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A Beginner’s Guide to Crypto Day Trading

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A Beginner’s Guide to Crypto Day Trading
A Beginner’s Guide to Crypto Day Trading

Crypto day trading is a popular concept that needs to be explored by beginners. Concepts such as this can make quite the difference for someone who is new to crypto trading. Therefore, if you are new to trading, you should know what day trading is among several other aspects.

This is a brief crypto day trading guide for beginners. This will help them understand what this type of trading is, can it be beneficial, should they start day trading and more.

If you are new to the crypto space and want to start trading then you should also be familiar with what this type of trading is.

What is Crypto Day Trading?

Day trading is one of the most popular trading strategies and is also called intraday trading. This trading strategy is not only limited to the crypto market but extends to the forex, stocks and other financial markets.

As the term ‘day trading’ suggests, this trading strategy allows the traders to open their trading positions for only 24 hours. Day traders open trading positions and then close them in the same day. This allows them to benefit from whatever price fluctuations occur during those 24 hours.

The price movements present very small windows of opportunities to the users because the price of a digital asset may or may not move up or down in a day. However, closing the positions at day end and not keeping any positions overnight does have its benefits.

Aspects of Day Trading to Know

This crypto day trading guide highlights the fact that trades of any kind never guarantee profits. However, gathering as much information as possible about trading, different strategies and more can increase your chances of having a good trading experience and even get some profits (if any).

There are traders who get benefits by day trading but successful day traders are aware of the numerous attributes of crypto trading. They are also familiar with the market conditions and have a good understanding of technical analysis.

The points where day traders should enter and exit their trading positions are determined by them by analyzing the following aspects, in no specific order.

  • Chart patterns
  • Key technical indicators 
  • Price action
  • Trading volume

Another major aspect of crypto day trading, every potential trader needs to know about is risk management. Regardless of how highly secure the exchange is that you choose, you still need to be familiar with the potential risks and how to avoid or manage them.

Risk management rules or tips help traders in determining how they can manage the risks they may come across and minimize their losses as well.

Should you Invest in High-volume Assets?

This crypto day trading guide can help you learn about various features of this trading strategy so in the end you can identify what works for you and what doesn’t.

Traders usually develop a trading plan and then continue according to their style. This is why, some day traders rely on fundamental analysis, while others don’t.

Day traders who follow fundamental analysis often opt for high-volume assets and aim to benefit from the short-lived price surges seen for the assets.

The crypto space is also known to be quite volatile, which is also what the day traders take advantage of. However, if there is not enough liquidated the traders can face some difficulties and lose all their funds. Therefore, unless you are familiar with the crypto space and aspects like liquidity and volume, you should not opt for crypto day trading or trading high-volume assets.

Day Trading Strategies to Know About

This crypto day trading guide talks about the various day trading strategies that are important for all traders to know about. The below-mentioned details of the day trading strategies can further help you decide if this trading strategy is useful for you or not.

High-frequency Trading (HFT)

This is an advanced day trading strategies that is often opted for by experienced traders. This is for traders who rely on quantitative data to trade and also create trading bots that use the data to open or close positions.

HFT targets very small timeframes to trade, which can be as small as milliseconds. Traders interested in HFT need to not only know about the latest tools and technologies but have a good idea about crypto markets and technical analysis.

Range Trading

Another popular strategy of crypto day trading is range trading and it heavily relies on candlesticks chart analysis. Traders need to know about support and resistance levels if they are interested in this trading strategy.

Scalping

This trading strategy is also related to small timeframes and scalpers often trade with leverage. They also use various techniques that include:

  • Order book analysis
  • Technical indicators
  • Volume heat maps

Conclusion!

Crypto day trading is a risky venture, just like other types or trading strategies. However, if you are interested in using this trading strategy you should have some idea of what it is and what it offers. The above-mentioned details can help you get a good idea of what day trading is.

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