Cryptocurrency day trading strategy pdf
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In this case, avoid trading on weekends and limit trading only on the highest-volume days. Crypto Day Trading Strategy The idea behind crypto day trading is to look for trading opportunities that offer you the potential to make a quick profit. Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of this scalping strategy. Step 1: Pick up Coins with High Volatility and High Liquidity As previously discussed, the number one choice you need to make is to pick coins that have high volatility and high liquidity.
There are more than coins on the market and growing. Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks. Remember, crypto prices can crash just as fast as they have risen. We use this indicator to track the activity of the smart money and to gauge when the institutions are buying and selling cryptocurrencies. The preferred settings for the MFI indicator are 3 periods.
How to use the IMF indicator will be outlined during the next step. They inevitably leave tracks of their activity in the market and we can read that activity through the MFI indicator. Namely, during the current day, we need to skip the first two MFI readings of and study the crypto price reaction. The price needs to hold up during the first and second MFI reading. The close of this candle needs to be near the upper end, giving us a candle with very small wicks.
This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits. See below: Step 5: Hide your protective Stop Loss below the low of the day. Take Profit during the first 60 minutes after you opened the trade. The obvious place to hide your protective stop loss is below the low of the day. This can also signal a reversal day.
However, the only rule you need to abide by is to take profits during the first 60 minutes or the first hour after your trade got triggered. Holding the trade longer than one hour will result in a lower success rate. Conclusion — Crypto Day Trading If you took the time to read the whole day trading crypto guide, then you should be able to buy and sell Bitcoin and alts and make some daily profits.
If you are interested in learning how to day trade cryptocurrency, be sure to equip yourself with enough information before diving into the market. However, crypto brokers set the prices at which a user can buy. Typically, this is often the market price plus a premium that enables the broker to profit. This model is similar to exchanging forex at your local bank. Note that transaction in this type of crypto exchange exclusively occurs between the crypto broker and the user. Crypto funds: These are structured like traditional investment funds.
They are professionally managed funds that allow users to purchase and invest in cryptocurrencies through the funds. Apart from offering professionally managed and diverse crypto portfolios, crypto funds help users avoid the hassle of purchasing and storing cryptocurrencies.
However, crypto funds are purely for investment purposes since one cannot use them for transactional purposes. However, thanks to the crypto market evolution, you can now trade cryptos in the spot or derivatives market. One of the first steps in crypto trading is finding the best crypto broker or exchange. There are several regulated brokers online, and you can choose them depending on your trading style.
But always make sure to sign up with a regulated broker. The tradable assets are in the form of trading pairs. The price of a cryptocurrency pair shows how much of the quote currency is needed to buy one unit of the base currency. Trading in the spot market involves buying the actual crypto. This means you take ownership of the coins and store them in your crypto wallet. Another option is to trade in the derivatives market.
This involves buying and selling CFDs. With CFDs, you do not own the underlying crypto but instead are speculating on the price fluctuation of the underlying crypto. CFDs are crypto derivatives that help you speculate on a crypto price without owning the underlying crypto. That means you can go long buy if you believe that the crypto will appreciate and short sell when you believe that the price will drop.
CFDs also enable crypto traders to use leverage. Another major advantage for trading with CFDs in the crypto market is the use of leverage. Leverage, also called margin, is a credit facility extended to you by your broker, which helps you increase your exposure to a particular asset. For example, if you take leverage of x, you will open a position that is x the size of your account deposit.
Note that leverage can only be used when trading derivatives. It significantly increases your potential profits but also makes the downside huge. A trading strategy is a technique that crypto traders use to enter and exit positions. These strategies determine if a trader should go long or short and at what point to close that specific trade. These trading strategies determine the type of crypto trader you are.
Day Trading Cryptocurrency Strategy Day traders try to profit from price fluctuations of cryptocurrencies throughout the day. By the end of the day, all crypto trades are usually closed. No trade is held overnight. Day trading heavily relies on current market trends and news events in the market. Day trading is often contrasted with crypto HODLing, where you buy crypto, ignore daily volatility, and stick with it for months or years.
Involves exploiting the current trends in the market. Traders react quickly to changing market sentiment, regulatory environment, and political goodwill. Positions with higher capital and leverage. Within one day, the trading positions are closed. Swing Trading Swing trading is an investment strategy in which investors try to take advantage of short-term fluctuations in the context of a larger price movement. Swing traders focus on realizing profits in a period of only a few days and limiting any losses as quickly as possible.
These swings open up profit opportunities by allowing investors to buy or sell securities that take a new price direction with the help of short-term chart signals. Here are some facts about swing trading: A swing is a market movement without much correction. Swing trading is carried out in higher time units.
Swing trading implies longer-term trading — positions can be held for several days or even months. Crypto swing traders incorporate both sentimental and technical analyses to inform their trade decisions. Swing traders can either go long or short. When they go short, they enter into a position when the market sentiment is at its highest and is bound to wane. Since cryptos are demand-driven, their price tends to be susceptible to public sentiment. Conversely, when swing traders go long, they enter when the public sentiment is beginning to rise.
Note that swing trading involves a lot of market analysis and monitoring trades. Essentially, swing trading is based on two basic strategies: trend trading and breakout trading.