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Cryptocurrency trading is booming across the world. Every trader wants to invest in cryptos and wants to earn good profits. But it is not so simple to make profits in a single day; traders should know the strategies for trading the cryptocurrency. Cryptocurrencies can go high in the market at any time of the day. Therefore crypto day trading is the best strategy to earn money.
In this article, we will see what crypto day trading and different strategies of Crypto day trading is.
What is Crypto Day Trading?
Crypto day trading includes the buying and selling of cryptos during the same business day. It is one of the short term trading strategies which is used by the traders for making a small amount of the profits from the intraday price movement of the cryptocurrencies. Traders buy the coins and sell them within the time period of a few minutes or hours. Traders never hold the position for a period of overnight. Traders make multiple short transactions between a single trading day.
There are many day trading strategies but will see the top 3 crypto day trading strategies to earn money in the cryptocurrency market.
TOP 3 Crypto Trading Strategies:
Scalping Trading Strategy in Crypto Trading
Scalping is the best day trading strategy where traders make hundreds of small trades during the single trading day and try to make small profits from each trade. In scalping, traders take the benefit of the increased trading volume. Many traders exit the position within the second of entering the position, and several traders use bots for scalping. The maximum account balance benefits the traders in making good gains through multiple trades. Though the gain amount per trade is fewer, traders can produce adequate amounts at the end of the day by trading various trades. Scalping is best for crypto traders as the volatility in the cryptocurrency market is high.
Momentum Trading Strategy in Crypto Trading
Crypto day trading is all about momentum and finding the cryptos which are more moving. Many coins fluctuate up to 20–30% in a day. The critical factor is to detect the coin before it moves. These coins with potential momentum trend above the moving average. The momentum can be due to a technical breakout or the fundamental catalyst. Traders focus on cryptocurrencies, which are significantly moving high and in the same direction. Traders can hold the position for a few minutes or an entire day based on the speed movement and when it changes its direction.
Momentum trading strategy is executed mostly at the beginning of the trading session or when some news is published, which can bring significant price movement in the coins. This is also the most considerable crypto day trading strategy, which can help traders to gain a substantial amount of profit.
Arbitrage Trading Strategy in Crypto Trading
Arbitrage trading strategy is buying the cryptocurrency in any one market and selling it in another market at a higher price. As the cryptocurrency market is not regulated; thus, it allows traders to exchange the cryptos in any market. Because of this, there can be significant differences in the spread as there is a difference between the liquidity and trading volume of assets. The difference between the buying and selling of the assets is known as the spread.
For example, sometimes coins are traded at 40% higher in South Korea than in the US; this happens lots of times. In this situation, the traders buy the bitcoin on the US market and immediately sell them on the South Korean market.
Some of the essential tips for Day Trading Cryptocurrency
Decide how to day trade cryptocurrencies.
There are two ways traders can day trade cryptocurrency. Traders can buy the crypto and sell it when price rises during the trading day, and another way is CFD crypto trading using the long and short orders on the platform of the broker.
Always Trade Popular Cryptos
There are many cryptocurrencies, and they don’t have the same characteristics. The popular cryptos are the money makers. Because they have higher trading volume and volatility, which can deliver all the price fluctuations that traders look for day trading and make profits.
Always keeps an Eye on Correlated cryptocurrencies.
Litecoin and Bitcoin Cash are highly correlated with the bitcoin price. Both coins are designed by using the Bitcoin blockchain. Because of this, traders have to keep track of correlated currencies to determine the movement of other coins. There are many situations where one coin makes a move before its correlated coin.
Always keep watching the news.
Traders always have to be alert for the news as there is no news calendar like the forex market. Therefore traders have to find the source for the latest news about cryptocurrencies because news plays a vital role in the day trading cryptocurrencies.
Bottom Line:
Traders can make good profit with day trading cryptocurrency strategy as the crypto market comes with an advantage as the market is open 24/7, which means traders get an extra hour for day trade compared to other markets. Brokers play a vital role in executing the day trading strategy appropriately. Choosing the broker with good services is essential as the margins, commission fees, and fast trade execution are crucial factors in the day trading cryptocurrencies. ETFinance is a top brokerage platform for cryptocurrency trading which offers maximum leverage, low commission fees, and fast trade execution trading platforms, and more importantly, it is safe for trading.
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