Cryptocurrency: Best Day Trading Strategies for Beginners
The wide acceptance of cryptocurrency has opened up more investment options for the money market. Today, people don't just trade in stocks or forex, Cryptocurrency trading has become mainstream and has produced several millionaires. However, just like any other form of investment, certain risks come with this trade, which has seen some persons lose money, especially newbies. This is why is advisable to understand the dynamics of this market and learn strategies that can deliver good results over time.
There are various ways people invest in Cryptocurrency. There are crypto enthusiasts that are interested in the long term investment bouquet, which is investing in a coin and hoping that it appreciates over time. But some investors are more inclined to the short term model know as Day Trading. In this piece, our focus will be on Day Trading and Day trading strategies that every beginner should know.
What is Day Trading?
Day trading is an investment tactic that involves real-time buying and selling of assets within a short time. In other words, in Day trading, an investor or a trader can buy an asset now and sell the same asset the next minute simply by watching the market behavior. This is very obtainable with stock or forex trading.
Since we now have several options of cryptocurrencies in the market with high volatility, Day trading has become a thing for crypto enthusiasts who are interested in cashing out on their investments before the close of business each day. Though a risky venture, it has proven to be a great way to multiply your crypto.
Below are 4 strategies to deploy if you must excel at Day Trading of cryptocurrency.
1.Understand the Fundamentals of Blockchain
Cryptocurrencies are built on Blockchain technology. It is imperative that before you start throwing money around in the crypto market, devote some time to learn and understand the basic principle behind the machine powering the market, BlockChain. Blockchain technology could be a very complex architecture but you do not need to bother with all the details just the basics, enough to help you understand how secured your investment is.
You will understand why some coin is doing better than the others or why some coin seems like it has become the bride of many investors. To trade in cryptocurrencies, scalability, privacy, and security are things you must consider.
2.Study and Understand the Coin You Want to Trade
Just like fiat money trading or forex trading, there are several cryptocurrencies in the market and their volatility differs. By volatility, we mean the rate at which they appreciate and depreciate. Successful crypto investors spend time to study several coins before they chose which coin to trade.
It has been proven that less popular coins promise higher returns, unlike Bitcoin which is very popular, widely accepted, and more stable. However, with high returns, comes high risk, so you need to understand this and choose your portfolios carefully? One of the risks associated with trading in small/unpopular coin is falling prey to a "pump and dump scheme. You don't want to use your hard-earned money to buy a coin that won't be accepted anywhere.
The guys that developed a new coin will spend some money promoting it like hell. Then they will latch on to the short-lived popularity to cash out and investors with coins that have no value. With more than 1500 different crypto coins in circulation, you must do your due diligence well before picking a coin.
If you are a beginner, you shouldn't start out taking too much risk. You may want to consider trading in a more popular and stable coin like the Bitcoin Cash, Ethereum, Monero, Tether, and Bitcoin, etc. Ensure you do your due diligence. This might look like a lot, but it is indeed rewarding when you trade in a coin you understand well
3.Choose The Right Exchange Platform
The choice of your trading/exchange platform contributes significantly to how you perform in the trading. This is so because, a good platform will ensure that you have all the support that you need ranging from security to privacy, technical assistance, and favorable service charge.
There are lots of fraudulent platforms out there or weak platforms that are vulnerable to hackers and cybercriminals. Carry out extensive research on different platforms, understand their offerings, check out their reviews, and decide on the best option for you. There have been cases of platforms that have been hacked and investors lost their money. Although the emergence of hardware and software wallet crypto wallets are beginning to mitigate against such risks.
4.Practice The Basics Of Day Trading
Another important Day Trading strategy that many people ignore is the act of practicing Day Trading with dummy platforms. Trading in cryptocurrency is like a game of betting. You will be watching the market and staking your investment with the projection that one coin will appreciate against the other or that one coin will fall or depreciate when compared to the other, so it's a two-way venture.
To perfect the art of forecasting and predicting opportunities, you need to understand the market behaviors and the forces that influence the market trend. This is not what you need to be figuring out with your real, hard-earned money. So, it is cool to learn how the basics of day trading and how the market works while practicing on a dummy platform. In as much as your success on the dummy platform does not automatically translate to success on the real platform, it still provides you with an edge over traders that don't practice. It is the best way to begin your successful day trading venture.
Cryptocurrency trading is a profitable investment option and it can only get better. When you apply the above mentioned best day trading strategies, you will be better positioned to join other investors who are cashing out big time on the market daily.
BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.
BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts, derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.