A Beginners Guide to day trading Bitcoin and other cryptocurrencies Binance US Blog

Bitcoin has a major influence over the crypto market, and most crypto assets correlate to its movements. If Bitcoin faces significant selling pressure, it’ll be rare for altcoins to move upwards. There are many different cryptocurrencies available for day trading, but Bitcoin is often considered to be the best option.

Meanwhile, the Amplify Transformational Data Sharing ETF invests 80% of its net assets in shares of companies that develop and utilize blockchain technologies. Here you can see the close correlation between the share price of crypto exchange Coinbase and Bitcoin values (as priced in US dollars) during the 24 months to 12 October 2023. Crypto traders can roll over contracts to extend their futures position concern mounts over potential crypto exchange wex exit scam past their expiration dates. During this process, the existing contract is closed and a new one with a later expiration date is initiated. At the other end of the scale, prices can soar if major companies start using or accepting digital tokens. This was the case in early 2021 when Tesla began accepting Bitcoin for payments (though the automaker rowed back on the idea shortly afterwards).

Day traders need to know what the cryptocurrency does, its governance, network size, and protocols to help them assess the overall condition of their preferred investment. Therefore, it’s equally important for investors to learn a lot and follow news on their chosen assets’ blockchain updates. Day trading, on the other hand, is not a get-rich-quick scheme but a clever strategy to generate income and create wealth over time. It requires adequate planning, proper execution, risk management, and trading skills.

  1. Although the primary purpose of the 150-period moving average is to act as a guide to display the underlying trend, it also makes for an ideal stop-loss zone for both long and short setups.
  2. As an asset class digital coins and tokens have advantages over traditional currencies, and demand for them could soar as technology takes over our everyday lives.
  3. On top of that, there are various other factors that you need to put under consideration to ensure you select the best bitcoin exchange for day trading.

This amount of money will give you enough room to buy and sell without incurring too much in fees and ensure good money management strategies. If you want to day trade crypto, you’ll obviously need to have some money set aside for it. How much you need will depend on the coins you’re trading and the exchanges you’re using. It is typically considered the highest-risk approach to crypto trading, and novice traders should learn the basics of crypto trading before attempting to day trade or scalp. In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning. When trading support and resistance it can be worth zooming out to a higher timeframe.

However, as a day trader, you mustn’t confine yourself to either of these two broad categories. At OKX Insights, we publish daily and weekly crypto market commentaries and analysis to help traders stay informed about the latest developments. You can follow OKX Insights on Twitter, our crypto markets channel on Telegram, or bookmark our section with daily crypto market updates. OKX also has a very useful list of cryptocurrencies that includes information on their latest prices, market capitalizations and 24-hour price change stats. It’s possible to day trade cryptocurrencies on virtually any exchange of their choice.

Additionally, you’re more likely to buy or sell cryptocurrencies at the right price without a premium when there’s good liquidity. Liquidity is one of the biggest factors when considering a cryptocurrency exchange to day trade. High liquidity is fundamental to the fast execution of orders at the best possible prices. That’s precisely what day traders are looking for — a how to buy prl guarantee that they’re getting the price they want with no delay. If you’ve got previous trading experience under your belt, read on for a closer look at some common crypto day trading strategies and the risks to get across before you begin. Essentially, the term “day trader” is derived from the stock market where trading is open only during business days of the week.

Crypto day trading is a high-risk, fast-paced style that is not appropriate for everyone. Before starting day trading, make sure you’re familiar with the markets and, ideally, have a demo or simulation account to trade on a reputable crypto exchange. Like other security markets, including stocks, indices, and Forex, day trading crypto has its challenges.

Getting started with day trading cryptocurrency

It’s very rare for most altcoins to move significantly if BTC is facing downward pressure. Alternatively, when BTC is trending upward, nearly all altcoins will rise in price as long as their fundamentals are positive and they have perceived value. For this reason, when you’re day trading cryptocurrencies, you can’t ignore BTC’s price action. While day traders get to take breaks and step away from the markets, it would not be worth much if they do not make consistent profits.

Next, consider the overall sentiment of the market towards a particular cryptocurrency. Positive headlines could create ‌bullish sentiment within the same day and positively impact the price. Similarly, unfavorable news surrounding a cryptocurrency might have a sudden bearish impact on the asset’s price. Coins with lower liquidity could offer greater gains as they could have higher volatility. This could benefit some traders, but volatility can also result from large trades and price manipulation rather than the market.

The speculators keep a watchful eye over the cryptocurrency market for news and activities that may indicate that a particular cryptocurrency will lose or gain value. Their main concern is things like coin hacks, new developments, and important partnerships that happen outside of the market. Finding a growth-earning trade is only half the job; the other half depends on exiting how to buy bitcoin with cash in the uk 2020 at the right time. While no one can perfectly time the bottom or top, scaling in and out of positions is a practical approach. It’s important to trade on an exchange that has a strong track record of uninterrupted uptime and fast performance. It is believed by many that the use of these virtual currencies will gain momentum as the digital revolution clicks through the gears.

That is, counter-trend trading means going against the dominant market direction (whether upward or downward) at the time, which is not something beginners are advised to do. This trading strategy works more like technical analysis because it involves mainly predicting. However, it has one significant difference—it operates on human reactions and reactions instead of price trends. Furthermore, the cryptocurrency market’s 24/7 nature provides ample opportunities, but it also means staying vigilant and informed at all times. Traders should be cautious of false information and be prepared to handle the stress and time commitment that come with day trading.

Keep in mind that crypto markets are inherently volatile, so a ‘low volatility’ range can still be upwards of 10%. Always check the range width and adjust your position size and stop loss accordingly. On top of that, there are various other factors that you need to put under consideration to ensure you select the best bitcoin exchange for day trading. These factors include authenticity and security, funding methods supported, the number of supported cryptos, fees and commissions, and the user experience.

Don’t trade with your entire capital

Look for coins to day trade based on liquidity and volatility, with your appetite for risk in mind. Not only do you need to know about what an exchange is and how to buy crypto, but you need to learn about trading strategies, trading indicators, and risk management techniques. Before you get started with any kind of crypto day trading, make sure you’ve carefully weighed up the pros and cons. Day traders aim to profit from these price movements, but they must also be aware of the potential risks of losing money very quickly. As shown on the chart below, stop losses for breakout trade setups are best placed inside the trading range or before the support or resistance level. Once your trade is in profit, consider moving your stop loss to break even or trailing it with the market.

Other things to consider before day trading cryptocurrency

It is important to note that day trading has been borrowed from the traditional financial markets, and the same principles apply to bitcoin day trading. Day trading involves speculating the price of cryptocurrencies over a single day. For cryptocurrency day traders, the rule of thumb is to open and close all positions within the same day. The objective of crypto day trading is to make a profit from short-term price movements and take advantage of intraday volatility. It is more of a self-imposed rule that day traders observe as part of their system.

Pros and Cons of Day Trading Crypto

What’s common across all these exchanges are the underlying assets that are traded. The same Bitcoin is traded on both OKX and a local cryptocurrency exchange in Japan, for example. However, sometimes the price of an asset might not be the same on two different exchanges because of the difference in liquidity. For example, the price of Bitcoin might be lower on OKX compared to the Japanese crypto exchange. In this scenario, the day trader can buy Bitcoin on OKX and sell it on the Japanese exchange, pocketing the difference as a gain. It’s the primary and single most important tool day traders use to decide on entry and exit points for trades.

Crypto day traders need to create a winning strategy supported by research and well-laid plans for initiating and exiting their positions. Range trading cryptocurrency is heavily reliant on the concept of support and resistance on candlestick charts. As such, to succeed in range trading, you must learn how to analyze a candlestick chart and identify the support and resistance levels. As the name implies, range traders identify cryptocurrency price ranges within the market structures and plan trades based upon those ranges.

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