Day Trading Cryptocurrency: The Best Strategies for Success

Published Oct 16, 21
4 min read

Cryptocurrency Trading 2021 - Learn How To Day Trade Crypto in Davenport-Iowa

2. News and Sentiment Analysis While it’s less popular among short-term traders, looking at headlines and overall market sentiment can also be used in Bitcoin day-trading. Sometimes, big news items can move crypto markets quickly. For example, on the day this article was written in mid-April 2021, the nation of Turkey announced that it would ban Bitcoin and other cryptocurrencies as payment options within its borders.

2% initially and more than 10% later. Additionally, there are websites that attempt to track the sentiment of the most popular cryptocurrencies by analyzing Twitter chatter. More positive tweets about a crypto equals more bullish sentiment, while more negative tweets equals more bearish sentiment—or so the theory goes. 3. Range Trading Range trading assumes that prices tend to move within a certain range.

Traders might buy when prices reach a support level and sell when prices reach a resistance level. Or they might go short when prices hit resistance and close out the short when prices fall to support. Pivot points are an example of range-bound trading. Calculating pivot points gives investors an idea as to what price levels are likely to see reversals in momentum.

One thing to keep in mind when considering such a bot is this: if the bot is profitable and easy to use, why isn’t everyone using it, and why are its creators selling it rather than using it themselves? Which Cryptocurrency is Best for Day Trading? It depends on what’s currently happening in the crypto markets.

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This also creates opportunities for day traders. This is only one potential example—and this specific coin could be completely irrelevant by the time you read this article. Such is the volatile nature of cryptocurrency. Crypto Day Trading: Taxes and Regulations It’s important for traders to educate themselves about the rules and taxes associated with day trading in their area.

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Short-term capital gains taxes apply to the sale of any asset that was held for less than a year. This means any earnings are taxed as regular income or at the “marginal rate,” so based on an investor’s tax bracket. The IRS changes these numbers every year in order to adjust for inflation.

The wash sale rule is also a must-know for day traders. This rule prevents investors from taking a loss on their taxable income when they sell a security then buy the same security within the next 30 days. There are many more nuances regarding taxes and day trading. Traders should consult with a certified tax professional to understand all the necessary details for their own situation.



Even then, day traders still have to subtract fees from their profits. The Takeaway Day trading is a strategy that involves buying and selling stocks throughout the course of the trading day to try and turn a profit. With crypto, the trading “day” is even longer, as crypto markets are open 24/7.

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Interested in trading crypto? With the So, Fi Invest® crypto trading platform, members can buy and sell Bitcoin, Ethereum, Cardano, and more coins, all on a secure platform that ensures your holdings are protected against fraud and theft. Photo credit: i, Stock/MF3d The information provided is not meant to provide investment or financial advice.

Limitations apply to trading certain crypto assets and may not be available to residents of all states. No brands or products mentioned are affiliated with So, Fi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners. SOIN0421175 .

4% range seems volatile until you realize that Bitcoin can realize a ±42% change in 24 hours. Cryptomarket caps are small enough that they can be manipulated by a single big mover. In some cases, those big movers will systematically manipulate the price of a coin up and down to profit from a range.

Volatility trades are ideally directionless, meaning there is a possibility of making money whether Bitcoin goes up or down. The long straddle is one directionless volatility strategy using Bitcoin options. To initiate, you buy a call and put option at the same time for the same strike price and expiration date.

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In the crypto market, traders usually hold a portfolio on an exchange they are trading. To start an arbitrage opportunity, open accounts on exchanges you believe will show significantly different prices for the same asset. Attribution: Holdbot At one point, Bitcoin traded at a 40% higher price in South Korea than in the U.S.

Looking for more trading strategies? Head over to Coin Market Manager. Best Online Cryptocurrency Brokers The trading platform you choose will likely make a big difference in your day trading results. The strategy that you choose should make a difference in the platform you choose because different platforms will have different strengths.

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