Day Trading Cryptocurrency

29.07.2019
Day trading cryptocurrency is a process of buying and selling financial instruments within a single day, usually with the help of special strategies. 
 
But today we will go beyond those simple explanations and will tell you everything about day trading and why it is profitable.
 
Everything!
 
You won’t need to look for additional manuals and guidelines. 
 
Just grab some snacks and switch off your phone notifications, so they won’t distract you from what you are about to hear!
 
Ready! 
 
Steady! 
 
Go!
 
Day traders are financial market players who close all the positions before the trading day is over. This is the core difference from other traders who may hold positions for several days or even longer.
 
Day trading orients on intraday timeframes and most often trades technical analysis. 
 
Another distinguishing feature is that day traders use much higher leverage compared to other traders. The value of borrowed capital may be ten or even a hundred times higher than of the main money, and with its’ help you can make money day trading cryptocurrency.
 
But how does it concern the cryptocurrency market, considering that it operates 24/7? Great question! 
 
Crypto market never sleeps, which means that frames of the working day no longer exist: there is no actual opening or closing of the trades.
 
Traders have all the freedom to decide how long their working day lasts, depending on the time zone and the day trading cryptocurrency strategy they choose. 
 
The most active are American and Chinese sessions because they can boast the most significant amount of participants.
 
Do you feel like you have just listened to a college lecture? 
 
Lack of basic knowledge to learn how to day trade with maximum use?
 
Don’t worry, we are here to help! 
 
Start with reading this article, and after mastering all the necessary terms, you will be ready to trade like a pro!
 
 

Enough Capital

 
 
money for day trading cryptocurrency
 
 
If you want to learn how to trade cryptocurrency, Reddit will help you, but it is always important to start with finding out how much capital is enough. 
 
It is not a secret that successful trading on financial markets greatly depends on sufficient capital. 
 
Yes, it is not crucial to have a huge deposit when you are only starting your path at day trading cryptocurrency Robinhood app, so you can day trade with $1000, but with the time you will see that it is not enough for a full purchasing power.
 
Lesson Number One: If you want to make good money, you need to have enough capital!
 
Cryptocurrency market is extremely volatile and changes rapidly: often on tens of percent one way or another.
 
 

Leverage Trading or Margin Trading

 
 
leverage trading day trading
 
 
As we have already mentioned above, day trading crypto makes sense only with higher leverage. It gives traders a chance to operate minor movements with a solid capital. 
 
With such a strategy, a trader can build up his capital much faster.
 
As a rule, the trader’s deposit is a stop loss for the trading account. 
 
It is a common practice to divide the deposit into smaller sums to come up with daily stop losses. 
 
Sometimes traders have weekly, monthly, or even yearly stop losses. 
 
Most of the exchanges on the cryptocurrency market don’t have an opportunity to use borrowed capital. 
 
However, there are still a few kind souls!
 
For example, Bitfinex exchange allows traders to increase their capital by 3.3 times. 
 
Recently Binance, the biggest exchange in terms of trade turnovers, started providing leverage to all of its participants, and day trading cryptocurrency Reddit discussions are full of this info.
 
But there is an exchange that managed to outshine everyone else!
 
Bitmex allows trading with x100 leverage. 
 
However, not with the crypto asset but with its settlement futures. Settlement futures gives a right to obtain not the asset itself but the difference between buying and selling. 
 
Exchange marginality allows opening short sales, i.e., selling the asset without having it on balance and then redeeming it to credit the difference on a personal account.
 
Such a sale is conducted after the exchange borrows you a crypto asset. For such a ‘favor,’ you will need to pay an extra fee. 
 
If your system allows the asset’s price drop, the short sale is the best way to make money.
 
Sounds complex? 
 
Then go back to the first paragraph and reread this section as many times as you need. 
 
Don’t worry, we will wait!
 
 

Margin Call

 
margin call day trading
 
 
A margin call is a demand of a broker to a trader to deposit money or securities to bring the account to a minimum value. In case the trader loses 80% of the trading deposit, the broker is ready to step in.
 
However, if the day trading cryptocurrency Robinhood player doesn’t deposit sufficient funds, the broker is forced to cover all the loss positions, taking a part of balance’s funds as a commission. 
 
Sometimes the loss sum exceeds the deposit. In such a case, a broker can demand compensation for losses from the trader through the court. 
 
However, in the majority of cases, cryptocurrency trading brokers consider this risk in advance, and the situation never reaches the court. 
 
Day trader simply loses the deposit, and his account is closed.
 
 

Market Understanding

 
 
market understanding day trading
 
 
Many newcomers, who are only getting familiar with day trading, make the same mistake: they start trading crypto assets without understanding how the market operates. 
 
To explain what we mean, let us divide this aspect into two parts: market mechanics and fundamentals.
 
Market mechanics is the trading system: position placement and its closure, working with orders and stock quotes. It also includes how various cryptocurrency exchanges operate. 
 
Moreover, before choosing your day trading cryptocurrency strategy, it is advisable to learn what order types exist and which of them you can use.
 
Do you think it is enough? 
 
Hell no!
 
You should also understand how margin trading works if you want to rely on borrowed capital. 
 
Fundamentals give day trading cryptocurrency Robinhood specialists a chance to understand the reasons for price fluctuations. So before buying cryptocurrency, you need to determine its value for others and to predict whether its price will go up.
 
Only after diving deeper into understanding the basic principles and mechanisms of trading, you will be able to succeed. 
 
This article will be your guide in the world of crypto signals and will explain what things to pay attention to when trading.
 
 

Trading Strategy

 
day trading strategy
 
 
Before you start day trading, it is important to understand when and how you will open a position. It is also called a day trading cryptocurrency strategy – a set of day trading rules, which apply to cryptocurrency and which you are ready to follow to take all the risks.
 
Day trading strategy includes specific signals to enter and exit the position. 
 
Many traders think that opening a position is more important, but in reality, everything is all the way round. Only when you exit the position you either take profits or losses. 
 
That is why your strategy for day trading crypto should take into account both entry and exit. 
 
Often trading strategies are based on cryptocurrency technical analysis. Inexperienced traders use a variety of indicators, and professional traders include elements of fundamentals to their strategy.
 
 

Technical Analysis or TA

 
technical analysis day trading
 
 
For cryptocurrency day trading players, term Technical Analysis or simply TA is not new. It is a graphical interpretation of trades on the market or exchange. 
 
The most popular basis for technical analysis is a candlestick chart, which is also called a Japanese candlestick chart. This pattern stands at the origins of bulls and bears, as well as other indicators.
 
It is possible to make profits out of day trading only if there is volatility and motion. 
 
That is why technical analysis is an excellent tool for those who can read and analyze it properly.
 
 

Fundamental Analysis

 
fundamental analysis day trading
 
 
The next element is fundamental analysis. It is an evaluation of the financial indicators of a company or crypto assets. However, the definition and concept of fundamental analysis in cryptocurrency day trading is more complicated.
 
Everything becomes more and more fun. 
 
Right?
 
Many experts are trying to evaluate a company based on its promising technologies. 
 
However, in the cryptocurrency market, it is quite challenging to conduct a crypto assets analysis. That is why it is much simpler to evaluate the prevalence of a particular currency.
 
It also allows to erase borders and to scale the technology worldwide, because cryptocurrencies can be used all over the globe. Understanding the importance of fundamental analysis will allow strengthening your strategy.

 

Trading Plan

 
day trading plan
 
 
One of the things that cryptocurrency day trading experts should pay attention to is the trading plan. Considering that all positions open and close the same day, it is crucial to get ready for trading in advance.
 
As a rule, traders already have patterns, but it is still necessary to be in a constant search for new trading ideas. Every idea should include fundamental and technical analysis, as well as a day trading cryptocurrency strategy.
 
Crypto market never sleeps, so some traders adjust to time zones to trade with maximum liquidity at American or Chinese sessions. Some strategies work better at a certain time, for example, from 7 to 9 AM GMT.
 
It doesn’t matter how you decide to approach day trading: the only condition is to prepare the strategy in advance. If not, such trading will be the same as playing roulette.
 
 

Risk Management

 
risk management day trading
 
 
Risk management is a course that any financial specialist has to take at college or university. This also concerns day trading cryptocurrency. 
 
A competent trader has a clear understanding of when to enter and exit the position. 
 
At the same time, risk management allows evaluating how much the trader is ready to lose, considering all the aspects.
 
Before opening a position, cryptocurrency day trading professionals evaluate how much they are ready to risk and only then calculate profit’s potential.
 
Cryptocurrency market is volatile, remember?
 
This means that the risks are much higher, and before trading, we recommend mastering basic principles of risk management, especially if you are trading with leverage. 
 
Any wrong decision may be fatal.
 
 

Money Management

 
 
money management dat trading
 
 
Risk management gives a clear understanding of how much a trader can lose in a deal. 
 
At the same time, money management allows you to understand what value of the deal should be to let you lose exactly the same sum that you have planned.
 
Day trading cryptocurrency Robinhood professionals usually allow a 5-10% risk of the deposit. 
 
If the trader has closed a few positions in a row with a profit, he can increase the risk, but if several deals were unprofitable, it is necessary to lower the risk.
 
By regulating risks, cryptocurrency day trading experts can manage their capital. With proper money management, traders can reduce a series of unprofitable positions and minimize losses.
 
Money management is one of the key elements any day trading strategy should include because you should always keep track of your capital and know how to manage it.
 
 

Work with Exchanges & Fees

 
exchanges and fees day trading
 
 
 
To let you conduct day trading, cryptocurrency exchanges take a certain fee. In modern financial markets, fees are charged from those who prefer trading on the market.
 
At the same time, an exchange may pay you a rebate if you trade limit orders. Most of the cryptocurrency exchanges for day trading crypto, which make impressive fees, offer a discount.
 
It is a common practice for an exchange to provide a discount for holding their token on your account. However, you need to be careful: the more positions you open, the higher the fee will be.
 
Also, if your strategy includes borrowed capital, you should always be alerted. Make sure you understand all the terms and conditions of a particular exchange before using borrowed money. 
 
 

Gradual Development

 
gradual development day trading
 
 
One of the biggest mistakes that the majority of day trading cryptocurrency Reddit newbies do is risking and trading too frequently. Like any other occupation, trading requires learning and understanding all of the basic principles and aspects: starting with assets and managing capital.
 
Once you get familiar with all the concepts, it is recommended to start cryptocurrency day trading on a demo account. 
 
At first, you need to create a system with all of its elements: preparation for the trade and risk management of the account.
 
Note down in capital letters: building up trading capital should be gradual. 
 
It is a universal law!
 
You should also increase risks step by step. Once your system stabilizes and you learn how to make small profits, you can increase system parameters. Your day trading cryptocurrency strategy should be level-headed, so never trade significant sums! 
 
Such an approach usually results in deposit loss. Do you need it?
 
In trading, every detail matters, and patience leads to gradual and stable success. This law especially concerns day traders, because they deal with increased risks and any wrong decision can put an end to their careers.
 
 

Emotions Management

 
emotions management day trading
 
 
Day traders are also human beings, and they experience a variety of emotions. It is impossible to avoid emotions, according to day trading cryptocurrency Reddit discussions: you regularly risk losing money. 
 
Do you want to know what distinguishes a professional trader from a new one?
 
The ability to minimize emotions when making trading decisions. Any external factor may drown you if it influences the cryptocurrency day trading process. Unfortunately, newbies find it hard to put all the emotions aside.
 
That is why we advise trading on a demo account. And once you feel that you are ready, it is better to start with a small deposit account.
 
 

Market Fluctuations

 
market fluctuations day trading
 
 
It is not a secret that markets are constantly changing. Cryptocurrency market is not an exception, so any person that wants to try out cryptocurrency Robinhood day trading should be ready for fluctuations.
 
An experienced day trader is always ready to adjust to the latest tendencies. You shouldn’t open a short position on a bullish trend or to buy on a bearish one. An ability to adapt to the market is vital if you want to succeed in day trading cryptocurrency and to make profits.
 
 

Final Words

 
Today’s article about cryptocurrency day trading may seem a university lecture, but it is impossible to learn how to trade without understanding its basics.
 
Our day trading for dummies guidelines has provided you with all the basic concepts you may need: capital, margin and leverage trading, technical analysis, emotions management, and much more. 
 
Now you should only structure that information and practice, practice, practice!
 
However, if you feel that day trading Reddit rules are too complex and are not for you, we recommend paying attention to crypto bots. These fellows analyze for you – all you need is start-up capital. 
 
To learn more about crypto bots, just press the link. Good luck! 



                                         

 

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