5 Strategies to start day trading cryptocurrencies. Image credit: AdobeStock
Since the introduction of Bitcoin to the public in 2009, people have engaged in the cryptocurrency industry. Nowadays, this field is almost everywhere – crypto has been slowly accepted in different countries and has been gradually incorporated into every sector of businesses due to its potential. Over the years, there have been cases of successful people and people who made it into the billionaire’s list from crypto trading. All these things have proven that crypto is indeed profitable, which is why more and more people constantly look for ways and strategies to increase their chances of earning.
Due to increasing cases of scams and the volatile nature of the market, crypto enthusiasts have engaged in trading strategies to help them come up with a perfect plan when it comes to the movements, decisions and directions for their crypto trading activities. Aside from following a strategy on their own, some traders seek help from crypto platforms. Bitcoin Motion is one of the better choices out there if you decide to use this kind of service, as their brokers utilise the best trading tools and are equipped with the right knowledge and experience to increase the chances of earnings.
Day Trading is one of the most popularly used trading techniques by both newbies and advanced traders alike. In Spite of its name, day trading is not done during the day when there’s still sunlight; the name refers to the type of trading where traders can enter and exit the market within 24 hours or less. In a simpler way, you can think of it as the moment that crypto traders buy coins at a low price (entry) and sell them at a higher price (exit).
The secret to a successful day trading is knowing how to take advantage of the crypto market’s volatility and analyse the movement of the digital currencies. While this strategy may be the most common, day trading takes a lot of skill and also comes with a lot of risks. With that being said, it’s essential to track and monitor the price and come up with trade ideas through automated platforms.
As mentioned, day trading is the method of buying and selling assets within 24 hours or less. Taking advantage of the price movements can be profitable, but can also be dangerous for beginners. Whether you are a newbie who likes to explore this type of strategy or an advanced trader looking to make the most out of day trading, it’s good to have some knowledge before approaching this method. Check out the 5 day trading techniques that you may want to use.
1. Momentum Trading
Momentum Trading refers to the method where investors jump on stocks whose values have shown consistent increase. However, these digital assets are rare and hard to find due to the market’s volatile nature. Check out these qualities of a stock if you’re using a momentum trading strategy: major move in values, stock movement of 30-40%, smaller stocks, and trends for momentum trading tools.
2. Scalping Trading
Scalping has this philosophy that small winds can add up to a lot of money if combined together at the end of the day. Crypto traders who use this method buy and sell targets and sticks to these predetermined levels. Scalping is one of the best day-trading strategies for confident traders who are capable of making quick decisions and executing them without hesitating.
3. Pullback Trading
Pullback Trading refers to the technique of searching for a stock or digital assets with an established trend. Traders who utilise this method monitor the trend until there’s a decline in the price from the trend. If the trend is upward, traders then look for the downward price movement or pullback, as it is an indicator or their entry point to buy.
4. Breakout Trading
Breakout Trading is done when the stock price rises above the former top resistance price. However, this method is not as easy as learning how to read price charts, indicating the resistance and then buying after a breakout. This technique requires monitoring the level of stock trading volume – this is because breakout trades on high volume are considered to be sustainable compared to breakouts with less volume.
The news and media plays a great impact in the movements of the value of digital assets. One poor earnings report can cause a stock price to fall; by keeping an eye on the news, day traders can make profit on the popular daily stories. If the news is bad, you might want to borrow shares of stock from investment firms; but if the news is good, you can go and buy the stock outright and sell the shares after the price rises.
According to experts, day trading is extremely risky and may result in significant amounts of losses in a very short period of time. However, this doesn’t mean that you should steer clear from day trading all throughout your career; there are some who were successful in making profits through day trading. You just need to do your research about some tips and tricks on approaching this type of trading, and most importantly, the market has a volatile nature, so only invest what you can afford to lose.