Cryptocurrencies can be traded, and they come with a massive advantage; crypto markets are accessible 24/7. This means that you have more hours to trade each day than you would have for exchanging stocks. Also, you can gain the benefit of day trading forex in such a way that there are no overlap hours where volatility is its highest.
On the other hand, digital currencies come with a package of very high volatility. It may move up to hundreds and even thousands of dollars in as little as one hour, especially when trading cryptocurrencies like Bitcoin.
Bitcoin nearly dropped 40% of its value in less than 30 minutes as a heavy sell-off struck the markets. The volatility means that brokers commonly provide cryptocurrencies on low leverage, high margin basis. In addition to this, the BTCUSD crypto pair suffers serious rollover charges, so it is usually not a good decision to leave crypto positions overnight on your FX platforms. With this, day trading cryptocurrencies is the road to be taken.
To be able to trade profitably, this article will share some useful tips.
1. Select How You Want to Day Trade Cryptocurrencies
There are two possible ways to day trade cryptos. You can purchase crypto on an exchange where you can sell them off, or you can presume the contracts-for-difference assets (CFDS)of the cryptocurrency of your selection using long and short orders on the platform of an FX broker.
Each process has its variations, drawbacks, and benefits. So you need to choose which form of crypto day trading will suit you after considering all these factors.
2. Cling to the Well-Known Cryptocurrencies
All cryptocurrencies are not generated alike, so they do not have the same features. You cannot differentiate digital currencies like Dogecoin, Ethereum, Bitcoin Cash, and Ripple, which belong to the top list of best crypto day trading.
The popular cryptocurrencies are your fund-makers. They have more volatility; greater trading volume is more likely to carry the kinds of movements you need to witness in a few hours to make profit-making trading possible.
It is good to stick to pairings that showcase the cryptocurrencies above, so you can be assured of having a good range of movement and make your crypto trading successful. You can also do your research, access the crypto market, and identify which cryptocurrencies are also doing well in terms of the span of movement.
3. Make sure your account is sufficiently funded
The limit requirements for cryptocurrency CFD trading are very high; usually, you will be required to provide half of the cost of setting up a position on your chosen cryptocurrency as a margin. A loss of 3% of your account will not cause hurdles for your account size. But, a loss that converts to 20% or 30% of your account is huge. Your account will struggle to recover. When you have a sufficiently funded account, it will enable.
4. If you low budget, trade other less demanding cryptocurrencies
Bitcoin is the digital currency that imposes the highest margin of all traded cryptos. You can always trade other cryptocurrencies that do not demand high margin requirements. For instance, trading other digital currencies such as Ripple and Litlecoin captivates margin costs far lower than Bitcoin.
5. Use Correlations to Enhance your outcomes
Litecoin and Bitcoin Cash are most correlated with the price of Bitcoin. They were both generated using the Bitcoin blockchain and therefore followed the price moves of Bitcoin with a high level of validity. On the other hand, Litecoin also correlates with Bitcoin to a lesser degree.
At times, you have to be aware of what is happening in a correlated asset to envision what may occur with the other ones. There are cases where one asset makes a move before its correlated asset. Make this your advantage.
6. Being aware of the news
You have to be updated when it comes to trading cryptocurrencies. It is a must to find a credible source for the latest crypto news, especially when you notice some very instant, sharp price moves on any crypto. Usually, the news sources for the crypto-moving situations are on social media platforms.
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