The Best Strategies on How to Day Trade Cryptocurrency

The cryptocurrency market’s promising returns have drawn in even those who had previously never dreamed of trading digital assets or even knew about strategies such as swing trading and ‘hodling.’

The swinging prices of cryptocurrencies such as Bitcoin and Ripple have made them the perfect investments for day traders. However, simply jumping into day trading without the right insights can be dangerous because you can incur significant losses.

This guide is a comprehensive review to help you dive into day trading and become a pro by getting answers to common questions such as “What are the risks involved in day trading?” and “is day trading cryptocurrency right for me?” Read on to discover more about crypto day trading.

What is Day Trading Cryptocurrency?

Day trading cryptocurrency entails buying digital coins and trading them within 24 hours. The process involves using high amounts of leverage and short-term trading strategies to capitalize on small price movements of the selected digital assets.

Day trading digital coins are used by the market to help with smooth running via arbitrage and supplying liquidity. While some seasoned cryptocurrency traders opt to shy away from day trading, a large proportion of people also make good returns on their investment from day trading virtual currencies. That said, is day cryptocurrencies for you?

If you are looking at the close to $1 trillion crypto niche and are thinking of getting a piece of it, the truth is that there is an opportunity to join and reap big. But it is also crucial to appreciate that you can incur losses. Here are the risks to be aware of when focusing on trading cryptocurrency for profit.

best crypto for day trading

The Risks You Need to Know When Day Trading Cryptocurrencies

While jumping into the enticing cryptocurrency market might seem attractive, it is important to first learn about the involved risks.

Capital Loss

Studies indicate that more than 80% of day traders fail within their first year of trading. Many day traders report considerable losses when they start trading, and few of them advance to the level of making profits. Why does this happen?

The main reason for the high failure rate of cryptocurrency day traders is that traders often lack the necessary background education and experience in trading cryptocurrencies. They also fail to use appropriate risk management strategies.

But this is not unexpected. A new trader should not expect to join the cryptocurrency niche for the first time and rake in millions. It is important to understand the right market trends and craft a winning day trading cryptocurrency strategy for high profitability.


Day trading is enthralling and makes people feel alive. Thoughts of simply hitting a few clicks on a webpage and becoming a million times richer keep people wanting to go for more every moment. Unless you have a natural capability to avoid addiction, your brain could get overwhelmed easily by the desire to simply get more.

The danger of this addiction is that people easily put their guard down regarding the best crypto for day trading or even cast aside the best strategies that deliver results. Then, they quickly end up incurring losses or entering into unnecessary debt.

Furthermore, the addiction can erode your values in society and destroy relationships with family and friends. You need to develop personal discipline and use trading indicators that can help to establish when it is right or wrong to enter and trade in the market.

Significant Stress

At this point, it is important to appreciate that people who engage in day trading take it as a full-time job. You cannot simply open your laptop for a few minutes every day and expect to make thousands of US dollars in no time.

This occupation requires your full attention to be able to understand emerging trends and follow price shifts. If you do not do this, there is a serious risk of incurring losses. The main issue with this intense focus is that it can be very stressful.

False Market Information

Unlike the forex markets, the crypto industry is highly speculative. At any moment, people have views of the direction that price of different currencies will take. Traders can, therefore, easily make their decisions based on the wrong information, resulting in major losses.

When you follow the top online crypto communities such as Reddit and Steemit, all types of conflicting trends will emerge. Here, day traders should read these forums with skepticism and narrow down trends that have been proven to be reliable.

Even with the expert suggestions, you also will need to learn how to interpret the price movements of individual crypto coins. You can do this by checking the price movement on websites such as  and individual coin’s websites.   

The Best Way To Manage Risks

  • Only Trade With The Money That You Have

As the risks keep growing, especially with the large list of scams in the industry, you need to be extra careful to avoid incurring losses. Therefore, you should never trade with funds that you do not have or cannot afford to lose.

When you decide to focus on how to day trade Bitcoin or other coins, the first step should be setting aside funds for other needs such as housing, food, healthcare, insurance, and paying debts. The remaining cash is what you put into day trading cryptocurrencies.

It is also a bad idea to borrow money to invest in day trading. In the case of a significant loss, you can go into debt quickly.

  • Take Time Learning About Cryptocurrency Trading

Trading cryptocurrencies, like trading on a forex exchange, is a skill that you should acquire and perfect over time. Before making the first move into actual trading, consider working with a mentor who has a proven record of success.

A mentor should demonstrate the important factors of crypto trading such as graphical trends that signal when the prices are about to shift. An expert also will demonstrate how to use a comprehensive analysis strategy and understand how to make money trading cryptocurrency in the markets.

  • Start Practicing With Demo Accounts

Learning crypto trading theory will provide insights on what to do, but additional practice will be needed to hone trading skills. You should consider signing up for a demo brokerage account that provides with real-time access to trading platforms for practice purposes.

This is a free method of learning how to craft the right cryptocurrency trading strategy without worrying about making a loss. The good thing about demo accounts is that they allow users to convert to real trading platforms after practicing. This means that you will continue with the platform you have been using to practice trading in order to raise the chances of making profits.

  • Learn To Manage Your Day Trading Risks

One thing you have to appreciate when considering day trading digital coins is that you cannot win all of the time. There are instances when you also will incur losses. Many traders only report successful wins on 60% of their moves.

To keep the losses to a minimum, you need to install the right systems that automatically shield your funds. Here, the focus should be picking the right take loss position and take profit point. Even if the market suddenly swings in the opposite direction, the loss you incur will be small.

crypto day trading

How To Day Trade Cryptocurrency In Ten Steps

  • Start By Digging Deeper To Understand What The Blockchain Is And How It Works

Although the primary focus is on learning how to day trade cryptocurrency, understanding more about Blockchain technology will be equally helpful. This way, you can appreciate the difference amongst the various coins and why their prices also differ.

Although the topic is complex, understanding how the Blockchain works will help you know why investors opt for a specific coin over another. For example, the issues with Bitcoin such as poor scalability and lack of privacy have been pushing people to other coins such as Ripple and Monero.

  • Picking The Right Cryptocurrencies

With more than 1600 cryptocurrencies in the market and the list still growing, selecting the right coin to trade can be an uphill task. The best coins to go for are those listed at the top of the market based on market capitalization because they are less volatile.

The top coins in the market today include Bitcoin, Ethereum, Ripple, and Bitcoin Cash. Note that smaller coins can be profitable in the short term. However, their price can plummet with a considerable margin within a short time.

  • Research Smaller Crypto Coins Before Investing Funds

Although the top coins are relatively safe for traders, the risk increases significantly when dealing with other smaller coins. Here, you need to be extra careful to avoid jumping into coins that are created as pump and dump schemes that rely on hype to drive up prices.

When poor quality coins crash, the effect is that your investment will be lost. To avoid this scenario, you need to extend the lessons on how to make money trading cryptocurrency to include due diligence when selecting the coins to trade in the markets.

Note that selecting a high-quality coin can be a lengthy process. However, the time you spend is well worth it. It is better to take time selecting a good coin as opposed to simply picking what is available and risk losing your investment when the price crashes.

  • Join A Good Cryptocurrency Exchange

Cryptocurrency exchanges are the buying and selling platforms for digital coins. To trade profitably, you will need to look for a reputable exchange that lists the targeted coins.

Take time to check important parameters of the exchange to ensure that it has a low transaction fee, the customer support is responsive, and there is a long list of coins one can trade on the platform.

You should also go for the exchange that is secure for trading your preferred digital coins. The exchanges have become an easy target for hackers with recent attacks happening in January 2018 at Coincheck exchange of Japan. In this case, more than $500 million worth of crypto coins were lost.

  • Learn The Basics Of How To Trade Cryptocurrency

Day trading digital coins requires some skills in interpreting the market trends. As in forex trading, digital coins are traded in pairs. This means that when a trader buys a cryptocurrency, he/she is looking at the value of that coin in relation to another. The target for learning the basics is to be able to leverage the fluctuations for profit.

  • Ensure You Can Use Different Orders When Trading Cryptocurrencies

Notably, human beings tend to get emotional when they see the movement of price towards a positive direction. But this is the moment when the loss can  strike. A stop loss order is designed to help users minimize losses in the event of an unexpected price shift.

The following are the main types of orders that you should learn how to use when trading cryptocurrencies.

  • Limit Order: This type of order means taking a position (specific price) for executing a buy or sell action.
  • Stop Order: This order means taking a specific price position where your coin will be sold if the price moves away from the limit order. The importance of a stop order is to help keep losses as low as possible.  

NOTE: It is strongly recommended that you should never take more than 2% of your trading account on a single trade.

  • Know Different Trading Analytics

The following is a summary of the analysis you need to know:

  • Fundamental Analysis

This strategy uses events that happen outside of the crypto markets to establish the expected movement of a currency. For example, if there is a problem and different agencies indicate that a specific currency can solve the issue, the price of that coin is likely to go up.

  • Technical Analysis

This analysis uses the basic laws of supply and demand to determine the expected direction of the value of a cryptocurrency on a trading platform. The approach uses data such as price and volume over time to predict a coin’s future trend.

  • Sentiment Analysis

This is a good way of predicting the price moment of your selected coin. The analysis targets how people feel about a specific currency.

How the coin is viewed can greatly influence the price of a coin and help traders rake in profits or incur losses. For example, a buyer who purchases Bitcoin because it is marketed as ‘the ultimate future of finance’ has simply invested because of sentiment.

  • Follow The Cryptocurrency News To Know The Direction Of Different Coins

One of the top methods of how to make money from cryptocurrency trading is following market news. Because the cryptocurrency market is still small compared with the forex markets, the prices are influenced by the news. For example, when new positive developments are announced regarding a cryptocurrency, the value of respective coins goes up.

For example, the price of TRON shot up by 90% in January 2018 when one of its founders posted a vague Tweet about a new partnership. However, news associated with issues that affect the industry negatively such as hacker attacks and new regulations pulls the price of cryptocurrencies down.

Traders’ focus should be on getting the latest news as soon as it hits the market to take advantage of the expected coins’ price shifts. Remember to be extra careful of unregulated news sources such as Reddit, Telegram, and Twitter that often release unsubstantiated reports and discuss rumors.

  • Only Invest The Funds You Are Ready To Lose

To succeed in cryptocurrency trading, you should never go beyond your means. When people are told that they can make millions of dollars trading cryptocurrencies, some go out and take loans to come and take the opportunity. This is the wrong thing to do.

While it is true that the funds you invest could flourish, the chances of losing them are also high. When you consider the fact that coins could indeed crash, the wise thing to do is to only invest the money that you can afford to lose.

The best strategy is adding day trading into your budget. This implies that your finances will not be thrown off-balance in the case of a market crash.

  • Make Sure To Have An Exit Strategy

Now that you have learned all of the tricks of cryptocurrency trading and have even started raking in some profit, it is important to have an exit strategy. To create a good exit strategy, simply ask yourself some key questions including “How long will I be trading?” and “How much can I afford to lose?”

The Final Take

Now that you have learned the basics on how to day trade digital coins, go ahead and try it with a real platform. Note that a significant amount of information on cryptocurrency trading is available today. Therefore, do as much research as possible to ensure that the selected coin, trading platform, and strategy will yield profits.

Remember that this is just the beginning. You will need to stay updated on the selected trading pairs to know when the price direction is likely to shift. Finally, we cannot emphasize enough that you should only invest what you are ready to lose.