May 07, · 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. 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(). 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.
Day trading bitcoin strategyBitcoin Day Trading - Find Best BTC Brokers Can you make money?
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.
The name of the strategy is self-explanatory. Automated trading involves making use of AI technology such as trading robots, or Expert Advisors, to trade on behalf of the trader. There are numerous trading bots available with different parameters programmed which can be downloaded or purchased. A lot of Forex brokers and crypto exchanges also provide such robots to traders. The trading bots are programmed according to different strategies and when choosing a bot, it depends on the traders trading needs, objectives, and parameters in deciding which one to use when trading.
This strategy is, however, notoriously risky as the cryptocurrency market is volatile and in using this strategy, it may lead to substantial losses.
This strategy is rarely recommended, and it requires a strict risk management plan. In Hedging Bitcoin, traders open strategic trades to decrease or eliminate the risk of existing positions.
Traders hedge an existing holding by opening a position to short their current position. This involves the selling of the asset on the current market price in the expectation that it will decline.
Should the market price fall, traders will then buy their asset back for the lower price and coin profits from the difference. This means that, when using this strategy, traders will be trading on times when massive news breaks. This includes instances where the news reports events such as natural disasters, terrorist attacks, and others which cause assets to fall. However, this is a risky strategy as there is a likelihood that prices on these assets may fall even lower. This strategy entails that a trader enters a position as the price dives should the expectation be that the current trend will endure.
This also involves a lot of discipline in trading psychology as it may trigger the overwhelming urge to close the position should the price continue declining in a downward trend. Trading, and Bitcoin trading, deserves a lot of consideration and tactic with the goal on making profits and minimizing any losses.
Therefore, it is imperative for traders to ensure that they start with a basic understanding of Bitcoin trading first before trading. There are numerous strategies that can be employed when trading Bitcoin and traders are urged to ensure that they thoroughly research and learn their strategy before moving to another.
The general rule concerning strategies is that it is better to have one good strategy that works instead of having numerous strategies that increase the chance of losses while they do not make profit at all. In addition, traders need to realize that there is no holy grail of strategies where trading, Bitcoin included, is concerned and one trading strategy that works for a trader will not work the same for another trader as each has their own trading styles, needs, and objectives.
When trading in Bitcoin it is imperative to secure your investments. Bitcoins are only as secure as the wallet storing them. Best Forex Copy trading Platforms and Brokers according to research in South Africa, Copy trading, also known as social trading, mirror trading, or auto trading […].
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Bitcoin Overview When trading Bitcoin, it is the simple process involved with buying low and selling high. Fundamental Analysis Fundamental analysis involves the evaluation of mainly both economic and financial variables along with several others.
There are numerous variables that influence the demand of Bitcoin including: User adoption Transaction activity, and Trading 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. Technical Analysis Technical Analysis in Bitcoin trading requires traders to read charts and it is an essential skill in trading Bitcoin successfully.
Ultimately, the price hits the profit-taking zone approximately 13 hours after the initial break occurred. The stop-loss order is placed below the first resistance zone. Similar to the breakout strategy, the breakout retest strategy looks at breakouts of previously defined important levels. Traders who are trading using this strategy are not interested in the initial breakout; instead they set their focus on a potential retest of the cleared level.
The line of thought behind this strategy is that a consolidation, or minor pull back, is healthy as the trending asset regroups before continuing higher. We use the same situation as for strategy 1 since it offers the setup we are looking for. The bulls clear the first resistance level, move higher, get tired and rotate back lower to retest the previous resistance, which now acts as a support. The higher volume behind the retest suggests that the price will either break the support and return back below the previous resistance or bounce and make a new swing high.
The latter scenario is at play here as the bulls take the price to the second level of resistance after regrouping near the first resistance. It took Bitcoin around 3 hours to travel from the first to the second resistance level. Again, the stop-loss is set below the support level. By performing basic technical analysis on a chart, we identify clear support and resistance levels. The bounce day trading strategy can be used to look for a bounce off of the trend line, MA, pivot point etc.
By drawing a trend line to connect the two most recent swing low, we look closely to try and capitalize on the potential third touch of the trend line. As this is a day-trading strategy, we are only looking for a bounce, not a complete reversal. Judging from the two previous occasions, the price rebounded strongly off the trend line, providing us with the optimism the same may happen for the third time.
The stop loss is both below the trend line, as well as below the horizontal support the previous swing low. Setting the profit-taking level for this strategy is optional. To actually own bitcoin rather then speculate on the price , you need a digital wallet to store your cryptocurrency. There are a whole range of wallet providers out there, but we like UpHold.
It offers higher levels of security than most and is backed by large, regulated brokers. So you want to make money day trading bitcoin? You can also use orders — open orders or limit orders — to enter the market at the point you want to. Day trading bitcoin on Bitmex has become particularly popular in recent years.
However, there are other choices too, including:. Away from the direct exchanges, there are also brokers that will allow you to trade the underlying asset of Bitcoin, without actually owning it. It can for example, be traded within a forex pair against the US dollar. Our broker table will show which firms offer one-click trading of bitcoin.
Whilst you find your feet, using a small amount is advisable. Some people seek the assistance of a bitcoin day trading bot, others rely on their own technical analysis and judgement. Nearly all bitcoin day trading tutorials will suggest you utilise price charts and have an effective money management strategy. This will help you keep losses at a minimum and profits high. Candlestick charts offer you the most information in the smallest amount of space.
From them you can learn several essential bits of information:. When using your chart ensure you have the right timeframe settings. For day trading bitcoins you want charts that are between minutes. Whether you were day trading bitcoin in , or day trading it now in , consider using the on balance volume OBV indicator.
It utilises an intelligent combination of price and volume activity to tell you what is the total money flowing in and out of the market currently.
How do you apply it to Bitcoin? If bitcoin trading is on the rise whilst the OBV trading is heading south, then you know people are selling into this rally, however a move to the upside would not be sustainable.
The same logic can be applied in reverse. Another one of our top tips — It is imperative you utilise multiple news sources. Bitcoin value is extremely reliant on public perception, so news events can trigger spikes. Some of the most useful and user friendly news sources out there are:. When it comes to useful bitcoin day trading tips, many suggest that if there is zero negative news about bitcoin and cryptocurrencies in general, then it could well be the right time to sell.
Trading bitcoin for beginners introduces numerous risks — traders must be aware of them before putting money on the line. Learning bitcoin trading can involve expensive mistakes, so this list of risks with hopefully offer new traders some tips to avoid the pitfalls:.