Day Trading Strategy

Introduction

There are different trading strategies out there, i.e day trading, swing trading and position trading etc. The type of trading strategies we used depends on the individual's understanding and knowledge. In the crypto market, day trading is the most used trading strategy commonly. Though other trading strategies are also very effective, but Day Traders are more active in the cryptocurrency markets. Though the Day Trading strategy is not only used in cryptocurrency markets, it is used in forex market, stock markets and also in the commodity markets.

As I have said earlier, the type of trading strategies you used depends on your knowledge and target. However, in this article, I want to emphasize more on Day Trading. I want us to take a look at if Day Trading is a good idea in the cryptocurrency markets and if the Day Trading strategy gives more profits. At the end of this article, you will be able to know how Day Traders make their money and if you too could join the Day Traders.

Day Trading!

Day Trading is the strategy of buying and selling cryptocurrency within the same day. Day Trading is like opening positions and closes it within that same day. Day Traders do not take position and hold it overnight. Day Traders are known as active traders because they get involved in entering and exiting a market position on the same trading day. The Day Trading strategy is designed for only the professional and pro traders. If you are still a novice cryptocurrency trader, Day Trading strategy is not made for you.

The Day Traders main target is to use the Day Trading strategy to make profits out of the price changes in the cryptocurrency markets. Though one fact is that Day Traders don't make huge profits in spot trading but since margin and perpetual trading came into existence, they do make huge profits by taking a position with higher leverages. The cure function of Day Traders is to open a trade and close it within that day without leaving it overnight. Day Trading strategy is all about capitalizing on the price movement.

How Do Day Traders Make Money

Making money by using Day Trading strategy depends on your vast knowledge and experience about the cryptocurrency markets. I have said once that Day Trading strategy is not made for the novice. A successful Day Trader uses technical analysis to analyze and build ideas. The Day Traders uses technical indicators, price actions, volume and charts patterns to identify open and close trading positions. It is very important to know that Day Trading is very risky, but with the application of risk management, it will be difficult to lose your investment.

There are two key ways of analysing a cryptocurrency market i.e technical analysis and fundamental analysis. The technical analysis is most effective for Day Traders while the fundamental analysis might not play well for Day Trading strategy because it took a long time for fundamental events to influence the price of a cryptocurrency.

Day Traders do trade a cryptocurrency market with high volume. They usually focus and capitalize on perforate in trading activity. Most Day Traders take profits out of the crypto market volatility. They never get concern with the future potential of the market, rather they focus on the volume and liquidity of the market. Have it at the back of your mind that Day Traders only trade on a market with good and high liquidity. With their aim of opening and closing their market on the same day, it won't be viable for them to trade on the market with lower liquidity. In the current cryptocurrency market, Day Traders do focus on the BTC/USDT market because its good liquidity, and this is the reason why BTC/USDT volumes in most Crypto Exchange are higher than other market pairs.

Day Trading Strategies

Scalping

Scalping is one of the best strategies used by Day Traders. Scalping is optimizing on the various price gaps caused by buy-sell spreads and orders. Scalping involves utilizing the opportunity of price moves that occurs on short time frames. At times, Scalping occured when there is market inefficiency or gaps in liquidity. Day Traders use Scalping strategy to buy at the bid price and sell at ask price and take the price difference between the two as profits. Scalpers are Day Traders and they only hold a position for a shorter period. Scalpers do make little profit since they are not holding it for long, but they do now trade perpetual contracts and margin. Scalpers will often trade on margin or trade futures contracts to increase their profits with leverage. So any Scalper Traders that want to make huge gains should adopt and start trading perpetual contract or margin trading. Using higher leverage is also risky because the market might go against you. So important you do your proper risk management.

Moreover, Scalping strategy is also made for experience and skillful traders. A Scalper should know how to use many technical indicators, volume heatmaps and spread order in analyzing the market. If you are not good with this knowledge, then Scalping strategy is not made for you or else, you will blow up your account portfolio.

Range Trading

This is another strategy used by Day Traders to identify an entry and exit position. Range trading strategy is a method of identifying an overbought and oversold positions i.e support and resistance levels. They do focus mainly on the candlestick charts to analyze the market. What Day Traders do with Range Trading strategy is to buy at the support level (oversold area) and sell at the resistance level (overbought area). The Range Traders mainly focus on the market that swing up and down without a long-term trend. Outermost, Range Trading strategy mainly sight on the price ranges within the market structure to create trading ideas. The rules of Range Traders is to buy the support level and sell the resistance level. In summary to this, Range Trading strategy requires a good understanding of momentum indicators, support & resistance levels and candlestick charts.

High-frequency Trading

High-frequency Trading is another strategy used by Day Traders, it is popularly known as HFT. High-frequency Trading is a method of trading that uses complex computer programs to transact a large number of orders in fragment of a second. High-frequency Traders uses trading bots to enter and exit many positions within a short period of time. High-frequency trading is mostly used by quantitative traders. They used the complex algorithms to analyze different markets and use the same complex computer program to execute the entering and existing order. The algorithm can be used to execute multiple market orders within a milliseconds.
This might sound cool, many think the bot do all the jobs but don't get twisted. High-frequency trading is more difficult than other Day Trading strategies. It requires you to be monitoring it at every moment so far the position is still open. It also requires backtesting and tweaking the algorithms in order for it to match with any changing market conditions.

There a lot of disadvantages of High-frequency Trading strategy. Some of it is that "profitable trading tools" are not easy to find, it is very scarce. Don't be deceived, most of the trading bot you see out there are not to be trusted. If the builder claimed that the trading bot is profitable, why won't he use it by himself to make profits rather than selling it out. So be careful on to trust most trading bot in the crypto industry.

How Do You Started With Day Trading

If you want to join the group of cryptocurrency Day Traders, you should start by going over any book that explains everything about trading. Learn the basic aspect first, then move to acquire the knowledge on how to do technical analysis using technical indicators and other strategies. So once you get mastered and acquired all the necessary knowledge and experience, you can then dive into Day Trading.

Which Exchange is Best For Day Trading?

From research and the experience I gained so far, [CoinEx](www.coinex.com]
Exchange is the best trading platform for Day Trading cryptocurrency. [CoinEx](www.coinex.com]
offers spot trading (more than 400+ market pairs), they also offer margin trading and perpetual futures. [CoinEx](www.coinex.com]
also has the feature for you to buy cryptocurrencies with fiat i.e USD, GBP, EUR, ILS, KRW, CHF, DKK, ZAR, RUB, CAD and many other fiat.

Is Day Trading Good or Not?

Day trading strategies are good and profitable, but there are some measures which you must consider;

• Day Trading is very stressful and requires full attention since the strategy is all about speedy decision-making and swift execution.

• Day trading requires a total understanding of the market and how to do the technical analysis.

• Trading cryptocurrency in general is risky, so be ready to bear the pain of you losing your trade. Even the best expert traders do lose some trade. Applying the risk management is the best option for you as a Day Trader.

In Conclusion

Day trading is an often used trading strategy for the cryptocurrency traders. This strategy is used to make profits from market volatility. Day Traders opens a market and closes it within the same day. Day traders utilize chart patterns, technical analysis and indicators to identify an entry and exit market position. Day Traders do use scalping, range trading, and high-frequency trading strategies.

Written by Raphman
!CoinEx Ambassador