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Tips on how to make money day trading cryptocurrency

Cryptocurrency


Cryptocurrency day trading is an investment strategy that relies on frequent trades of one or more coins throughout the day to make a profit. While traditional buy-and-hold investors are concerned with a crypto’s long-term performance, day traders seek to take advantage of more immediate profit-making opportunities.

Successful day traders rely on several resources and tools to be successful such as crypto screening or trading simulator software to capitalize on short-term price movements of crypto assets.

If you are looking to make day-to-day income from cryptocurrency, this article is for you. Here, you will learn three major tips for performing crypto day trades and five trading strategies.

1. Choose a reliable platform
The first step to becoming a day trader is to choose a crypto exchange platform that fulfills your trading needs. US-based traders can use only domestically regulated crypto-trading platforms, which is a significant factor to consider when researching the right platform. Exchange liquidity, asset liquidity, and fees are at the top of a trader’s list when choosing the right platform to buy and sell crypto.

2. Choose your investments
Immediately after choosing a platform, it’s time to pick what you’re interested in investing in. For crypto day traders, market volatility is a necessary evil. The same market condition that scares away buy-and-hold investors is the chaos that creates opportunities for day traders to make a profit. Hence, you must be very watchful.

3. Choose an investment strategy
There are many techniques day traders use to make gains on short-term fluctuations in the crypto markets. A crypto day trader should devise a winning strategy backed by research, with well-laid plans for when to enter and exit their positions.

Some of these techniques are listed below.

1. High-Frequency Trading (HFT): High-frequency trading is a technique where you take advantage of price changes that occur on the order of seconds or fractions thereof. The frequency in question is routinely on the order of dozens of trades per second — far beyond the capability of a human trader.

2. Range trading: If you are range trading, you want to pay attention to overbought and oversold zones. Overbought means buyers have saturated their needs, and the stock will probably sell off; oversold means the opposite. Chart indicators, included in any reputable stock chart program, can help you find these zones.

3. Arbitage: Arbitrage in crypto is when you buy a cryptocurrency on one exchange and make a profit by selling it immediately on another exchange at a higher price.

4. Scalping: Scalping is a strategy that allows you to make a small profit from many trades, which later adds up to an enormous profit. Scalping uses large amounts of liquidity (currency) to take advantage of small price changes over a short period. The time horizon is generally a few minutes but can be as short as seconds or as long as hours.

5. Technical analysis: Technical analysis (TA) is one of the most popular strategies but not the most effective. It is the study of financial data like historical price and volume data points to identify statistical trends in the markets. TA provides traders with science to find opportunities to trade and earn profits.

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