Cryptocurrency is a type of digital currency created and stored electronically. It’s also called virtual currency, as it doesn’t have any physical form. Cryptocurrencies are decentralized, meaning banks or governments do not control them. They’re also anonymous, allowing you to make secure transactions without revealing your identity.
This article will go over some simple strategies that will help day traders trade cryptocurrency successfully on the market.
Let’s get started.
What is Day Trading?
Day trading is buying and selling a security within the same day. This type of trading usually occurs on exchanges, where buyers and sellers meet to buy and sell securities. Cryptocurrencies can be day traded similarly to traditional stocks or Forex pairs. The main difference is that there are far more opportunities to trade cryptocurrencies since they are decentralized and 24/hours. News Spy employs high-level trading tactics to generate regular returns from bitcoin trading.
5 Strategies of Day Trading Crypto
- Technical Analysis
The first strategy for day trading cryptocurrency is technical analysis. This approach looks at past price movements and attempts to predict future patterns. Several indicators can be used to make these predictions. Common indicators used to identify trends include moving averages, MACD and RSI.
- Active Traders
This strategy is for those serious about trading cryptocurrency as a career. This approach involves analyzing the market daily to pick out optimal entry and exit points throughout the day. Active traders constantly monitor their positions using technical analysis tools that provide real-time data, allowing them to adjust or switch up their trades accordingly.
Active traders’ goal is to keep all open positions until expiry before exiting manually, so there’s no need to stop losses unless one wants additional risk management.
- Range Trading
One of the simplest strategies to day trade cryptocurrency is range trading. Many successful traders have used this strategy, including Peter Brandt, a well-known technical analyst, and trader who predicted Bitcoin’s crash back in 2014. Range Trading involves setting buy/sell limit orders at certain price points that are bounding prices action on either side of its current market value.
- Scalping
Scalping is a strategy traders use to make small profits on short-term price movements. This type of trading involves buying and selling cryptocurrencies quickly, often within minutes or hours. Scalpers look for opportunities when the market is volatile, and prices are moving up and down rapidly. They hope to make a profit by buying low and selling high.
- Bot Trading
Bots can be a great solution for those looking to trade automatically, especially during times of low volatility. The bots automate certain aspects of trading strategies without requiring any human input. The downside to this strategy is it has been shown that many bots have flawed programming and instead end up buying high and selling low – not what traders want.
The Bottom Line
Day trading cryptocurrency can be a profitable venture, but it’s also risky. Make sure you have a solid strategy in place before getting started. Some simple strategies include setting stop losses and using limit orders. You should also watch the news and price movements to stay ahead of the game.
