Universal access – You can start day trading bitcoins anywhere on the planet, 24 hours a day, 7 days a week, days a year. You simply need an internet connection. Plus, because you’re day trading you don’t need to have a long term view about whether cryptocurrencies will succeed. 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 14, · How to Start Trading Bitcoin: The first thing you need to get started trading bitcoin is to open a bitcoin wallet. If you do not have a bitcoin wallet then you can open one at the biggest wallet called Coinbase. We have arranged a special deal for everyone wanting to get started in bitcoin to get a free $10 at Coinbase/5(48).
How to do bitcoin day trading5 Easy Steps For Bitcoin Trading For Profit and Beginners
Instead, they buy digital assets and hold them for a short period, anywhere between a few minutes to a few hours, before they sell them off. Traders can be classified into two broad categories.
Speculators and technical analysts. The speculators keep a watchful eye over the cryptocurrency market for news and activities that may indicate that particular crypto will lose or gain value. Their main concern is outside market influences such as coin hacks, developments, and significant partnerships, among others. Analysts, on the other hand, are concerned about the internal workings of the cryptocurrency market and tend to rely on financial patterns and charts for their insight.
You may find that being unique and true to yourself extremely beneficial. The first step towards your day trading journey is to pick a marketplace. Different marketplaces offer different fee structures, coin pairings, trade amounts, etc. This is extremely important because little profits on large trade volumes can quickly disappear into fees.
Once you find a viable marketplace, go ahead and find two to three other marketplaces and register accounts on each. Doing so gives you flexibility in terms of cryptocurrency fees, liquidity, and availability.
Next, you need to develop a solid trading strategy. This step involves a lot of research and self-discipline. For starters, you need to ensure that you do not risk more than you are willing to lose. Day trading is a numbers game, and you are bound to make some losses here and there. Another vital factor in cryptocurrency trading is the stop-loss limit or as commonly known, your exit strategy.
Most exchanges allow traders to set a stop loss that automatically exits a trade at a certain price level. Limit sell order is another important concept in cryptocurrency trading.
Unlike the stop-loss order, the limit sell order automatically closes a trade one once your digital asset hits a specific high price. Once the asset hits that price point, the limit sell order will automatically sell your asset. The cryptocurrency trading market is currently filled with a large number of trading bots and trading algorithms.
Some are freely available on open-source platforms while others are given at a fee. As tempting as it is to utilize the services of these trading bots, extreme caution is recommended. Crypto trading bots are only as good as their programming. Therefore, any corruption in their code, and you can expect them to make mistakes. Features such as bot performance analytics, social trading, portfolio creation and tracking make it a robust option for any trader interested in automated cryptocurrency day trading.
The trader undertaking scalping hopes to profit by exploiting the bid-ask spread. Scalping is a quick, paced strategy that tends to be dangerous at times. Therefore, you need to be hot on timing and vigilant for unpredictable assets. This is a popular strategy that depends on following up on news sources and recognizing price moves.
Inversion is a commonly discussed strategy utilized all over the world. This strategy follows a fundamental rationale as it fixates on buying and moving day by day low and high pull-backs.
Therefore, it requires the capacity to anticipating pull-backs quality and precisely distinguishing them. Bitcoin is more volatile than any other type of asset in the cryptocurrency market. Therefore, day trading bitcoin comes with a considerable amount of risk. Bitcoin prices are highly sensitive to public sentiments and regulatory changes.
They fluctuate quickly depending on the types of news circulating in the industry, whether positive or negative. Therefore, before trading bitcoin, you want to wait until there is a high reading of volatility to make correct entries. Not having enough liquidity could trigger a substantial slippage that could lead to even more significant losses. Bitcoin is a safe commitment for a new trader as it can be used as a long-term store of value.
It also comes with relatively fewer risks compared to altcoins. You only need to day trade bitcoin when all conditions align in your favor. Therefore, avoid trading on weekends and limit trading only to days with the highest volume.
The safest altcoins to trade are those that are the top by market cap. These are the ones that are less volatile and are most likely to serve as long-term stores of value. A great example is Ethereum, Ripple, Bitcoin Cash, among others. These coins are less apt to disappear. Smaller altcoins are profitable in the short-term, but the risks associated with them are much higher.
Their prices can be artificially boosted through pump and dump. Resistance shows where an upward trend is expected to pause or rebound. That means that there are many buyers concentrated at that time. Resistance can be used as an exit point for a transaction. A level of support can be used to predict where a downward trend can pause or rebound. This can be used as an entry point. Market orders are the fastest way to enter or exit a trade at the best price available at the time.
However, instant execution means that the price becomes secondary. When you place a limit order, it will only be triggered once Bitcoin reaches the price you set. Thus, you may get a better price if you are patient enough. Bear in mind that the price should be profitable for you but still realistic.
The limit order will not be executed until there is a seller or sellers willing to accept the price that matches yours. If the market price is lower, it simply will not execute your order. Here are the benefits of limit orders:. However, some aggressive trading techniques do not suit limit orders. In situations when fast execution is more important than the price difference, you should opt for market orders. When you are day trading, the activity on the exchange occurs very sporadically.
Before you commit to any exchange, take your time to fully explore its functionality and thoroughly evaluate the drawbacks. Here are the best crypto exchanges for Bitcoin day trading:. Many traders shared their experiences about their psychological struggles that have caused them losses. If you want to avoid quietly sabotaging your trading profits, adopt the right mindset:. Trading cryptocurrency for profit is a difficult craft in itself.
As you can see, future Bitcoin day traders have a lot of learning to do — from the technical aspect of this industry to controlling their emotions. Day trading may result in considerable profits as well as equally big losses. It is not for everyone. But if you take the trouble to research properly and utilize the right tools, such as Bitcoin day trading bot by 3commas, there is potential to make a great living.
A proven leader, successful at establishing operational excellence and building high-performance teams with a sharp focus on value creation and customer success. By Mikhail Goryunov. Login , for comment. 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.