Top 5 Crypto Day Trading Strategies for Any Investor

Published Nov 07, 21
4 min read

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Day trading presents an opportunity for those who put in the time and effort to understand the market in which they are trading. This is no different for cryptocurrencies. Even more so, as this new industry has brought with it significant opportunity for day traders to profit from price discrepancies and movements that don’t exist in other, more mature markets.

Day traders will often buy and sell any number of financial instruments in the span of several hours, or less, and profit from speculating on short-term price movements. Day traders stay up-to-date on what moves markets in the short term and can place hundreds of orders in a single day to profit in the long run.

Over the past several years, cryptocurrencies have been seen as a growing market with increased liquidity and opportunity for trading profit. A cryptocurrency is a digital asset secured by consensus algorithms, such as proof-of-work or proof-of-stake, with transaction information stored on a digital ledger. Today, there are thousands of cryptocurrencies in existence, creating an array of opportunities for day traders.

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The digital asset has grown not just in popularity, but in its technology as well. Bitcoin is designed as a form of decentralized digital currency that is usable across the globe without the fear of censorship resistance. Bitcoin has a fixed supply of 21 million that can ever be mined.

Furthermore, many other alt coins take the form of ERC-20 tokens, which means they are built on Ethereum protocol. These include EOS and TRON. Stablecoins, There is one category of cryptocurrency that has become increasingly important for traders and investors. Stablecoins represent cryptocurrencies that are relatively price-stable, generally by pegging themselves to fiat currency.

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These bids and offers influence price and liquidity. Unlike US equities, where regulation requires brokers to execute customer trades at the best price in the market (i. e. across all the exchanges), there is no similar requirement in crypto. Therefore, a small exchange with low liquidity will often deliver inferior prices to customers of that exchange.

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Other payment methods such as credit card and Pay, Pal are less common, but also accepted at some exchanges. Some of these alternative funding options can carry with them high fees, so be sure to read the fine print. Of course, for those already in the game, the best option is often to fund your account directly from your crypto wallet.

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This could serve as an excellent option for those interested in day trading crypto. On top of a lack of leverage, it is difficult to find ways to directly short cryptocurrencies. Shorting, or betting against an asset, is the most direct way to profit from the decline of an asset’s price.

Security, When it comes to security, cryptocurrency exchanges as a whole have a mixed track record. There have been numerous accounts of exchanges being compromised, and traders’ cryptocurrency being stolen as a result. However, in recent years security of most exchanges has improved considerably and hacks have become increasingly rare.

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An exchange is only as good as the security it provides its traders, and traders should only opt for exchanges which can ensure the security of all funds on its platform. Most of the best-known exchanges, especially those operating in well-regulated jurisdictions, have had extremely good track records. Market data and analytics - Day trading crypto, Order book, An exchange order book displays a real-time list of outstanding order requests from traders to either buy or sell a cryptocurrency.

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The difference between the highest buy order and the lowest sell order is known as the spread. Spreads on cryptocurrency exchanges are often wider than exchanges of other assets, due to its unregulated nature and more extreme price fluctuations, as well as relatively high fees. Trades, Almost all exchanges also provide a short history of the most recent trades made at the exchange.

This data can be especially useful for day trading cryptocurrency as it will help traders get a good indication of the cryptocurrency’s price movement in the short-term. Exchange premium/discount, Because exchanges are not linked to one another, there can be price discrepancies of the same asset across exchanges. This causes a cryptocurrency to sell for a premium or discounted price at one exchange compared to another.

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Being able to take advantage of these discrepancies is an excellent way to profit when day trading crypto. Trade execution - Day trading crypto, Fees and tiers, Cryptocurrency exchanges vary in their fee structures. Most exchanges operate on a fee-per-trade model, with a fixed percentage or monetary fee for each trade conducted.