What is cryptocurrency day trading
The cryptocurrency sector is still growing and new opportunities are coming up. Crypto enthusiasts are exploring different ways of earning a profit in the sector. One way of making a profit in this highly volatile sector is day trading. Cryptocurrency day trading is very short-term trading with timelines ranging from just a few minutes to a couple of hours. Basically, it means buying a cryptocurrency at a decent price and selling it at 0.05% – 2% profit a few minutes or hours later.
The goal is to make a small but quick profit. Day trading is nothing more than the process of buying or selling an asset. The main idea when day trading, is to look for opportunities to make a quick profit. If you are planning on holding on to a cryptocurrency for longer, this is long-term trading.
Day trading cryptocurrency is speculative and risky sometimes. If you day trade cryptocurrency, it probably happen to you to finish the day with a negative percentage either because of bitcoin going down or because the cryptocurrency didn’t perform as you expected. But on a normal day where bitcoin doesn’t fluctuate too much, you can make between 0 and 10% day trading, depending on how much time you dedicate, the exchange fees and what cryptocurrencies you’ve picked.
Factors to Consider When You Day Trade Cryptocurrency
The market is flooded with numerous cryptocurrencies. When it comes to day trading, not all make the list. Here are factors you need to put into consideration before settling on a cryptocurrency for day trading. But how can you pick the best cryptocurrency to day trade? First, we need to understand what are the most important aspects when you day trade cryptocurrency.
Trading volume is the amount of activity around a digital currency. Trading volume enables you to know the popularity of an asset and how frequently it is changing hands. For day trading, the cryptocurrency must have considerable volume. Generally, a cryptocurrency with good trading volume is an indicator of a healthy investment. Good cryptocurrency volume is determined by factors like the number of trades where the higher the volume the better. Some cryptocurrencies may look good on paper but have no trades. This is a red flag and those are not great for day trading cryptocurrency.
Generally, the cryptocurrency market is highly volatile. Volatility refers to when the price of a cryptocurrency moves up and down quickly. This means that the asset can be either be a success or failure for the trader. For day trading, you need a cryptocurrency that is volatile with upward price movement. You can take advantage of the price spikes to make a profit. In the cryptocurrency world, it is not unusual for the price of a coin to rise or fall by more than 10%-50% within a day. In some cases, even more. A good cryptocurrency for day trading needs to have a bit of volatility in the past days. For example: Tether would be the worse option if you want to day trade cryptocurrency as its price its always $1. Bitcoin on the other hand is increasing and decreasing with more than $100 per day, some days even $1000. This makes bitcoin a good option for day trading.
The Cryptocurrency Exchange
The cryptocurrency you settle for must be on a good and reputable exchange. In most cases, day traders usually store their assets on exchange wallets, which is risky. As a result, security must be high. Look at the number of coins listed on the exchange, transactions fees and transparency of the exchange. Furthermore, research on whether the exchange has had any security breaches in recent times. You also need to check the cryptocurrnecy exchange fees. For example, Binance a great volume and really low fees if you’re a hodler of BNB. You’d pay only 0.075% of your trade whenever you buy or sell cryptocurrencies. But, if you trade with a larger amount of cash – you can go as low as 0.015% per trade. We’ve recently wrote an article about Binance vs Coinbase – which I recommend you to read to understand more about why we’ve picked Binance.
The media has an influence on any business or product and cryptocurrencies are not an exception. Both good and bad news affect the price of cryptocurrencies. Cryptocurrencies are more sensitive to news than anything else. One of the reasons why cryptocurrencies are so sensitive to good or bad news is because unlike fiat, they are not regulated. As a result, any popular sentiment created due to positive or negative news directly affects their value. Since cryptocurrencies are usually mass-managed by people working in all parts of the globe in real-time, popularity and impression play great roles in increasing or decreasing their worth. Whenever you want to pick the best cryptocurrency to day trade or even a good one – its important to pick one without bad news.
Also, its important to make the difference between bad news an FUD news. FUD is when someone sees that Bitcoin hashrate drops and create an article about how miners are leaving mining bitcoin. Bad news is when someone would manage to break the network or to gain access to a wallet with a lot of bitcoins.
Before settling on a day trading cryptocurrency, look at how active the team is. For the success of any cryptocurrency project, we need to have a strong and active team. The team needs to provide regular updates about the cryptos development along the way. Furthermore, an active team should be easily accessible to respond to queries regarding the asset. To do this, its better to check their github or even to get in touch with the team and see what they achieved so far from what they wanted to do.
Cryptocurrency Day Trading – Whcih is the best Cryptocurrency to day trade?
Here are cryptocurrencies perfect for day trading.
Binance Coin (BNB)
Binance Coin is the cryptocurrency by popular exchange platform Binance. Users deploy BNB to pay the fees levied by Binance exchange for using services. These fees include trading fees, exchange fees, and listing fees. Currently, the token is valued at $16.81 with a volume in the last 24H of $227 millions. BNB is good for day trading due to its growing popularity. Based on the Binance exchange popularity and how many people use it, BNB is one of the greatest cryptocurrencies that you can day trade in crypto. First of all, it has a certain utility – the fact that it reduces the fees on Binance and that you need BNB to purchase IEO tokens from Binance. These are its main two things that BNB is used for, so far.
The ADA coin runs on the Cardano blockchain. Just like Ethereum, it has smart contracts capabilities and can run Decentralized Applications. By the time of writing ADA had a market value of $0.038469 with a 24-hour trading volume of $64,692,875.
ADA has the right hype around it considering the future it holds. The cryptocurrency is promising to improve on all Ethereum shortcomings. What makes Cardano different from other cryptocurrencies is the level of technical competency it has, as its creator is an Ethereum co-founder.
Cardano is a top pick for cryptocurrency day trading as the volume is high enough and the volatility is really good. For example: Cardano (ADA) increased last week by almost 10% followed by a 5% decrease afterwards.
Ripple is a gross settlement system (RTGS), currency exchange and remittance network. It deploys a common ledger that is managed by a network of independently validating servers that constantly compare transaction records. XRP is the native cryptocurrency for Ripple. Ripple is based on a shared public database that makes use of a consensus process between those validating servers to ensure trust.
By the time of writing, XRP value stood at $0.243060 with a 24-hour trading volume standing at $1,422,416,374. For day trading XRP, we recommend you an exchange with a high . XRP is a good pick for day trading cryptocurrency as there are fluctuations daily for 1-2% and the cryptocurrency is pretty stable – offering traders one of the best cryptocurrency to day trade. There’s not such a big volatility on XRP, so the profit margin won’t be so high. But the fact that the value is pretty stable is an advantage in case of a dump.
IOTA is a cryptocurrency meant for the Internet of Things. The crypto is used for transactions between devices linked in the Internet of Things. It is an open-source cryptocurrency which focuses on secure payments and transactions for the devices connected on IoT. By the time of writing this article, IOTA value stood at $0.228 while the 24H volume was $8,620,070.
Apart from being listed on top exchanges, IOTA is a good candidate for day trading because the future looks bright. Currently, the world is adopting Internet-enabled everyday products and the Internet of Things is thriving. Analysts forecast that B2B spending on IoT technologies and solutions will reach $267 billion by 2020. This capability provides IOTA with the opportunity to offer profits on a short term as well as on a long term.
Even though the volume is not so high for IOTA, its still a good pick for day trading cryptocurrency.
At the moment, Ethereum is valued at $162.75 with a volume of $7,979,497,230 over the last 24 hours. Ethereum is the second largest cryptocurrency and it has great potential for growing significantly. Furthermore, being the home of decentralization application, the use of Ethereum is widespread. Even though its price slowly decreased over time, the daily fluctuations are present there and a smart day trader could surely use them to profit by trading Ethereum.
Investing in cryptocurrencies is a risky affair. For day trading, the risk is much higher. However, before getting into day trading, ensure you have conducted your research and know your limits. You need to understand that day trading can return losses and you should be prepared for it. Additionally, monitor cryptocurrencies for any new developments because any news might affect your preferred cryptocurrency.
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