3 Beginner Crypto Trading Strategies Worth Exploring

Technical trading is based on the belief that past prices have some effect on what future prices will be. It takes lots of effort to predict the rate of certain crypto even for the next 10 minutes. If you can read charts and market signals, there is no guarantee that your prediction is correct. Like any other type of trading, day trading may bring you either considerable profit or loss.

• You can either look through all the features on the site or check out Strategies that could benefit you.
• Mean reversion, otherwise known as fading, involves trading over extended moves with the intention of taking profit on a market correction or reversal back to the average value or mean.
• In this guide, you will learn what day trading crypto is, how it works, and the strategies to employ.

However, if the timeframe is higher, the level will likely be more recognisable and stronger. While there is no ‘perfect exit’, it can be helpful to take profits incrementally. By closing a portion of your position quickly, you will reduce the risk of an offside trade and can choose to hold for a longer period. If you’re holding a long trade, position your immediate edge stop below the support zone, accounting for wicks and potential price spikes to the downside. In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning. Once you’ve plotted out your support and resistance zones and identified a potential setup, it’s time to execute.

How Are Trading Strategies Different for Crypto?

High-Frequency Traders take advantage of price movements in seconds or even milliseconds. You can book to profit because of the difference in liquidity and trading volume. To do this, you must open accounts on exchanges showing a significant difference between prices for the crypto which you are trading. This is – an active investing strategy where you identify a range in which you buy or sell over a short period. For example, if a coin is trading at $35 and you believe it will rise to $40, then trade between $35 and $40 over the next several weeks. With this strategy, both the risks and the possibilities are endless.

• Once you’ve got answers, we are ready to provide you with the next steps.
• Depending on your risk tolerance and ultimate trading goals, you can choose the strategy that best suits your trading ventures and goals.
• When different markets list inconsistent prices for the same crypto, traders can quickly buy from one and sell at a higher price to the other.
• “Trading is all about having an edge in the game and knowing the mathematical probability behind each trade”.

Support levels are price levels at which an asset tends to stop falling and start rising, while resistance levels are price levels at which an asset tends to stop rising and start falling. By identifying these levels, traders can set their buy and sell orders accordingly, taking advantage of potential price reversals in the crypto market. It is also important to closely monitor market conditions and adjust your strategy accordingly. Cryptocurrency markets can be highly volatile, and being adaptable to changing market dynamics is crucial for day traders. Regularly monitoring price movements, volume, and market sentiment can provide valuable insights for making profitable trades. The other day trading cryptocurrency strategy often used is chart analysis.

Mining Cryptocurrency on Phone: Quick Start Guide

However, it is essential to keep in mind it is also by far one of the most high-risk ways to interact with cryptocurrencies. Understanding the details of how to day trade crypto is very important if you want to see long-term gains. Range trading is based on the assumption that crypto prices will normally —over a given period— only fluctuate within a certain range.

• In fact, the amounts must not be any larger than you can afford to lose.
• Chart indicators, included in any reputable stock chart program, can help you find these zones.
• This section is going to talk about the mental side of trading, which is probably the most important thing to consider.
• In this case, you have to monitor fluctuations of just one coin in a pair.

A crypto day trader using this strategy is betting on the change of a crypto asset’s price. The day trader earns regardless if the price rises or falls in the long straddle. The first choice isn’t always the best choice when figuring out where to conduct crypto trading. For budding crypto day traders, the options and differences between the many crypto exchanges can be overwhelming.

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After the rejection is confirmed, you should consider moving your stop loss to break even or trailing it with the market. This will ensure you’re not out of the money if a large order comes through and momentum swings. Depending on whether – it’s a long or short setup, stop losses should be placed above or below the range with enough room for wicks and small fakeouts. If the range is compromised and a breakout occurs, this will likely happen quickly and on high volume.

Day trading, scalping, and high-frequency trading are examples of short-term strategies that require active engagement with the market on a daily basis. The timeframe you choose for crypto trading will depend on your trading style. If you are a scalper, 1 minute / 15 minutes time frame will be best. For day trading cryptocurrencies, 15 minutes / 1 hour will be the best. Crypto day trading strategies also require you to understand trading volumes, as these let you know how strong a trend is. Day trading cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Ripple, etc., is a great way to make money from home.

Understanding How To Day Trade Crypto: A Beginner’s Primer

Binance, Coinbase Pro, and Kraken are three of the best crypto exchanges that cater to the specific needs of day traders. Whether you prioritize high liquidity, low fees, advanced charting tools, or security features, these platforms offer a diverse range of functionalities to suit various trading styles. It’s worth noting that this crypto trading method is most effective in a highly volatile market (when prices are rising or falling sharply). When the market moves sideways, however, it can trigger multiple buy and sell signals as the two moving average lines converge and diverge more frequently. This usually happens when there is a lot of uncertainty in the market and there’s an equal number of bearish and bullish traders. This is the only problem with the trading strategy, but the average gains tend to outweigh any losses incurred from periods of low volatility.

• Many cryptocurrency exchanges offer leverage trading, allowing traders to borrow funds to increase their trading position.
• Most intraday traders rely on technical analysis to build the right trading ideas.
• This could have been achieved without you needing to sit at your computer all day to check for any price movements.
• Looking at the chart below, we can see that there were three key RSI divergences on the recent bitcoin/U.S.

A series of vertical bars often signals this state on the 60-minute chart. Connect with him about writing techniques, cryptocurrency, and music. This helps them keep track of how the crypto audience reacts to the latest news, and how the majority of users discuss crypto daily. If the price drops after the first two MFI 100 readings, then this suggests that most likely we’re going to have a down day.

Best for Leverage Trading With Many Instruments: IFC Markets

The bot monitors the market and, based on the given trading logic, executes trades continuously for as long as it is connected to the exchange. By instituting specific trading logic, High-frequency trading can be combined with many other strategies. The difference between gambling and trading is an effective strategy. A good strategy can be the difference between one or two lucky streaks and consistent long-term returns. You can apply different trading strategies in different situations, depending on the nature of the market and your competencies.

• The cryptocurrency market is highly volatile and subject to sudden price swings.
• Dollar chart (BTC/USD) that foreshadowed changes in the overall trend.
• For this trade example, we will be scalping on the 1-minute chart using 3x Exponential Moving Averages (EMAs) to help with setup identification, trade execution and stop loss placement.
• Although this sounds like a small amount, in the long run, this will protect you from going broke.

A single number, ranging from 0-100, indicates how healthy and robust the network is at a given moment. Anyone interested in understanding Bitcoin’s stability and security can benefit from this. If you lose money too fast, it can set you on a path of revenge trading.

Best for Businesses Wanting Exposure to Cryptocurrency: ICONOMI

Some traders will tell you that there is no limit to your earning potential once you gain experience and understand strategies. Statistically, some experienced traders can earn 100% to 200% of their investment every month. While the fee charged on each transaction is little, it can quickly add up when you trade daily. Traders use price charts to evaluate the market, predict trends, and develop trading techniques. Understanding how to read the charts helps you determine whether the market is going up, down, or sideways. It helps you determine which technique to use in each trend direction.

• If we look at the circled area (white) more closely on the 30-minute chart, we can see there was another divergence that showed momentum was changing back to bullish.
• Position your stop slightly below the trend line, remembering to account for wicks.
• In this context, day traders never leave positions open overnight since they aim to capitalize on intraday price movements.

It takes the emotion out of trading and instead it trades using strong artificial intelligence to perform fact-based technical analysis. In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win. You’ll find the nerves of steel and intuitive trading platform through research, research and more research. Let’s take a look at the X-factor in this gumbo, that is, the best crypto day trading strategies you can use.

Most Profitable Cryptocurrencies to Mine

They also employ sophisticated algorithms that constantly analyze market conditions and adjust trading strategies accordingly. By adhering to a plan and avoiding impulsive trades, you can minimize the emotional impact on your trading and increase your chances of making profitable trades. Staying informed about the latest news and developments in the cryptocurrency market is another crucial strategy. Being aware of market trends, regulatory changes, and major announcements can give you an edge in making timely trading decisions. Utilizing reliable sources of information and staying updated with market analysis can help you identify potential trading opportunities and avoid sudden market downturns.

• The sooner you accept the fact that there will be losses, the better.
• Since the percentage price targets tend to be smaller, larger position sizes make more sense.
• In this section, we’ll delve into the trade management of support and resistance setups and demonstrate profit-taking and stop-loss positioning.
• Day traders use intraday trading strategies to try and profit from market volatility, and will typically not stay in positions for more than one day.
• 2018 will forever remain memorable due to the great crypto bull market.

In recent years, the cryptocurrency market has witnessed exponential growth, attracting traders from all corners of the world. For those looking to capitalize on short-term price movements and take advantage of day trading opportunities, selecting the right exchange can make all the difference. The most important thing to understand about technical analysis for your crypto trading strategies is how to read a candlestick chart. The limits of the main rectangle of the candlestick are the crypto’s opening and closing prices for the day. If it is green, it rose in value, and if it is red, it dropped in value.

Accepting losses

However, it requires a lot of patience and discipline to succeed at day trading. If you want to become successful at day trading, you need to learn how to trade properly, and also be able to identify when a cryptocurrency has reached its peak or bottom. Technically, you can start day trading with any amount of cryptocurrency. That being said, your potential for profit increases as your investment increases. Before you get started with crypto day trading, familiarize yourself with the requirements.

• Developing a disciplined mindset and sticking to your trading plan can help you avoid emotional pitfalls and increase your chances of success in this fast-paced market.
• Scalpers need huge capital to make a profit because the profit from this strategy is usually very small.
• High-frequency trading is a type of algorithmic trading strategy typically used by quantitative traders (“quant” traders).
• If the RSI is above 70, i.e., overbought, it’s likely to fall quickly.
• There are several cryptocurrency exchanges and brokerages to choose from, and some may be a better fit for you than others.

You will likely be trading higher than usual leverage, and it’s a good idea to get in and out as soon as practicable. This may be where volume dies down, the market consolidates, or wicks start forming, showing that traders are taking action and attempting to push the market back towards the mean. Mean reversion positions are some of the most difficult to manage and master. In this section, we’ll cover how to place stop losses and profit targets and provide some tips on minimising risk.