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6 Day Trading Cryptocurrency Strategies You Need To Know

At its peak, back in November 2021, one bitcoin was worth a staggering $68,000.

It’s no secret that many investors have made a fortune with bitcoin and other cryptocurrencies. There’s no telling what the future holds, but it certainly looks bright for crypto.

If you’re looking to get into cryptocurrency trading, the new year presents the perfect opportunity to hop on the crypto bandwagon. However, it’s worth noting that crypto trading is no walk in the park. Without proper day trading cryptocurrency strategies, making a killing from crypto trading is a pipe dream.

If you’re looking for solid crypto trading strategies for your investments, you’re in the right place. Today, we’ll be highlighting a few foolproof cryptocurrency day trading strategies to boost your investment.

Related Read: Best Price Action Patterns in Day Trading

What Is Crypto Day Trading?

Before we proceed, let’s first solidify our understanding of what crypto day trading is. So what is crypto day trading?

Day trading with cryptocurrencies is a form of short-term cryptocurrency trading in which transactions are completed on the same day. This means traders buy and sell their crypto in a 24-hour time frame. It’s one of the simplest crypto trading techniques, but it’s very profitable.

Related Read: Harmonic Patterns in Day Trading

Best Day Trading Cryptocurrency Techniques

Having the right cryptocurrency trading strategies is imperative to your success as a crypto trader. That said, here are five of the best strategies you could try out as a crypto trader.

1. Range Trading

Range trading is based on the assumption that cryptocurrency prices fall within a certain range. This strategy involves examining candlesticks with keen attention to support and resistance levels.

Traders who use the trading range buy or sell crypto based on these two levels. They’ll buy when the crypto hits a specific support level and sell when it reaches a particular resistance level. This ensures clear trading parameters and is one of the most straightforward day trading strategies.

The disadvantage of range trading is that it necessitates traders to be on the lookout for new opportunities and frequently put money into the market. This means traders have to pay a bundle in commission fees every time they invest.

2. Technical Analysis

Technical analysis, or TA, is an intricate trading strategy for day trading. This strategy is premised on mathematical figures and indicators that traders use to draw conclusive conclusions on the market’s movements. Most traders use computers to monitor these mathematical indicators and see through their trades.

Some traders, on the other hand, keep a close watch on the charts, using the cup-and-handle pattern technique, for instance. The Relative Strength Indicator, or RSI, is one excellent example of a mathematical indicator popular in technical analysis. This indicates how much a cryptocurrency sells and reflects on whether the crypto price will rise or fall.

3. Scalping

Scalping involves taking advantage of minor price movements within a short period. Traders who use the scalping strategy are known as scalpers.

Scalpers take advantage of leverage like margins or future gains to boost profits. This works fine, but it increases their losses if things don’t go their way. That’s why risk management is imperative to successful scalping in crypto day trading.

Scalping involves the use of other day-trading techniques, including order book analysis and volume heatmaps. Some scalpers also use technical analysis to determine their entry and exit points.

4. Bot Trading

Bot trading is also known as high-frequency trading or HFC. This type of trading involves using special software known as a “bot” that executes commands automatically. Bots use complex algorithms and can execute multiple trades in quick succession.

However, contrary to popular belief, bot trading doesn’t mean traders can sit back and let the bots do the trading. Traders will have to create a specific strategy and develop a program that can execute that strategy. They also have to constantly monitor and update the bots to ensure they achieve their intended purpose.

5. Long Straddle Trading

Trading long straddle training is also known as buy straddle or simply straddle trading. With straddle trading, traders buy a put and a call order on the same crypto. Both the put and call orders have the same expiration date and striking price.

This strategy takes advantage of a cryptocurrency’s volatility. As long as the crypto price changes, the trader makes a profit. This means the trader wins regardless of whether the crypto price goes up or down.

However, if the crypto asset price doesn’t change, the crypto trader will lose. Plus, since traders purchase both call and put orders, they incur double losses if the asset price remains the same.

6. Sentiment and News Analysis

As the name implies, sentiment and news analysis involve looking at news headlines and the overall market feel to determine your trading. This strategy is less popular with most day traders because most news headlines affect the long term. However, it’s still worth a shot, especially if you’re starting.

With news analysis, currency news on cryptocurrency will determine whether you should hold, buy, or sell cryptocurrency. For instance, in 2021, when Turkey banned cryptocurrency, most crypto owners decided to sell their crypto. This led to a drop in crypto prices.

News and sentiment analysis are all about keeping a close eye on what’s going on in the crypto world. Positive news means that things are looking up for crypto, and it will fetch a higher value. Negative news means that crypto prices are likely to fall.

How to Day Trade Crypto Correctly

The above strategies should set your crypto day trading on the right foot. That’s all well and good, but what if you’re an absolute beginner in crypto day trading?

If this sounds like you, keep reading, and we’ll show you how to do crypto day trading the right way.

Start By Choosing a Reputable Platform

The first step to day trading cryptocurrency is choosing a good crypto trading platform. There are tons of crypto-trading platforms, but you have to settle for the right one. In the US, you can only use crypto-trading platforms that the domestic authorities regulate.

When looking for a crypto-trading platform, here are a few key factors to consider:

Supported Cryptocurrencies

You need to find a trading platform that supports the crypto you’re looking to trade. Of course, you first have to figure out what cryptocurrencies you want to trade. You can start with some of the bigger names before moving to the newer cryptocurrencies.

Reviews and Testimonials

Reviews are users’ accounts of their experience with the trading platform. Ensure you have a look at reviews to know what to expect from the trading platform. Positive reviews are a good sign, but negative reviews are a red flag you shouldn’t ignore.

Check the Number of Active Years 

The number of years the platform has been active is also an important factor to consider when picking a trading platform. The more years of activity, the more stable and credible a trading platform is. You might want to tread softly with new trading platforms that are yet to make a name for themselves in the industry.

Transaction Fees

Crypto trading platforms charge transaction fees for all transactions you make on the platform. That’s perfectly okay, but you want to be careful with platforms that charge too much to transact. The transaction fees should be within reasonable margins to be worth considering.

Deposit Methods

It’s important to look at what kind of deposit methods the trading platform allows. Some will let you wire funds to your cryptocurrency wallet, and others will allow bank transfers. Find a platform with deposit methods that are easy and convenient.

Pick Your Investment

Once you find a crypto trading platform that fits your fancy, the next step is to choose your crypto investments. Thousands of cryptocurrencies exist today, but most trading platforms only handle a handful of them.

For crypto day traders, market volatility is both friend and foe. The chaos of high volatility is what engenders the actual buying and selling of crypto. So, find a highly volatile crypto that you think will work for you.

It’s important to do tons of research on a cryptocurrency before investing in one. Look at things like volatility, trading volume, and liquidity before picking a crypto to invest in. Find a forum that discusses crypto and other assets like http://www.raremetalblog.com/oxford-gold-group/ so you can learn all you need to.

Select a Day Trading Strategy

Pick a crypto day trading strategy from the ones we’ve talked about above. Ensure you pick one that you’re familiar with and understand completely. Liaise with other day traders on the best strategy to pick for your trading.

Start Day Trading Crypto

After selecting a solid strategy, all that’s left for you is to start trading crypto. If you play your cards right, you’ll be able to rake in some good money every day.

Best Day Trading Cryptocurrency Strategies for Successful Trading

Even though day trading cryptocurrency is one of the most profitable day trading strategies, it can still be tough. That’s why traders need the best day trading tips so they can minimize risks and maximize gains.

By following the day trading cryptocurrency strategies we’ve talked about above, you can boost your profits and avoid most mistakes.

For more tips and strategies, keep reading our articles.