The crypto market has spawned an army of day traders and long-term blockchain adherents in recent years. The investors dreamed of retiring early and wealthy by capitalizing on crazy market movements during the great crypto bull.
Different sources fed them a diet of news and analysis proclaiming crypto was headed to the moon. Well, the results were different.
It is, therefore, crucial to learn how to trade. This article will show you how to approach Bitcoin and crypto day trading, not as a blind believer in blockchain, but as a calculated pro speculator who knows exactly when to hold and when to fold.
Crypto day trading, or intraday trading, involves buying and selling cryptocurrency assets within the same day, allowing traders to capitalize on short-term price fluctuations without holding positions overnight.
Cryptocurrencies are favorable instruments for day trading due to their highly volatile price movements. Day traders can potentially achieve greater profits, but they also face significant risks.
Massive volatility follows consolidations. Price movements are dramatic, and declines are stunning.
I love the crypto market because short-term trading strategies, which I typically use on a daily chart, work like a charm in intraday trading.
If you want to learn more about day trading, read up on Jesse Livermore, a seasoned stock trader who first observed that different stocks and markets have different attributes nearly a hundred years ago. His observations are just as accurate today as they were then.
Before we get to the nuts and bolts of a day trading crypto strategy, let me share a story for a clear perspective.
2018 will forever remain memorable due to the great crypto bull market, which surpassed the Dutch Tulip Mania of the 1630s. I was clueless about cryptos, preferring to trade stock indices or Gold CFDs.
But I had friends heavily invested in Bitcoin. Some urged me to get into Bitcoin ASAP. They were boasting how much they were making, and even quitting day jobs to focus solely on day trading cryptos. They often asked whether I had ever multiplied my returns on any investment in my trading career.
I kept my mouth shut. I like to keep my market maneuvers to myself. With the leverage that CFD trading offers, several hundred % on a single trade outcome (relative to the risk taken) is quite common.
At the time, Bitcoin was trading at $6k and growing. I told my buddies it would probably hit the psychological barrier of $10K and then collapse.
I waited – Bitcoin shot straight through $10K, making me look idiotic – and didn’t stop until it hit $20K.
I could see guys getting rich all around me, and here I was, having traded markets for over 15 years, feeling like a pauper in comparison! I had to rethink my entire premise of how markets worked. Investing in cryptocurrencies seemed compelling.
Bitcoin has a limited supply
It can be used for global trade and is allowed anonymity
The Fed couldn’t print it out of thin air.
It was giving back power to the people
It was going to be $100,000 or more, apparently
However, I resisted the urge. I hoped Bitcoin would return to gravity so I could load up. It wasn’t long before things started going awry. Governments, JPMorgan’s Jamie Dimon, and the Fed were concerned. Regulators started to ban exchanges, and the price started falling hard.
Fundamentally, you need a trading plan to trade the markets successfully, whether it’s crypto, stock index, or Gold CFDs.
None of my friends had one, and it came back to bite them in the butt.
As a full-time trader, I’ll make one thing clear: If you don’t have an exit plan, you are doomed to fail in this business.
Traders use price charts to evaluate the market, predict trends, and develop trading techniques. Understanding how to read the charts helps you determine whether the market is going up, down, or sideways. It helps you determine which technique to use in each trend direction.
I’ve traded Bitcoin many times on the Mitrade platform for the past two years,
Now let’s look at a typical chart of Bitcoin▼
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As a beginner, it’s essential to understand the significant risks associated with the cryptocurrency market due to its high volatility.
If you decide to enter this exciting market, consider focusing on more stable coins such as Bitcoin, the largest and most widely accepted cryptocurrency in the world. You might also want to explore Ethereum, the second-largest cryptocurrency after Bitcoin.
This is not a suggestion to trade solely in these two coins; rather, my intention is to share a strategy that may help reduce risks for beginners—seeking opportunities among major cryptocurrencies.
There’s a perception that you need to watch multiple timeframes on multiple screens and access a constant stream of news-to-day trade successfully. I’ve made a career trading insanely simple patterns. I only employ a short-term simple moving average. Let’s look at the simple day trading strategy.
I am going to use a 2-hour chart. Anything lower has too much random noise, whilst anything higher is getting into the realms of swing trading, not day trading. The 2-hour chart in the crypto market works well for the system I will teach you.
You need to look at only two things for a trading setup:
● A red candlestick bar
● A 10-bar simple moving average
You need to filter market noise to get an edge in trading. Avoiding lower probability setups and waiting for the higher probability ones is probably the most challenging part of day trading.
The filter system works as such:
● The most recently closed candle must be red
● It must be above the 10-bar SMA.
● Or, if below, it must touch the moving average.
If the most recently closed bar is red, and one of the other criteria is met we:
● Place a buy entry stop order 2 points above the high of the red bar.
● Place a protective sell stop at the value of the low of the red bar.
Canceling – a secondary filter
If the order isn’t triggered by the next bar’s close (in 2 hours), then cancel it. The setup has lost its effectiveness. And we look for a new opportunity.
If the order is triggered, we prepare to protect our trading position. This means reducing the risk exposure. This is done using the trailing stop.
After the first candle is closed:
● Move the protective stop to the low of that bar.
● If the value is lower than the value of the original stop loss, do nothing.
● As each bar moves consecutively higher, move the stop to a new low
● Repeat until stopped out
Here are three images of this strategy in action.
You might be tempted to dismiss this system because it’s simple. But I have made a career out of it.
Many traders choose to fill up their charts with all sorts of things; trend lines, support resistance levels, fib levels, MACD, RSI, etc. When you’re day trading, you need to be able to think quickly. If you’re processing too much data or metrics, it will confuse you.
Day trading is quite challenging because you can spend long hours at the PC, waiting for a setup to come along. This can lead to lapses in concentration. After sitting for hours, worrying about when a setup will form, and questioning whether you will make money that day, you can become prone to placing trades you shouldn’t.
Also, crypto trading involves lots of emotions. You can make money in record time, leading to overconfidence or fear of the market. However, you can lose it as fast. You need a clear head when day trading cryptos.
If you win quickly, you can become greedy. If you lose money too fast, it can set you on a path of revenge trading.
Yep, day trading is hard – but that’s why it rewards handsomely.
Successful trading is a business, not a hobby. Like any business, you have profits and expenses. How you manage them determines how far you go.
Day trading cryptos offer fantastic rewards, regardless of whether it goes to $100K or $20k. The volatility in this asset class is truly immense, a dream of every trader.
Do you know a business that doesn’t require customers, selling, stock purchases, and marketing? Have you heard of a business that doesn’t require a special business premise or license? Or one where you choose working hours?
There is only one such business in the world, Trading.
Here at Mitrade, make your trading journey as enjoyable and profitable as it can be. Day trading cryptocurrencies is one of the ways. Happy Trading！
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Mitrade allows you to trade CFDs on major cryptocurrencies such as Bitcoin, Ethereum, Ripple, Dogecoin, and SOL. It also gives you access to over 300 different US shares and currency pairs. The following are some of the most traded cryptos you can trade today: Bitcoin, Ethereum, Dogecoin, Ripple, Cardano, Solana, Polkadot, and more.
Volatility is what day traders look for. Many altcoins and tokens have high volatility. However, I do not recommend day trading altcoins because you can rapidly blow away your position.
The forex market is the primary market for day traders because of the relatively low volatility. Cryptocurrencies are more volatile than forex, so I propose trading the mainstream crypto——Bitcoin. Bitcoin’s market is fairly stable now and has considerable liquidity.
There are several tactics to explore for investors interested in day trading. One of the most effective strategies is news trading (fundamental analysis). The market is generally affected directly by news events, resulting in seismic price changes. A consolidation pattern can precede economic data releases followed by high volatility.
The majority of day traders lose money. The more you trade, the more you are likely to make a mistake. Another reason is the high fees. While the fee charged on each transaction is little, it can quickly add up when you trade daily.
Before making any trading decisions, it is important to equip yourself with sufficient fundamental knowledge, have a comprehensive understanding of market trends, be aware of risks and hidden costs, carefully consider investment targets, level of experience, risk appetite, and seek professional advice if necessary.
Furthermore, the content of this article is solely the author's personal opinion and does not necessarily constitute investment advice. The content of this article is for reference purposes only, and readers should not use this article as a basis for any investment decisions.
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* References, analysis, and trading strategies are provided by the third-party provider, Trading Central, and the point of view is based on the independent assessment and judgement of the analyst, without considering the investment objectives and financial situation of the investors.
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