Cryptocurrency trading is getting popular and gaining momentum due to the rising assurance of great returns and minimum deposits required by a trader. So, a novice market player can start trading in the market with a few funds in their hands. In recent months, the boom in digital trading has been phenomenal. The COVID-19 has been phenomenal in that aspect of trading cryptocurrencies of all aspects in the financial market. Billions of dollars have been infused in the past few years. Day trading cryptocurrency strategy is the most common phenomenon with cryptocurrency. It requires the placement of fine planning or strategy.
The crypto market is becoming vast, with more than 4000 decentralised currencies floating in the market. So, traders have a lot from where they can select and manifest their choices. But, it requires stable and standard strategies in place for excelling and requesting better returns.
Know about cryptocurrency
Before implying a day trading strategy in the cryptocurrency market, it is imperative to know its roots and why it is successful? Cryptocurrency can be defined as the virtual currency with the backing or security of cryptography, which protects it from any attempt of counterfeiting. As a result, hackers have almost an impossible task to hack transactions or accounts.
Most of the cryptocurrencies that we see today are based on blockchain technology. Blockchain works on a network of disparate or different networks of computers placed in different nations. The technology ensures transactional data’s integrity. So, it becomes a crucial component for several virtual currencies prevailing in the crypto market.
Interestingly, cryptocurrencies are not released by a central or government authority. Thus, these are free from any manipulations. However, China is the exception in those regards as it has launched its own centralised cryptocurrency digital yuan in the market. But it has control of the Communist government that is ruling the nation. It was launched in June 2021.
Meanwhile, on the theoretical level, a decentralised cryptocurrency is a light in the darkness for people looking for a market that is free from the manipulations of companies and industrialists.
What are cryptocurrencies?
You can define it as a system that helps make your payment transactions secure in times of trading insecurities. There are virtual tokens that are linked to a digital ledger where entries of transactions take place. Crypto here represents several cryptographic techniques and encrypted algorithms. Their duty is to protect the entries of public-private key pairs, elliptical curve encryption, and hashing functions are some of the illustrations.
Trading cryptocurrencies require all aspects that one may need to indulge in stock trading or forex trading. Moreover, it is closer to forex trade as experts consider cryptocurrency as the apt replacement of the existing fiat currency.
What is the need for day trading cryptocurrency strategy?
Day trading strategies save time for people who are full-time professionals in other sectors. Those people can’t track the market for a longer time. So, day trading strategies reward them
Day Trading cryptocurrency strategy
Day trading strategies help in making full use of opportunities that cryptocurrencies throw in the financial market. They bestow you with chances to explore the full potential for making bigger profits quickly. Day trading does not require a trader to get the delivery of an asset. One can buy and sell a cryptocurrency on the same day. Here are some strategies that you need to put in place for gains.
Know about the market:
The reason for the failure is not researching or knowing enough about the market. As a result, you cannot make any progress in day trading crypto. For fetching investment advice, you should know how it deals with influences and the criteria that need to be fulfilled for creating the right investment objective.
It is even better if you, as a beginner, learn what triggered the existence of cryptocurrency and what parameters you need to tick. That information is valuable while you chalk out other strategies. You would get to know about its algorithms and modus-operandi. Getting that into the frame of mind would let you grasp the market situation. Speculating the market with the given determiners helps place better planning.
The cryptocurrency market has been running relentlessly 24*7 and 365 days since its inception. That’s the biggest strength, and I hope that it showcases for traders. And that’s why several brokers are continuously rendering their services to willing market players.
Select cryptocurrencies with high volatility and liquidity
The strategy’s value is worth in gold. Picking up virtual coins with liquidity and volatility quotient at their best, the equation of trading digital currency becomes the best, especially during day trading. You can recover losses from every session. Bitcoin is the first cryptocurrency in the market that has been going strong and has seen several curves due to its volatility. Its reputation is due to the volume and volatility it inherits.
Buying similar altcoins is beneficial in an equivalent proportion. When the market is unsure which way it might turn, selling and buying at regular intervals can be a great strategy in place. Thus, high volatility and liquidity are beneficial. Apart from bitcoin, ripple, ethereum, litecoin, stellar, tether, cardano are among a few virtual coins that have enough potential to make you richer quickly. So, this aspect of strategy should be on top of one’s priority.
Medium-term Day trading cryptocurrency strategy
The strategy is the most effective one for all traders who cannot wait for the longest time. Short session buying and selling may not give huge benefits in day trading. However, it is the medium-term trading strategy that can heap gains. Most crypto-traders are finding the strategy conducive. They can use a stop-loss with a decent range when the market is slightly volatile. Tables can alter in the basket of profits.
It guarantees consistent profits to traders. You can notice that when there’s no bearish market, most coins trade sideways., giving you a chance to experiment a little. You can use it in the limited range that you get for the investment.
It would be best to do this here to find the lowest point of a coin compared to other days. However, it would need observation of the market, but it will be worth the wait.
Following the strategy of buying the undervalued coin and selling it witnessing a surge is beneficial. However, you’ll need to buy a good quantity if it is possible for a better margin. So, investing during those moments is a compilation of great strategies. Medium-term trading gives a reasonable time for a virtual currency to jump or slip further.
Use technical indicators for Day trading cryptocurrency strategy
If you want to make the best use of the limited day’s time while trading cryptocurrencies, technical indicators must be included by you in the regime. It saves time and magnifies your profits. Some of them are stochastic oscillators, moving averages, Bollinger bands, money flow index, Fibonacci Retracements, Relative Strength Index (RSI), Ichimoku Cloud etc.
They can help you track the performance of the market and give you the best leads of the investment time. These indicators can help you gauge the depth of the market and look around how the market is prevailing.
The market condition is found in your favour; it makes for the best day trading.
HODling and buying
You can find the technique or strategy the simplest of all in the application, similar to its theory. So, most traders try to get the best of it in the cryptocurrency market while trading during the day. If you have to find the day’s bottom, buy and hold it for a while. As several cryptocurrencies have gone quiet since the banning in China, there’s no time to recover. But there are fragments of the surge and fall daily. So, making full use of those is helpful for day traders.
The caps of crypto markets are fragile and can move with a slight influence in the market. The manipulation can happen through one single move. These moves work systematically. Sometimes they send a digital coin up and vice-versa in a matter of a few hours. So, you may decide the arc based on the market.
If you can notice the pattern and learn from it, profits are at your disposal. So, knowing the range is beneficial for traders. In the case of range trading, a market player needs to pay attention to overbought and oversold zones. If you can configure and know about them, profits will expand. Overbought would mean that the buyer has gone beyond the satisfactory level of buying, whereas the oversold is diametrically opposite to it.
For finding the correct zones, you can take help from several chart indicators like RSI, Stochastic Oscillator and other chart programs stationed at some other place.
Scalping in cryptocurrency
If you are not sure of any other Day trading cryptocurrency strategy, scalping can provide the much-required assistance. When the trading volumes are high, scalping does the trick for you. It is among the best day trading strategies when the volatility is fine. Scalpers enter and exit the cryptocurrency market several times a day while trading. Some users use automated bots for giving life to their trading aspirations.
Interestingly, scalpers look to exit the market before the coin they are investing in gets influenced by the outside force. So, the profit in one buy-sell session may be less, but when there are several takes in a day, profits are huge. In scalping, traders do not let a crypto coin change its sentiment while they have invested in it. They quickly get away.
A large bankroll in place can help make the best of the move. It is applicable to the shortest day trading cryptocurrency strategy. The return of interest is also the lowest here, but as explained, that’s the motive. Scalping strategy also cuts short the possibility of risk that may arise when you are trading. So, there are multiple benefits. It assists in watching the cryptocurrency market closely and lets you get the depth along with the fundamentals.
When you have limited funds, basic understanding and patience for crypto trading, an arbitrage trading strategy works best in your favour. The planning involves a trader buying cryptocurrency from one market at a lower price and selling it with profits in the other. The profit is earned with the margin between the buying and selling prices. It is the right strategy to place in the market while you trade crypto.
Notably, the crypto market is unregulated. Hence, anyone can create an exchange here. It results in a price difference. So, traders can make use of a few more conditions like this. Thus, it is considered the best trading style. Advanced traders are using it.
You can seek the help of brokers that can help you in arbitraging. Some of them include TradedWell, GlobalTradeATF, Opening accounts on these brokers can heap rewards as they allow arbitrage strategy. There was a time when bitcoin fared almost 40 per cent better in the Korean market compared to the US one. So, people with retail investor accounts got benefited from it. This was called Kimchi Premium.
Traders purchased it from the US market and sold it to the Korean one. Such trading opportunities occurred several times. It is a simple Day trading cryptocurrency strategy but an effective one at that. However, cryptocurrency traders should also take into account fees or charges while dealing in arbitrage trading. Cryptocurrency exchanges may charge a little more than the normal exchange fees.
See the news as a Day trading cryptocurrency strategy
Day trading cryptocurrency strategy involves paying attention to the market keenly and keeping a constant watch on the news. They create changes in the market. Any negative or positive information can deliver profits and losses. So, you should buy and sell cryptocurrencies after learning about the market every hour. So, you can time your buying and selling as the news suggests. It may include some information about the foreign markets and others.
Derivative trading has its perks. Traders can speculate the market without needing to take the delivery of the underlying asset. It does not require funds at the time of dealing in the market.
Trading strategies for cryptocurrency have a crucial role to play in the day trading market. Such plannings may include knowing about exit points, different crypto coins, application of a straightforward strategy, financial instruments, swing trading, etc is pivotal for traders. You should know which type of Day trading cryptocurrency strategy suits you. Moreover, you can use trading bots for trading and making huge gains.