One word that’s most commonly associated with cryptocurrencies, especially by investors and “experts” that don’t consider crypto a viable investment asset, is “volatility.” They would say things like it’s an asset whose value is driven purely by speculation or that the value might sink if just one major player sells their majority stake in Bitcoin, creating a snowball effect.
What these people fail to realize is that volatility is the bread and butter of cryptocurrency day traders. If you want to enter this highly lucrative and exciting market, there are a few things you need to know.
What Is Cryptocurrency Day Trading?
The word “day trading” is taken from the stock market, where traders enter and close their investment positions within the same trading day. Day trading is radically different from investment, where investors hold investment assets long-term and predict growth using the “fundamental analysis” of an investment asset.
Cryptocurrency day trading is the same. Traders seek cryptocurrencies with high liquidity (which essentially means how easily they can be bought and sold) and trading volumes. A higher volume means more of that cryptocurrency is changing hands. With a lot of activity, traders find it easier to buy and sell their assets, but they primarily make money off a crypto’s volatility. That involves making trades by predicting how rapidly the price is going down or up (you can make money both ways if you can predict it accurately).
If you want to day trade crypto, you’d have to accumulate a fair bit of knowledge and market experience before you can predict same day trading patterns. Expert day traders mostly employ technical analysis and use chart patterns, technical indicators, price action, volume, and sometimes news to make important trading decisions.
Where Can You Trade Cryptocurrency?
If you understand how cryptocurrency prices go up and down and how you can make a profit by opening a position (buying crypto) and exiting that position (selling crypto) at the right time, the next major step is to choose the right crypto trading platform like Crypto Investor
There are a few things you need to look into:
- Cost of Trading: Some trading platforms charge you a flat-rate fee while others might make money off of the crypto exchange “spread.”
- Security: Since crypto is a digital-native asset with no tangible commodity backing it up, security is the prime concern when day trading crypto. Make sure that platform you are choosing takes the security of your digital assets seriously.
- Updated and Easy-To-Use: If you are new to day trading, an overly complicated platform might hinder your trading activity. Make sure the platform is easy to use and offers updated information.
- Variety of Crypto Assets: If you want to trade cryptocurrencies other than the most common ones, you should choose a platform that offers a wide variety of crypto assets.
- Reliable: If you want to augment or verify your…