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There is more to day trading cryptocurrencies than simply buying a couple of coins and hoping for the best. If you want to learn how to day trade cryptocurrencies, there are a lot of things that you need to understand. The first thing is that the cryptocurrency market is not like traditional markets. This means that there is no central bank or clearing house involved in order to help regulate and verify trades.
Table of Contents
What is Day Trading?
Day trading is a type of investing that involves buying and selling shares, coins, or other assets on a regular basis. Unlike long-term investing, which involves holding onto an asset for a longer period of time, i.e 6 months to years, day traders typically hold each position for less than 24 hours before moving on to another one.
Day traders tend to focus on high-volume cryptocurrencies such as Bitcoin and Ethereum because their price swings are often more extreme than those of smaller market cap coins with less liquidity. This also makes them more susceptible to market manipulation by whales who control large amounts of cryptocurrency in order to manipulate prices higher or lower depending on their goals
How To Get Started?
Day trading is the process of buying and selling cryptocurrency within the same day.
The first step in becoming a day trader is choosing an exchange where you can purchase your desired cryptocurrency, such as Binance or Coinbase.
Next, it’s important to study chart patterns so that you know what market conditions are most favorable for making trades with confidence.
Here’s What You Should Know Before Trading Crypto
Now that you know the basics of day trading cryptocurrency, it’s time to put your knowledge into practice. Before we get started, it’s important to remember that there are no guarantees when it comes to trading cryptocurrencies and making money. The market is volatile and unpredictable–even the most experienced traders can lose their entire investment in just one trade.
Therefore, you should only be willing to risk what you can afford to lose.
Choosing a Cryptocurrency Exchange
Choosing a cryptocurrency exchange is the first step in your day trading journey. There are many options out there, and it’s important to choose one that meets your needs. The cryptocurrency exchanges include:
Binance
is the largest crypto exchange by trading volume globally. Their platform offers low fees and high liquidity. In addition to a wide range of cryptocurrencies, including BTC, ETH, and USDT markets.
Coinbase
They have a platform Coinbase Pro, which offers more advanced trading features than Coinbase does on its own site.
Bittrex
is a reputable cryptocurrency exchange that offers a wide variety of cryptocurrencies, including BTC, ETH, and USDT markets. Bitmex is a popular derivatives trading platform with a leverage of up to 100x
Poloniex
is a cryptocurrency exchange that offers a wide variety of cryptocurrencies. It is best suited for advanced traders looking to take advantage of pro trading features and charting tools.
Kraken
is an exchange based in San Francisco that offers advanced trading features like margin trading and stop-loss orders.
Huobi
is also another trusted cryptocurrency exchange. It is based in Beijing and offers a wide range of coin pairs.
The Cryptocurrencies to Day Trade
The cryptocurrency market is a volatile one, and it’s important to have a strategy in place before you start trading. The following cryptocurrencies are some of the most liked cryptocurrencies to day trade:
Bitcoin
The original cryptocurrency, and still one of the most popular coins on exchanges today. It has been around since 2009 when it was first introduced by Satoshi Nakamoto. Though many other altcoins out there have more advanced features than BTC does now, this doesn’t take away from its value as an investment opportunity or use case as an actual currency in real-life transactions.
Ethereum
Ethereum is a popular decentralized platform for creating applications based on smart contracts technology. It is the second-largest crypto project in the blockchain space, and Some expert say that they expect to see a lot of growth in the coming years.
Litecoin was the first altcoin to be released, in 2011. The open-source, peer-to-peer platform allows for fast transaction speeds and near-zero costs.
Ripple is a global payment network for banks and financial institutions. It allows for instant, low-cost transactions between different currencies and jurisdictions. The large exchanges expect to see bullish momentum in the coming years with Ripple, as it’s one of the most popular cryptocurrencies on the market by the exchange’s rating, and one of the cheapest in the large coins range.
Cardano is a blockchain project that aims to create a secure, scalable, and reliable computing platform for decentralized applications. It uses smart contracts as well as a Proof-of-Stake consensus algorithm. This cryptocurrency is one of the most popular altcoins by market cap, and has seen steady growth over the past few years compared to the other coins.
Stellar
Stellar is a protocol for sending and receiving money in any pair of currencies using blockchain technology. It allows users to quickly transfer funds at a low cost and with minimal processing fees. Cryptocurrency has seen massive adoption by banks, payment processors, and other financial institutions due to its scalability, security, and usability.
Analyzing Chart Patterns
Chart patterns are one of the most important tools for day traders. There are several different types of chart patterns, each with its own unique characteristics and uses.
The following three chart patterns are considered “Reversal Patterns” because they indicate price reversals:
- Head and Shoulders Pattern
- Ascending Triangle Pattern
- Falling Wedge Pattern
Head and Shoulders Pattern
The Head and Shoulder pattern is one of the most popular chart patterns used by day traders. The pattern can be seen in all time frames but is most commonly found on daily charts. It consists of three peaks with two shoulders (the middle peak) between them. A head and shoulders top is formed when the price makes a lower high followed by another higher high, which then fails to break through its previous resistance level. To confirm this pattern, you must wait for confirmation of a reversal in a direction, either with an increase in volume or a candlestick pattern that completes below the neckline (red line). The Head and Shoulders pattern is a bearish reversal pattern that indicates an uptrend is about to reverse.
Ascending Triangle Pattern
The ascending triangle pattern is another reversal pattern that indicates a trend change. It is formed by two lines: a horizontal resistance line above the current price and a rising support line below. The price will bounce off the support line but eventually break through it on its way up to retest the resistance level. To confirm the pattern, you should wait for a break in the price above the resistance level. The ascending triangle pattern is similar to the descending triangle except that it slopes upward instead of downward.
Falling Wedge Pattern
The falling wedge trend reversal pattern is formed by two converging lines: a support line below the current price and a resistance line above. The price bounces off the support line but eventually breaks through it on its way down to retest the resistance level. To confirm the pattern, you should wait for a break in the price below the resistance level.
Tips To Guide New Day Traders
If you’ve already become familiar with the basics of day trading and want to try out some new strategies, here are some tips to help you get started:
Most people who try their hand at day trading end up losing money because they trade too much. If you’re not sure what a coin is doing, don’t buy or sell until you do.
Most people who try their hand at day trading end up losing money because they trade too much. If you’re not sure what a coin is doing, don’t buy or sell until you do.
The first thing you need to do when you want to start day trading crypto is diversified your investments.
Setting Up Your Profits and Losses
The stops will help you limit your losses in case the market moves against you. The stops are placed at a price where the trade would be closed if there was no further price movement in your favor. The take-profit order allows us to lock in profits as soon as our trade reaches this point in time and price action.
Final Note
If you’re planning on trading cryptocurrency, you must do your homework. Don’t just buy it because you think doing so will make you rich. Do the research and determine which currency has the potential for growth, not just in terms of value but also in usage. And don’t over-leverage yourself. Each and every trader should have a maximum cap on what they are willing to lose. On that note, we hope this article has been helpful and that you are now better prepared to enter the world of cryptocurrency trading.
WeInvests is a financial portal-based research agency. We do our utmost best to offer reliable and unbiased information about crypto, finance, trading and stocks. However, we do not offer financial advice and users should always carry out their own research.
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