Are you planning to start day trading cryptocurrency? If so, we can guide you. The cryptocurrency market has seen tremendous growth in recent years. This market is completely different than all the other markets you have traded in. Because of this, you might need different strategies and plans to overcome the crypto market. But you don’t have to worry.
In this post, we are going to introduce you to trade in cryptocurrency and help you to compare crypto brokers. By comparing them, you can easily choose a crypto broker for day trading. Crypto market has a lot to offer, are you ready to learn?
Day trading cryptocurrency, what is it ?
Cryptocurrency is a digital currency. The most famous example is Bitcoin. As you trade fiat currency and stocks, you can similarly trade cryptocurrency. The two main factors of day trading i.e., volume and volatility is a part of cryptocurrency trading. These currencies are highly volatile and are being traded in huge volumes. These two factors lure day traders towards it. So when you trade cryptocurrency in a single day, it is known as cryptocurrency day trading. In this post, we will show you how to ace in crypto trading by using various strategies and crypto technology.
Day trading cryptocurrency: The first steps.
If you want to trade in cryptocurrency, follow these steps to know how to start.
- Decision: Make a decision if you want to trade with cryptocurrency or not . However you can use your instincts or information, whether the price is going to rise or not.
- Exchange: If you are planning to buy cryptocurrency, you need to buy it from an exchange. One such exchange is Hodly. It is an easy to use application.
- Broker: To speculate, a broker is a must. So you have to choose a broker. First, you need to understand what you want from your broker, then compare and choose.
- Fund: The second step is to add funds to your account. To buy and trade cryptocurrency you will need a account with funds.
- Buy or trade: Now you can either buy it, or you can simply trade.
This is how you simply start day trading cryptocurrency. First you can use a demo account to practice buying and selling. Many brokers provide demo accounts to beginners.
However, if you are planning to actually own cryptocurrency, you can’t use the demo account. This account is only for quick speculation and trading, not for buying from exchanges.
Trading Cryptocurrency doesn’t mean that you actually have to own this currency. Many traders only speculate on the price movements. So you can simply choose a broker. But first make sure the broker provides forex and CFDs. With this, you can easily trade without owning cryptocurrency.
Choosing the right platform or broker is very important in trading cryptocurrency . Some brokers use the traditional method of crypto trading while some use modern techniques. So before you open your account with them, you need to compare all the factors. We are going to discuss these factors below.
Apps and Software
Nowadays, many brokers are using mobile applications and software to keep you updated. Time is a very important factor. A few minutes can make a big difference. The mobile applications help you to get alerts and take advantage of the situation. They also offer a demo account to beginners. If you want all these facilities, choose a good broker.
Make sure your broker has a hack-proof trading software. As the currencies are digital, they can be easily hacked. So choose a broker who provides good security to clients.
Brokers charge fees for their services. Trading cryptocurrency can also include various additional costs. Each cost will be deducted from the profit. So choose your brokers carefully. Here is a list of fees.
- Exchange fees: It includes the fees to use their software. Therefore your fees may differ on the basis of crypto coins.
- Trade Fees: You have to pay fees for each transaction i.e., buying and selling. A taker fees to buy. And a maker fees for selling.
- Deposit and withdrawal fees: You have to deposit and withdraw money in your account with them for trading. They will charge you less for deposit. Withdrawal fees are high. Besides that you cannot use credit cards with some brokers. Some use debit cards and bank accounts.
The final decision on brokers:
There are many options , so choose what benefits you. Read the reviews of each exchange. If you are not sure, you can also go for a free trial of software and exchange. There are many reputed exchanges like Coinbase, Bittrex, Kraken, etc. This decision will affect your trading, so select a broker wisely.
Day trading Cryptocurrency for beginners
Trading cryptocurrency is not like stock trading. This market is extremely new and fluctuating. So make sure you have a good broker, trading software, etc. Also there are some basics you need to learn. These three things are the base of cryptocurrency trading. If you understand this, trading will become easy for you.
- Check what is growing: First thing you need to do is find all the cryptocurrencies that are growing or rising. Some high ranking currencies are Bitcoin and Ethereum. But there are other currencies as well. Ripple, Dash, and Zcash are potential currencies.
- Embrace Volatility: The next thing you need to check its volatility. Some currencies, like Bitcoin, are extremely volatile. It changed from $3000 to $2000 and then to $5000 in a few months.Volatility can be risky for you. But it can also help you to gain a huge profit.
- Understand blockchain: Blockchain technique will help you to understand the news related to cryptocurrency. This way you can easily predict price fluctuations by understanding the blockchain mechanism. Blockchain is a decentralized system which secures all the transactions and stores them. It’s stored in a public ledger.
If you want to buy cryptocurrency, you have to store it. To store it, you need a wallet. There are many wallets to choose from. These wallets are digital.Choose your wallet carefully. There are many fraud wallets in the market. These wallets will scam you. One trusted wallet is Hodly. It is regulated and protected.
Now that you know how, what, and why of trading cryptocurrency, you need to decide on strategies. Before you start day trading in crypto, you need to develop appropriate strategies. Besides that you also have to manage your money efficiently to earn a profit. Here we will discuss a few well-known strategies.
It is a very easy and simple strategy. All you need to do is be vigilant. First you need to keep an eye on the trend. Look for corrections by studying the trend and speculate swing out of correction. Then make your move. The swing strategy is simple. Just follow the trend and make use of the swing in the trend. However you should know when to stop.
Even if you have every possible aid, you can still make errors. To avoid this, you need to know certain tips and tricks. These tips will help you when no other option is available.
- Utilize News:
The news easily manipulates new cryptocurrencies. So if there is a news article that hacking is allowed in the crypto market, the new currencies will fall. But if there is news about it being successful, people will buy it. The external environment can easily affect the short-term currency. Make sure you read all the news.
- Technical Analysis:
You should always check and analyze the previous charts. The trends repeat, so we should learn from historical charts to predict the next move. If the situation is the same as it was before. The same trend may follow. By studying past trends, you can easily predict price changes.
- Study Metrics:
This technique is very important. By using study metrics, you can easily predict the value of a cryptocurrency. In this case you have to check the number of wallets and compare it with active wallets. And by checking the trading volume, so you can easily find value. Now you can compare it with the market price and make your move. If your prediction is right, you can make a huge profit.
- Trade on Margin:
Margin enables you to borrow money to trade. For instance if you predict a change, you can use margin to borrow a huge amount of money. Many exchange platforms provide margin. So if your prediction is right, you can make a huge profit. Nevertheless if your prediction is wrong, you may incur huge losses as well.
Rules and Taxes:
As this market is fairly new, there are no proper rules and regulations. Each country deals with cryptocurrency differently. Therefore you need to know the rules and regulations regarding taxes before you start trading. Here are the rules.
Countries are struggling to classify cryptocurrency. Some class it as property and some class it as currency. The US government has classified it as property. So if you trade in the US, you will be considered as an Investor. As a consequens you will then have to go through the complex procedure of registration.
Rules and regulations affect taxes. There is no standard tax regulation on cryptocurrency. In the US, the income from crypto trading falls into capital gain tax. But in other countries, where it does not fall into the property, you are a trader. So your gains will be under Income tax.
Nowadays, people are using bots for trading cryptocurrency. First, you need to make an appropriate strategy for trading. Then you can use a crypto robot to trade on your behalf. But first you have to program this strategy into the robot’s system. Once it is programmed, the robot will do the trading as per the instructions and strategy. Make sure you program it correctly. There are two main advantages of using Bot in trading.
- Time: It saves a lot of time. You don’t have to put in any effort to read and decipher charts. You can easily command the bot, and it will do it.
- Execution speed: It will also improve the speed of transactions. You don’t have to buy and sell cryptocurrency manually. The bot will do it much more quickly than you.
- Multiple currency trading: You can trade in multiple currencies by using bots. They have easy access to all the assets. Your potential profit will increase with this.
- Crashing: Using a bot can be risky too. In the end, a bot is still a machine. If there is a system crashing or unexpected events, you may lose all your profits.
- Expensive: It is very expensive and you have to pay in order to use the services of the bot. You can try it for free, but later you have to pay monthly subscription charges. You have to again spend money on installing the program into the bot. Bots also need updates. It will also cost you money. All this will be deducted from your profit.
You need to educate yourself if you want to trading cryptocurrency. The best form of education is self-learning. You can easily self-learn by using a demo account.
A demo account will help you to try and learn crypto trading from your own mistakes. You can also learn how to operate in the crypto market. And you can learn how to follow the trend and make a speculation. All this can be done by using virtual money in a crypto platform.
You can also opt for online and offline courses. They educate you about crypto trading. Besides that you can read books as well.
You can also check various tutorial videos to help you understand how to use the software and technology in trading.
This is your guide to start with day trading cryptocurrency. By following this simple guide, you can easily compare and choose a broker to help you in trading. Besides that you can also follow the strategies and tips to speculate price movements. Now that you know the basics, you also try using a demo account to get practical knowledge. Make sure you do technical analysis and read all the rules and regulations beforehand. Crypto trading has huge potential, and if you play your cards right and use volatility and volume factor, you can make easy money.