply appears to be a lot more straightforward as there is a set amount of Bitcoin; 21 million, and the rate of new supply is subsequently determined by Bitcoin protocol. In weighing Bitcoin to conventional monetary systems, it contrasts sharply as central banks possess the ability to print money whenever they want or need.
Despite this, it is, however, important to note that some caveats exist that affect the supply of Bitcoin. The fact that the creator of Bitcoin, Satoshi Nakamoto, supposedly holds around 1. Traders need to leverage fundamental analysis on Bitcoin as it provides them with a better sense of the true value of the cryptocurrency and subsequently it allows them a better sense of when it is a good time to buy and when they should consider selling.
Fundamental analysis is strongly criticised as it reflects more what a security should be considered in its worth than what the actual market price for it is. There should not be too much reliance placed on fundamental analysis and technical analysis should be done alongside fundamental analysis. Technical Analysis in Bitcoin trading requires traders to read charts and it is an essential skill in trading Bitcoin successfully.
Although it may seem intimidating and daunting at first, with time and practice it begins to make a lot more sense. Bitcoin trading is like stock trading with the difference being the asset itself.
Both use the same fundamentals and traders are advised to spend some time studying some of the greatest stock traders in the world to provide some edge.
The most important thing is to understand the psychology associated with the market and this requires research into existing strategies of established traders who have mastered their trading skill through the years.
The biggest benefit with conducting a timely technical analysis in Bitcoin trading is that it aids both investors and traders in being able to predict the market. It also helps investors and traders determine when the best and most profitable entry and exit points may be. When approaching a Bitcoin technical analysis, it is imperative to note that there are various groups of chart patterns with the most well-known patterns occurring on all timeframes. Bullish patterns on a chart indicate the likelihood of a trend going upwards while a bearish pattern indicate that the price is likely to move more downwards.
The third pattern involves reversal patterns which signal that the predominant trend is about to end and a price breakout in the opposite direction can be expected. Despite these distinctive patterns, they cannot fully guarantee certain market behaviour as they only show the likelihood of movements that can be expected. Technical analysis and chart analysis can be used by traders to create their trading plan in advance which can be based on the analysis on where orders should be set depending on what the trader expects the market to do.
Among an array of analysis tools, Fibonacci retracements are often used in conjunction with chart patterns as they indicate the likelihood for certain reversals and breakouts of price. There are numerous ways in which Bitcoin can be traded with two of the most predominant ways being the trading of Bitcoin and other cryptocurrencies on Forex and thus through a Forex broker , or by trading through a cryptocurrency exchange platform. There are numerous Forex brokers who allow traders to deposit, withdraw and trade on a Bitcoin-based account.
There are, however, some legal implications involved for some traders, such as Americans, as CFDs are not allowed in the United States. Bitcoin CFDs are traded on a variety of trading platforms that are designed for just the purpose, with the most popular being MetaTrader 4. It is one of the best trading platforms which provides traders with an array of tools such as:. A lot of traders may prefer to make use of a Forex broker that offers cryptocurrency trading as a tradable financial instrument for various reasons, one of the main reasons being that regulation.
Bitcoin and cryptocurrency trading are, for the greater part, unregulated and this means that client funds cannot be secured. Forex brokers, through regulatory requirements, must keep client funds in segregated accounts.
In doing so, the funds may only be used for trading activities and it must be withdrawable at any given time.
Cryptocurrency exchange platforms do not keep client funds, although some make provision for proprietary hot and cold wallets. A hot wallet is a type of storage which is kept online while cold wallets can be kept and managed offline. When considering that cryptocurrency platforms often fall prey to hacking attempts, traders are not advised to make use of hot wallets to store great amounts of funds, but rather to keep enough funds in these wallets for everyday purchases.
Cold wallets are recommended as they are more secure and traders are, in addition, not advised to easily make use of wallets provided by exchange platforms due to the level of security threats that they face frequently. Numerous Forex brokers have started making provision for the trading of Bitcoin by offering cryptocurrencies as a financial instrument in their portfolios of assets offered. But before traders can start with selecting a broker, there are some key points that need to be considered in choosing the right broker namely:.
Both these ways in which Bitcoin can be traded have distinct differences such as:. When trading Bitcoin through a Forex broker, traders must not only pay attention to the price of Bitcoin, but to that of the fiat currency as well and this involves fundamental knowledge of how fiat currency prices are affected and by which factors.
Trading cryptocurrency and trading Bitcoin as a CFD does not mean that the trader owns the asset, and this is where there is a distinct difference between trading and investing.
Trading only allows traders to benefit and profit from price movements. After selecting a Forex broker to facilitate the trade in Bitcoin and other cryptocurrencies, traders can follow the following steps to start trading Bitcoin:. Bitcoin and Cryptocurrency exchanges allow for the sale and purchase of Bitcoin. It can either be bought or sold through regular, or fiat, currencies, or it can be done by using cryptocurrencies. To select a cryptocurrency exchange, a similar process has to be followed as with selecting a Forex broker and this involves key factors that must be considered such as safety, transparency, record, user experience, and the fees involved.
Cryptocurrency exchange platforms are not regulated by regulatory entities as Forex brokers may be and thus client funds are not held or secured by the exchange.
It is imperative for traders to test and rate the level of security that the exchange platform offers along with seeing what their record is in terms of hacking attempts and how they mitigate and manage such attempts. It is important to gain insight into the experience of other users when considering a platform as it may highlight any issues that other traders have, or have had, with a platform.
The fees involved need to be considered and it is imperative for traders to first understand their own trading needs and any financial limitations that they have as they have to compensate of trading and non-trading fees along with any losses that they may suffer.
Traders must know what their budgetary needs and requirements are before they start trading Bitcoin. This needs to be laid out in their trading plan as it provides a good idea of how much can be put towards trading. In addition, it also helps traders avoid spending more than they can afford along with compensating for any losses which may occur.
Should traders put more on the line than they can afford to lose, they risk losing everything and there is always a chance that the trading account can go into a negative if the trader does not have negative balance protection. Learning to trade in small amounts and to control position sizes is a key element that beginners need to learn from the start. It would be detrimental for traders to start trading blindly as there is no framework provided for the needs and objectives of the trader and essentially traders also have no idea where their entry and exit parameters are.
Traders need to formulate a trading plan to ensure that they know when and were to buy, and when and where to sell, or exit a trade, to lock in profits and minimize losses. Earlier in this article, hot and cold wallets along with the issues surrounding security on exchanges was discussed. Traders are cautioned in never leaving funds on an exchange that they are not actively and currently trading with. Should traders leave funds on exchanges, it takes away from the control that the trader has over it and should the exchange experience a successful hacking attempt or the exchange goes offline or out of business, traders may lose their funds.
These are two emotions that tend to control and drive the actions of traders. Both emotions may be detrimental as traders may experience fear and prematurely close their trades when they hear disturbing news or a rumour which may affect their trade.
Greed may also be based on the fear of missing out when traders are informed of new trends, or new opportunities and it may lead to opening trades too soon, or a delay in closing existing trades. Traders need to be aware of the psychology involved with trading and they need to understand their own emotions and emotional triggers to avoid making mistakes that may lead to substantial losses. Regardless of whether traders are successful or not, there are lessons to be learnt in trading.
No trader will ever only experience profitable trades and in the art of making profits, traders will lose some along the way to becoming more profitable. Traders need to focus on the insights that can be gained while trading, not only on making profits as learning lessons can lead to improved skills, knowledge, and experience. Firstly, traders need to learn the basics of Bitcoin trading followed by what both fundamental and technical analysis entails and how it must be done.
This will allow traders to get to know the Bitcoin market and more proficiently analyse the trends as Bitcoin prices are extremely speculative and they do not agree with traditional financial theories.
Traders will need to consider the factors which impact the price of bitcoin such as the demand, supply, news, and events. By collaborating both fundamental and technical analysis, traders can more accurately learn when to buy and when to sell Bitcoin. Bitcoin trading needs to be done at a set pace as it is not a sprint to see who can make the most profit in the most efficient or fastest way.
Traders need to map out their long-term goals and adapt their strategies to work for them especially where manual trading is concerned. Traders need to determine the time that they can put into trading along with what they want to achieve over a long period of time and whether they can sustain those goals as well.
Trading involves a lot of risks and it is imperative for traders to ensure that they have risk management protocols in place to minimize their losses. The Bitcoin and cryptocurrency market is extremely volatile and when trading, it is important to make use of stop loss orders to avoid substantial losses that may exceed the capital of the trader.
Leverage is a useful tool in trading, despite the financial instrument being traded, as it allows the trader to open larger positions despite their initial capital. Where there are great profits to be gained, there are also substantial losses which can be incurred.
Leverage in itself has a lot of risks while cryptocurrency trading has its own as well and traders will find that Forex brokers do not offer a high level of leverage while most cryptocurrency exchange platforms do not offer any leverage at all. When using too much leverage, traders run the risk of becoming reckless and losing more than their initial capital while too little leverage may hamper the trade performance as premium trades cannot provide traders with their expected returns.
This involves experience, skills, and knowledge in coding as it opens a new world for traders to refine their trading skills and to tailor their strategies to precisely what they need.
By learning to create strategies from scratch, traders can make use of algorithms as they trade based on finite parameters and there are thousands of ways to incorporate various factors and parameters into conducting analysis and executing trades.
There are various ways in which Bitcoin can be traded where strategies, utilities, and methods are concerned, and traders should take time in exploring different options to find ways which cater specifically to their needs and objectives. While trading, traders are urged to put the correct amount of funds into a trade while keeping tabs on specific sizing methods to ensure that the risk and reward ratios are correct and to avoid putting too much funds at risk.
Before selecting a Forex broker to facilitate trades or a cryptocurrency exchange platform through which to buy, sell, or trade, traders need to identify their trading needs and objectives. This allows traders to refine and narrow down their search on finding a broker or exchange that caters more specifically for them. Before trading in a live environment or choosing a specific broker or an exchange, it is imperative for traders to make use of demo accounts to test the platform and offering of a broker or an exchange.
These trading bots are able to open and close trades without the trader intervening and provide traders with peace of mind that they will not miss out on opportunities when they are not able to trade manually and look for trends or changes in the market. This strategy forms part of the trend-following aspect of Scalping and features two moving averages which can be utilized in identifying the short-term trend of Bitcoin.
The cross of a shorter period moving average is placed above the longer period moving average which signals an uptrend while the shorter moving average below that of the longer signals a downtrend. The Stochastic oscillator is used by traders to identify market conditions where overbuying or overselling is present.
This signals the trader of a turning point in the current trend. Should the faster period moving average cross over the lower period moving average, the trader is signalled of a short-term uptrend in bitcoin.
Stochastic values above 80 signals the trader to overbought market conditions while anything below 20 signals oversold conditions. A short signal is returned when the period moving average crosses below that of the period moving average. This signals the trader of a short-term downtrend.
When using this strategy on short timeframes such as 1M or 5M, it tends to return the best result. Traders should ensure that stop losses are placed just above the recent swing high in case of short positions.
Stop losses can also be placed just below the recent swing low in case of long positions. The profit targets of the trader should be the approximate size of the Stop Loss so that the trader can at least have a return to risk. When using this strategy, the focus is on identifying breakouts around familiar price ranges and chart patterns such as:. When a breakout occurs, it is often followed by a substantial buying or selling momentum in the direction of the breakout with traders attempting to catch the momentum to profit from it.
This day trading strategy is based on the trade of the underlying trend of Bitcoin. This used to be a profitable approach when the cryptocurrency market knew only an upward direction but with ranging cryptocurrencies, a breakout approach would be better. Although, should a new trend in Bitcoin be established and it is characterized by higher highs and higher lows in uptrends, or lower lows and lower highs in downtrends, this trading strategy may yet again become more viable.
This strategy refers to catching price corrections which may go against an established trend. This strategy is not recommended for beginners as it involves a substantial amount of risk associated with the level of volatility in the cryptocurrency market.