How to Start Day Trading Cryptocurrency: 5 Tips for Success

Day trading cryptocurrency can be an incredibly lucrative endeavor.

High trading volume and return potential are powerful magnets for a growing number of traders. Of course, profits aren’t just there for the taking.

The market is inherently volatile and notoriously unpredictable. Trading can be a risky business, but the good news is volatility is precisely where the rewards emanate from.

Here is how to take well-calculated risks and hit it big.

1. Educate Yourself

The first step is to learn how cryptocurrency works.

Namely, familiarize yourself with terms such as blockchain technology, digital wallets, and mining. Make sure to research different cryptocurrencies and exchanges. Understand how market cap, available coins, and other factors shape trading prospects.

Notice Bitcoin, Ethereum, and Litecoin are among the top choices in terms of trade-ability and beginner-friendliness. At the same time, the market is flooded with disruptive and innovative solutions.

Some of them are poised for explosive growth and need to be on your radar.

2. Develop a Sound Strategy

You can’t hope to snatch profits without a solid game plan.

There are two main options to consider here. You can own cryptocurrency (in short-term) or focus on predicting the ups and downs in value.

In case you want to own it, you have to use exchanges. These exchanges operate in a similar way as stock markets, where buyers and sellers trade according to current prices.

In general, exchanges are geared toward lower-volume trading. If you want to work with larger sums, you want to adopt a broker-based strategy.

3. Navigate Exchanges

Picking an exchange isn’t simple.

We would recommend opting for reputable providers that have user-friendly, secure apps for your smartphone. They allow you to be tuned-in at all times.

Some exchanges enable trading fiat currencies for cryptocurrencies, while others accept only the latter. Note they have different margin requirements, which is important.

For example, in anticipation of a price shift, you want to trade on a margin. This is to say you can borrow money and boost your profits, provided your prediction comes to life.

4. Work With Brokers

If you aren’t interested in owning virtual coins, contact an experienced crypto broker.

Brokers who specialize in day trading can help you predict when the value is about to go up or down. You essentially trade funds indirectly via a dealer network.

To make an educated choice, take into account the range of crypto, tightness of the spread, and type of leverage (1:2). Leverage is crucial as it determines the risk and reward ratio.

Bear in mind brokers offering Forex and CFDs are a great entry point for novice traders.

5. Rely on Facts and Figures

Successfully speculating on future price movements is the sustenance of day trading.

To master this art, you want to take advantage of trusted information sources. In particular, learn to recognize positive signals and red flags.

A big company announcing the adoption of the cryptocurrency, for instance, is a huge boost to it. News of a cryptocurrency getting hacked has the exact opposite effect.

Apart from news, utilize technical analysis as well. It revolves around studying historical price charts and uncovering patterns for future reference.

Time to Master Day Trading Cryptocurrency

Day trading cryptocurrency is no cakewalk.

To set yourself up for success do your homework, and formulate a strategy. Pick your broker and exchange platform wisely. Have all the resources you need at your fingertips and keep up with the sudden price movements.

Following these steps, you will hone your speculative skills, maximize profit margins, and minimize losses.