The birth of the first cryptocurrency led to an increase in the total number of people and firms who are attentive and want to engage in the crypto world. Due to this, the need to master and fully understand the cryptocurrency market and how trading works is important to raise the possibility of gaining potential assets.
If you plan on engaging in methods that yield more profit-making and realistic
trades, it’s wise to study and master the crypto day trade strategies that can help you earn more assets in a day and decrease the risk of potential loss investment. Read on to know more about trading in cryptocurrency platforms and the day trading strategies that guarantee earnings.
In cryptocurrency trading, there are various ways of earning a profit, and one of the most common and well-known styles is the HODL-ing, which refers to buying tokens when the prices are low and holding on to them until the values are high. Although this strategy is known to be profitable, day trades may be perfect for you if you are not that curious about investing in crypto and you wish to maximise your daily profits.
While day trading can help maximise your profits, it’s not as easy as it seems. This short-term investment means taking on a higher risk, so it’s important to prepare a strategy when making trades while considering the risk that you’re going to face. You must take note of which strategy best suits your goals and investment status, as well as your level of knowledge and skills. The combination of these two is what leads to the potential of success increasing.
If you plan on engaging in day trading, check out these six strategies that you can utilise for a higher chance of boosting your earnings and lessening your risks.
- Technical Analysis
Technical Analysis is a day trading strategy that uses not only chart patterns but also mathematical indicators to list the possibilities and predictions on when prices will move based on the gathered data. This strategy mostly relies on generated computer programs like the Relative Strength Index (RSI), which often appears as a single line on the chart.
Relative Strength Index (RSI) holds a value of 0-100 and implies that when the price is closer to 100, it means that certain cryptocurrency has a high ranking in terms of the number of times it has been bought from cryptocurrency trading platforms like Bitcoin Profit, which also means that its costs are highly likely to decrease. On the other hand, if the RSI shows a value closer to 0, it means that a certain cryptocurrency is more oversold, and its values have the potential to increase.
While some technical indicators are identified by humans that study charts, including the cup-and-handle pattern, this indicator on the crypto charts shows the correction of a previous uptrend and eventually signals its restart. Technical Analysis strategy shows the defined entry and the risk levels that are hard to interpret in the crypto market due to the market’s fragmented volume metrics.
- Range Trading
Range Trading is a day trading technique that refers to calculating the difference between the highs and lows of prices of a certain trading period on a volatile market. If you plan to utilise this strategy, it’s wise to check out candlestick charts due to their support prices and resistance price levels. This means that traders might purchase when the values reach a term and sell it when the costs reach a resistance level.
One example of how range trading works is by determining pivot points and calculating the pivot point of the market charts that might provide you with knowledge of what price levels are likely to make a return.
- Scalping
Scalping is a day trading strategy that takes advantage of little to no price movements in a very short period. This method creates the most profit gains out of the gaps within the market prices or crypto liquidity.
Traders who utilise this strategy engage in a leverage margin or contracts to increase profit gains while also increasing the risks. Thus, doing research and studying how to handle and manage risks is extremely important in this day trade strategy.
Scalpers use different strategies, including volume heatmaps, the spread of technical indicators, or book analysis, which helps investors identify their entrance and exit positions on trades. Since this strategy is fast-paced and high-risks, it’s recommended to experience traders only and not for newbie investors.
- Long Straddle
Long Straddle is also referred to as option straddle, buy straddle or straddle. This technique involves purchasing put and call orders, which must be on the same cryptocurrency, expiration date and the evident price.
This strategy is a popular option in crypto trading due to the market’s volatility. A crypto trader that uses this strategy is putting high hopes on crypto assets’ price changes. Regardless of the values rising or falling in the long straddle, the trader still has something to earn, but if the price doesn’t move, the trader will incur a loss.
- Arbitrage
Arbitrage is when crypto traders buy a cryptocurrency on another exchange and earn by immediately selling it on another platform at a higher price. When the price of a crypto pair with less known Bitcoin and altcoin differs from one platform to another, traders who use this strategy can earn profit by taking advantage of the differences in the value.
Even though this strategy is a complicated financial mechanism that is usually computerised by price-monitoring applications, arbitrage makes the digital asset prices remain constant between the different exchanges.
- Bot Trading
Bot Trading is a computerised software tool that some investors use to buy and sell financial tools at a preconfigured time or when predefined conditions are met to earn profits. Cryptocurrency trading bots are constructed to help investors increase profits and decrease losses and risks.
Crypto trading bots can improve the efficiency of the process by looking at exchange fees, price movements, and opportunities for short-term profits on trades. Throughout the years, bot trading software has been popular among brokers on stock exchanges. This strategy is recommended for traders that have a complete understanding of software programming and APIs to make the most of it and take advantage of this strategy as a day trader.
In cryptocurrency, it’s normal to witness high risk, high reward investments. Cryptocurrency is a new class of digital assets, and investors should always consider the possibility that their cryptocurrency investments have the potential of losing overnight. No matter what investing style you want to utilize, it’s important to do some research and understand the risks and the process that you may encounter throughout your journey.
