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Many traders have taken advantage of the volatility of cryptocurrency to profit massively, making them learn how to move in and out of the market within a day. That’s where crypto day trading comes in. This is a beginner’s guide to Crypto Day Trading.
What is Crypto Day Trading?
The strategy of crypto day trading involves entering and exiting positions within a single day of trading.
The goal of crypto day trading is to profit from small movements in the market. Day trading in cryptocurrency is particularly profitable as cryptocurrencies can be volatile. For reference, it’s rare for traditional stock, or even a commodity, to see a significant jump in value in a single day. In crypto, such jumps happen very often.
You must have an adequate crypto day trading strategy and an understanding of fundamental and technical analysis. Most day traders rely on technical analysis to generate the right trading ideas. They use price action, volume, chart patterns, and other indicators to identify entry and exit opportunities and make investment decisions.
Because of their global recognition, Bitcoin and Ethereum are the best cryptos to day trade.
Read More: BEST CRYPTO DAY TRADING STRATEGIES
Crypto Day Trading Platforms
Advantages of Crypto Day Trading
1. Anyone with access to a crypto exchange can freely trade with it. Aside from verifying your identity and funding your exchange account, there are no additional entry barriers for retail investors or day traders to access, research, and interact with the crypto markets. And for those who want to own Bitcoin but cannot make an investment greater than $60,000, they can buy and sell a fraction of any cryptocurrency.
2. Traders can buy and sell without limits because the crypto markets do not close. For the New York Stock Exchange or the Nasdaq, marketplace hours are open to trade from 9:30 a.m. to 4 p.m. ET. A benefit of 24/7 marketplace access is the luxury of being capable of change while it suits you instead of suiting the marketplace.
3. Crypto and the blockchain technology that powers them are decentralized and devised to allow users to remain anonymous and process payments without an intermediary. For day traders on a centralized exchange, the lack of government taxes and fees makes cryptocurrency transaction costs very low.
Disadvantages of Crypto Day Trading
1. The always-open nature of cryptocurrency means there are fewer patterns for predictable and profitable trades throughout the day. Cryptocurrency day traders can hold onto the charts looking for the right time to execute a trade for longer than they would have to in traditional markets. This can make finding trends much more complex, and a quick daytime trading session can turn into a nighttime session.
2. When buying and selling cryptocurrencies, you may fall victim to pump-and-sell-off schemes or wash-sales. This occurs while a collection of people coordinate to artificially pump up the charge of a selected cryptocurrency to draw unsuspecting investors. The investors then sell off the crypto after income profits, tanking the rate.
Crypto day trading is a beneficial endeavor that could supply a few spectacular gains – especially for short-time period traders. As lengthy as you have the right crypto day trading strategy, you ought to have no problem.
Anyone who is curious about day trading crypto must recognize where they plan on buying and selling, have an in-depth strategy, and persist with their entry and exit points.