My experience day trading bitcoin. My husband gifted me some bitcoin for my birthday a month ago, before that I thought bitcoin to be some kind of nerd fad. For days, I saw bitcoin fluctuating between 17k - 19k and thought of day trading to make some money. May 07, · The E-Coin example is why it is important to understand that day trading Bitcoin and other cryptocurrencies will not always go to plan. You have to be able to accept losses when they happen, as this is a part of trading. Even the most successful traders in the world make losses, as it is impossible to always make the correct prediction. Jul 25, · Bitcoin is more volatile than any other type of asset in the cryptocurrency market. Therefore, day trading bitcoin comes with a considerable amount of risk. Bitcoin prices are highly sensitive to public sentiments and regulatory cryptoncoins.de: Mikhail Goryunov.
Day trading bitcoinLearn How to Day Trade Bitcoin: a Guide with Winning Trading Strategies
This can include stocks and shares like Apple, currencies like U. Dollars, and even metals such as Gold and Silver. Whatever is being traded, the objective is the same. Buy an asset and then sell it for more than you paid for it! This is exactly the same as trading cryptocurrency.
There are different types of trading goals, which are normally split into short-term trading and long-term trading. This is determined by how long you like to hold an asset before you sell it. Day trading is very short-term trading, and it can mean holding an asset for just a few seconds, to a couple of hours.
The idea is that you sell your asset before the end of the day, hoping to make a small, but quick profit. However, it is important to remember that the above two trades are examples of a successful prediction. On another day, the prices could have easily gone the other way, which would have meant that both Peter and John lost money.
The main idea is that when day trading, you look for opportunities to make a quick profit. If you are planning on holding on to a cryptocurrency for longer, this is called long-term trading. It literally just means to hold a coin or token for a long time and resist selling it.
There are lots of different methods that people use today trade, but the main two are based on either speculation or chart analysis. Speculation is when a trader believes a price will go up or down because of a certain event. In the above example of Peter, he purchased Ripple because he saw a positive news story. There was no guarantee that the price would go up, but he speculated that it would be based on his own opinion.
The other day trading cryptocurrency strategy often used is chart analysis. This is where traders study the price movement of a particular cryptocurrency and try to guess which way it will go, based on historical price movements.
When analyzing charts, you can look at how a price moves every few seconds, minutes or even hours. In the above section, I briefly discussed what day trading cryptocurrency actually is and some of the crypto trading strategies people use.
This section is going to talk about the mental side of trading, which is probably the most important thing to consider. Firstly, there are one major difference between day trading cryptocurrency and day trading real-world assets.
The reason for this is volatility. Volatility is when the price of an asset moves up or down really quickly, meaning it can either be a great success for the trader or alternatively a great failure.
For example, if you were day trading stocks on the NYSE New York Stock Exchange , it is very unlikely that the prices would change that much in a 24 hour period. This is because they are safe companies that have been operating for a long time.
Of course, prices still go up or down, but compared to cryptocurrencies, it would generally only be by a small amount. On the other hand, the prices of cryptocurrencies are very volatile.
In some circumstances, even more. Anyone that bought the coin towards the start of the day would have made a lot of money, however, the people that bought it at its highest price would have lost the majority of their investment. The E-Coin example is why it is important to understand that day trading Bitcoin and other cryptocurrencies will not always go to plan.
You have to be able to accept losses when they happen, as this is a part of trading. Even the most successful traders in the world make losses, as it is impossible to always make the correct prediction. Chasing losses is the act in which a trader experiences a bad loss and they attempt to make it back by taking really high risks.
This is one of the main reasons why the majority of traders fail. You have to accept that you will always make losses at some point! Before you even think about depositing funds into your new trading account, it is really important that you practice first. Although none of the major cryptocurrency exchanges offer a demo account, a good place to start would be Coins2Learn. Coins2Learn offers a trading simulator that allows you to trade using fake money. The platform is really good for beginners and they even offer tips and how to become successful.
You can access their website by clicking this link! Once you have a better understanding of how the markets work, the next step is to do the real thing. This is why it is important to start off with really low amounts. In fact, the amounts must not be any larger than you can afford to lose. At this stage of your day trading cryptocurrency career, you will be learning about the highs and lows of the markets and most importantly, improving your skills and knowledge. Once you have figured out how the markets work and you feel you are ready to start trading with real money, you now need to set yourself some targets.
This is really important as if you are planning to do this as your part-time or full-time job, you need to have expectations as to how much you hope to make. These traders will have a very large "bankroll", meaning that they can still make good money even if the percentage gains are small. Although this sounds like a small amount, in the long run, this will protect you from going broke.
Another important aspect to day trading cryptocurrency is that you set yourself a stop loss. A stop-loss is when you enter a price that you want to automatically exit your trade. This protects from you a sudden decline in price, or if you were not at your computer to do it yourself. If you feel that you will not have the mental desire, time or patience to become a day trader, you could always consider long-term investing instead.
Long-term trading is far less stressful, as once you buy a coin you can leave it to grow over a longer period of time. This could have been achieved without you needing to sit at your computer all day to check for any price movements. You can also apply the same trading techniques too, such as setting stop-losses or market limit-orders. However, if you are certain that you want to become a cryptocurrency day trader, then the next part of my guide is going to show you how to get started!
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Trezor VS Ledger: the complete overview of the two hardware wallets. Now that you know what day trading cryptocurrency requires, as well as what you need to consider, I am now going to show you how to get started!
The first step when looking at how to day trade cryptocurrency will require you to find a good exchange. A cryptocurrency exchange will allow you to buy and sell coins 24 hours per day. It is important to think about what kind of cryptocurrencies you are looking to get involved with. If you are looking to day trade full time, then it is well worth choosing an exchange that has lots of difference pairings listed. Note: A pairing refers to the two coins that are being traded. It is also important to find an exchange that has lots of liquidity.
This will ensure that you can always be matched with a buyer or seller, otherwise, you might not be able to close your trade when the price is falling! A good place to start would be Binance, as they have hundreds of trading pairs available and they also have one of the largest trading volumes in the market.
To find out more information on setting up an account at Binance, see my guide here! Once you have opened an account with an exchange, it is time to deposit some funds. Bitcoin is more volatile than any other type of asset in the cryptocurrency market. Therefore, day trading bitcoin comes with a considerable amount of risk. Bitcoin prices are highly sensitive to public sentiments and regulatory changes. They fluctuate quickly depending on the types of news circulating in the industry, whether positive or negative.
Therefore, before trading bitcoin, you want to wait until there is a high reading of volatility to make correct entries. Not having enough liquidity could trigger a substantial slippage that could lead to even more significant losses. Bitcoin is a safe commitment for a new trader as it can be used as a long-term store of value. It also comes with relatively fewer risks compared to altcoins. You only need to day trade bitcoin when all conditions align in your favor.
Therefore, avoid trading on weekends and limit trading only to days with the highest volume. The safest altcoins to trade are those that are the top by market cap. These are the ones that are less volatile and are most likely to serve as long-term stores of value.
A great example is Ethereum, Ripple, Bitcoin Cash, among others. These coins are less apt to disappear. Smaller altcoins are profitable in the short-term, but the risks associated with them are much higher. Their prices can be artificially boosted through pump and dump. Therefore, the risk of your funds going up in smoke is much higher compared to bitcoin. A little dash of due diligence is needed in determining which altcoins to day trade. Different countries hold different tax views concerning cryptocurrencies.
Alternatively, you may want to utilize the services of an accountant to make your work easier. The following tax overview is U. How much tax you pay is conditional to how long you have owned your digital assets. Tax for crypto held for less than a year is divided into three transaction types. If you purchase digital assets with fiat currency, you are not liable to pay any tax on that transaction.
The taxable event comes in when you sell your digital assets for fiat currency. For instance, if you sell Bitcoin for U. The same applies to crypto to crypto sale. All profit made from transactions will be taxed.
Any crypto held for more than a year under U. Moreover, capital gains tax is much lower compared to income tax. Some of these risks include:. For some people, trading is like gambling. Just the mere thought of making thousands of dollars at the comfort of your house is thrilling.
This addiction can be especially dangerous to your bank balance. It can damage your life, put you in debt, and destroy relationships with family and friends. The cryptocurrency market is extremely speculative. Therefore, almost everyone in the market has an opinion of how the value or price of a digital asset will move.
All these conflicting information tends to saturate the market and mislead new traders into making trades based on false information.
Almost all day, traders fail in their first year starting. Day trading is extremely challenging for novices as it requires a lot of knowledge, experience, and discipline- qualities that most beginners lack. Therefore, you are bound to make significant losses before you move on to make profits. Day trading is a lucrative career. That means hours will be spent on the computer monitoring price movements and making adjustments whenever necessary.
You are bound to make losses. Put theory into practice by signing up to a demo brokerage account and make trades in real time with fake cryptocurrency. Day trading is an acquired skill. Therefore, you need to train and hone your trading skills through education and training. The cryptocurrency space is full of scams, pyramid schemes, and fake digital assets. The risk of losing money in a day is real. Ensure that you diversify your investments and only use a section of it to day trade.
This minimizes the risk of losing all your hard-earned cash. Below are some useful cryptocurrency tips that can help increase your profit margin and minimize losses. They include:. With day trading, you want to get in and out of a trade as quickly as possible. Therefore, you need to have a clear objective in place before entering a trade. You may want to avoid being greedy as a massive swing in the market can translate to substantial losses.
A lot of new traders tend to succumb to the pressures of FOMO. As soon as they make a good trade and crypto rallies again for a sizable profit, they go all in. Yielding to the fear of missing out is one of the fastest ways to lose money.
A slow winning approach is most helpful. Exchanges have different fee structures. Therefore, you want to do your research and find ways that you can minimize your trade fees. This tip applies only to risk takers who wish to work smarter and not harder. At the most, day trading involves sitting at the computer monitoring charts and making trades all day. This can become monotonous in the long term.
To avoid this, you may want to use the services of a trading bot to automate your trading positions. For instance, the 3Commas trading bot can buy and sell crypto automatically according to a pre-defined set of rules that you feed it. Given the markets constant and rapid change, the correct answer to this question is a fixed answer but one based on acknowledging a changing industry.
One of the best ways to know which cryptocurrency to day trade is to conduct your research. By studying the market and analyze which coins are doing well, you gain knowledge and experience on where and how to start. Below is an excellent video tutorial on how to day trade on Coinbase Pro. Before getting bogged down by the complexities of highly technical indicators of cryptocurrency trading, you need to focus on a simple crypto-trading strategy.
First, you need to understand that day-trading takes a lot of practice and know-how to undertake. Furthermore, the government will still need you to pay taxes. The industry can be quite overwhelming.