Best Strategies for Day Trading Cryptocurrency
First, What is Day Trading?
Intraday trading means you buy and sell the same securities multiple times in a day. It is hoped that by making these transactions, you will be able to benefit from any increase that may be received by the securities on the day. Technically speaking, anyone can trade currency, although you will find that this type of investment is made by financial companies and individuals.
Intraday trading is risky, so it may not be suitable for everyone. The profit margin is usually small, and you may lose a lot of money in a short period of time. You can also expect to invest a lot of time in researching, planning, and completing transactions.
Things to Know About Crypto Day Trading
Day traders are looking for volatility. Compared with other cryptocurrencies, volatility is most common in small currencies or coins with a small market value. Any token with a market value of less than $1 billion is now considered a small-cap stock. Some small cap coins with good trading volume include SiaCoin (SIA), Basic Attention Token (BAT) and Fusion (FSN).
Micro-coins with high volatility can increase in value within one day, providing index returns for lucky investors. High volatility also means that these tokens can move in the wrong direction just as quickly. As the potential return increases, so does the risk.
There are no restrictions on daily cryptocurrency transactions.
You can open a $200 account on a cryptocurrency exchange and start day trading.
5 Day Trading Crypto Strategies
1. Technical Analysis
Technical Analysis is the investigation of past market information to anticipate the course of future value patterns. This technique is viewed as a feature of the security investigation along with the essential examination.
It is generally diverged from major investigation, which can be applied to the microeconomic and macroeconomic levels. Central investigation at the miniature level remembers research for money, costs, pay, resources and liabilities, capital construction and “delicate” components (supervisory crew quality, seriousness).
Essential examination at the large scale level incorporates considering or anticipating monetary development, expansion, credit cycles, loan cost patterns, capital streams between nations, work and asset use and periodicity, segment patterns, national bank arrangements and practices and governmental issues, and international affairs Questions, buyer and business patterns; and delicate information, (for example, opinion or certainty reviews).
2. News and Sentiment Analysis
Paying close attention to news, events, and sentiments in the cryptocurrency market is one of the easiest ways to determine Bitcoin’s short-term profit potential. Sometimes, a well-known report can affect rapid and drastic price changes. For example, in mid-April 2021, when Turkey announced the prohibition of using Bitcoin and other cryptocurrencies for payments, Bitcoin fell by more than 10%. The growing popularity of Bitcoin has inspired many crypto-friendly websites that track public sentiment towards leading digital currencies by analyzing social media chats. Positive sentiment tends to push up the price of Bitcoin, while negative news and events scare investors away, thereby affecting the decline in the value of Bitcoin.
3. Range Trading
By and large, digital forms of money will be exchanged for quite a while inside a specific reach. For instance, the exchanging cost of Bitcoin inside 30 days is between 8,601.40 USD and 10,210 USD. This ±9.4% territory appears to be conflicting until you understand that Bitcoin can accomplish a ±42% change in 24 hours.
The market worth of digital currencies is little to the point of being overseen by a major player. Now and again, these huge main thrusts methodicallly control the cost of tokens all over to benefit from this reach. In the event that you notice these examples, you can likewise exploit them.
In the event that you are exchanging inside the reach, you want to focus on the overbought and oversold regions. Overbought implies that purchasers have addressed their necessities and the stock is probably going to be sold; oversold implies the inverse. The outline pointers remembered for any trustworthy stock diagramming system can assist you with tracking down these spaces Normal pointers utilized for this reason incorporate Stochastic Oscillator and Relative Strength Index (RSI).
4. Scalping
The hawkers benefitted from the increment in exchanging volume. Hawkers can leave the exchange inside a couple of moments subsequent to entering the exchange, and many individuals utilize mechanized robots to expand the recurrence of their exchanging cycles. In a perfect world, the hawkers need to leave the exchange before any news or momentary vacillations change the symbolic’s market opinion.
It is ideal to have a ton of assets to exploit this very momentary digital money day by day exchanging methodology. Albeit the ROI of every exchange is little, the high worth rate implies that the scalp has gotten an impressive return (0.5% of $100,000 is $500, which is to the point of paying for an extravagance vehicle). Successive exchanges in some cases 10-20 exchanges each moment additionally imply that these little benefits add up.
5. Bot Trading
Robot trading is also called high frequency trading (HFT). This requires the use of algorithms and trading robots that are programmed to quickly execute a large number of transactions. Leading cryptocurrency exchanges such as Bitcoin Era provide trading robots that traders can even configure to execute transactions when they are away. However, this strategy requires a proper understanding of advanced cryptocurrency trading and programming techniques. The use of robots for bitcoin day trading does not mean that traders will wait for the results. Instead, investors must develop strategies and plans to execute transactions through continuous monitoring, testing, and updates to keep up with changing market conditions.
Which Cryptocurrency is Best for Day Trading?
The trading platform you choose may have a significant impact on your intraday trading results. The strategy you choose should have an impact on the platform you choose, because different platforms will have different advantages. For example, scalpers need fast delivery times, and volatility traders can get more benefits from instant news feeds.
Take a look at some of the best online cryptocurrency brokers and the services they provide.
Crypto Day Trading: Taxes and Regulations
Taxation is the only certainty in life, and cryptocurrency is no exception.
Yes, your Bitcoin is tax-free. For tax purposes, the IRS treats cryptocurrency holdings as “property”, which means that your virtual currency is taxed in the same way as any other assets you own (such as stocks or gold).
For most people who buy and trade cryptocurrency on online exchanges, it is relatively easy to submit it on their tax returns. But like most things related to digital currencies, the more active you are, the more complicated things will become.
1) Purchasing Crypto With Dollars
Just buying virtual currency in U.S. dollars and storing it on the exchange you purchased or transferring it to your personal wallet does not mean that you have to pay taxes on it at the end of the year.
If your only cryptocurrency-related activity this year is to purchase virtual currencies in U.S. dollars, you do not need to report to the IRS as instructed in the 1040 tax return.
2) Trading Cryptocurrency
When you use cryptocurrency as a method of exchange, things start to be taxed. This includes selling your cryptocurrency in U.S. dollars, exchanging one cryptocurrency for another—for example, buying Ethereum with Bitcoin—or using cryptocurrency to pay for goods and services.
