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How to Start Day Trading Crypto

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Investors prefer to trade cryptocurrencies because they are very volatile and if timed in the market correctly, trading cryptocurrencies can bring much higher returns than traditional investments. Do not forget that cryptocurrency trading is both risky and profitable due to its volatile nature. By the way, the risk can be reduced by hedging or diversifying.

The popularity of digital money is growing exponentially, especially over the past few years, thereby attracting an increasing number of new users. However, beginners may have many problems starting with simply not knowing what cryptocurrency trading is, what strategies should be used when trading it, as well as how to choose a crypto platform for trading.

How to day trade crypto is our main topic in this article. We will analyze daytrading strategies together with you, such as scalping, high-frequency trading, arbitrage, trading news and social networks.

Let's get started, we’ve also prepared a few tips for you.

What is Crypto Day Trading?

First, in a nutshell, what is crypto day trading?

Crypto day trading is a short-term trading strategy based on buying and selling crypto assets during the day. Cryptocurrency day trading has become possible due to the particular volatility and liquidity in the cryptocurrency markets. Day trading originates from traditional markets, but this does not mean that crypto day trading does not require a deeper knowledge of crypto and blockchain technologies in order to be consistently successful.

Best Crypto Day Trading Strategies and Tips

The popularity of digital money is growing exponentially, especially over the past few years, thereby attracting an increasing number of new users. However, beginners may have many problems starting with simply not knowing what cryptocurrency trading is, what strategies should be used when trading it, as well as how to choose a crypto platform for trading.

How to day trade crypto is our main topic in this article. We will analyze daytrading strategies together with you, such as scalping, high-frequency trading, arbitrage, trading news and social networks.

There are many crypto day trading strategies, some of the most popular day trading strategies are high frequency trading, scalping and arbitrage. Below you can find out more about them.

Scalping

The essence of the strategy is to earn on the spread - the difference between the purchase and sale prices. A trader carries out a large number of transactions per unit of time, constantly buying at the bid price and immediately placing sell orders at the ask price.

This strategy is popular with both experienced traders and beginners. The strategy is applicable to any cryptocurrency assets. However, the method requires a calm state in the market so that there are no sharp jumps and breakdowns. In the event of a breakdown, it can immediately level out all profits earned on scalping for the previous period. Nevertheless, if the asset behaves fairly stable throughout the day or week, then this way of earning is quite the place to be.

High-Frequency Trading

High frequency trading is a type of algorithmic trading strategy commonly used by quantitative traders. The idea is to use algorithms and trading bots that can quickly enter and exit many positions in a short period of time, we are talking about milliseconds. For a high-frequency trader, a few milliseconds of advantage can give a significant advantage over other market participants.

Algorithms are capable of implementing extremely intricate trading strategies. At first glance, all this is very tempting, but high-frequency trading is much more complicated than it seems. It includes many testing, monitoring and tuning algorithms to adapt to constantly changing market conditions. If you think that you can just sit back while the trading bot makes money, then it is not.

It should also be taken into account that high-frequency trading is a rather closed industry. Finding quality information in the public domain is not easy. Because if successful trading firms and hedge funds started sharing their high-frequency trading strategies with individual investors, those strategies would stop working.

Arbitrage

The strategy is quite simple and has a really low level of risk. The bottom line is to buy a token on an exchange at one price and sell the same token on another exchange at a higher price. Since transactions are constantly taking place on exchanges at the moment, situations often arise when the cost of the same asset on different exchanges differs, sometimes quite strongly. And since the number of cryptocurrency exchanges and crypto-coins themselves today reaches hundreds and thousands, there are a sufficient number of such (arbitrage) situations to make money on this stably. This strategy has been actively used and is being used in the classic stock and currency markets to this day.

The strategy is good because it does not depend on the direction of the market, but requires constant monitoring of prices on different exchanges. Also, do not forget about commissions for transactions and the fact that arbitrage transactions will be profitable if the difference in rates on different exchanges is at least 1%, which is not uncommon.

Trading News and Social media

Strategies based on fundamental analysis use the news and other economic data to make decisions. The economic indicators regularly used are interest rates, inflation, confidence numbers, and employment numbers.

The calendar is a very important tool used by traders because it provides a schedule for the economic events. To use it well, it is better to always check the calendar before the trading day; this will help you know more about the events that you expect. Look at the trends in the specific data.

Note: it is usually advised to avoid trading during the time when data is coming out.

Calendar tells traders what to expect but there is news that can affect prices and has nothing to do with the financial market, for example earthquakes. That's why it is important to be among the first people who receive the news. So, for that, be on Twitter, check out local news.

How To Choose The Best Day Trading Crypto Platform

There are factors to consider when choosing a day trading crypto platform, here below we will note the most important ones.

Fees are an important part of crypto platforms as this is how they make money. There is no standard transaction fee, each platform has its own approach. Some have higher withdrawal fees and charge less for transactions, some are the other way around. In any case, the point is that you don't want to spend most of your profits on fees, so you will need to find out the fees for different platforms by contacting them. We know it's time consuming, but it's reasonable.

Funding Options - getting money into crypto trading platforms is important, and you should be looking for a trading platform that has options. So here are the options you have when funding your account:

P2P (peer-to-peer) - you can buy cryptocurrency right there from another user on the platform.

You can transfer from your local bank or online payment systems like PayPal and Cashapp. Needless to say, having options is good, because, you know, sometimes one of the options can have troubles with execution (issues with the debit or credit card or issues with the local bank etc.).

Listed Coins - There are now more than 10,800 different crypto coins in the cryptocurrency market. You shouldn't be limited in your choice, but it doesn't automatically mean that if the platform has a tremendous amount of coins listed it's a good one. Anyway, before you sign up with any trading platform, check that there is plenty to choose from. Most crypto trading platforms list major coins like Bitcoin and Ethereum, but surely it's not enough. Choice makes it possible to easily target new cryptocurrencies and put your money into new projects.

User Experience is important as well, most platforms have crypto trading apps that aren't easy to navigate. Needless to say, your convenience comes first. If the platform can only be accessed on the web, the website should be designed for easy navigation. For newbies, especially complicated navigation can be frustrating, so they will need to do a lot of research before getting used to the process.

Customer Service is very important, since when you have an issue with the account or assets it's hard to get a quality help. So before funding your account make sure platforme has responsive customer service. How? Easy, you can try calling multiple time on different issues and evaluate for yourself.


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