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Day trading attracts many traders from all sides as this is an opportunity to earn more money in a relatively short period of time. Unlike long-term investments, day trading means placing orders every day and closing positions within 24 hours.
Daily trading can be compared to a full-time job. A trader makes an order within a short period of time and closes them once his goals are achieved. With the development of cryptocurrency trading, this style has become even more popular due to the high volatility of digital resources.
Main features of day trading
When a trader wants to trade intraday, he must understand the main characteristics of this style of trading. Are the following:
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All positions should be open and closed within one day. Most day traders prefer to keep their orders for a couple of hours. Once the signal arrives, it works for a couple of hours before the momentum fades.
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High speed of decision making. Day traders must think and act fast as they do not have much time to place an order. If they have missed the opportunity to enter the market, they will have to wait until the next signal.
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Precise entry points. Day traders must find the best entry points ever. This style of trading means that you do not need to stay on the market all the time. The only thing you need to do is find the best access points, place orders and close positions once the signal has been completed.
Seven tips for daily cryptocurrency trading
There are several intraday secrets and trading strategies that can be useful for every investor. We will cover the most important ones.
Imbalance between supply and demand
Daily cryptocurrency trading means you have to find entry points within a day and profit from it. To find the best entry points, you need to look for the imbalance between bulls and bears because these situations can cause huge price changes.
In the event of an increase in demand, the cryptocurrency increases and the operators have the opportunity to purchase. When the offer exceeds the demand, the scramblers refuse to offer opportunities to short-sellers to make profits.
Setting the price targets
For novice crypto day traders, it is essential to set price targets, which means you always need to know where you are jumping from the market. By calculating your trading premium in advance, you can set your risk level to follow the risk / return ratio established in your trading strategy.
Let's say you see that BTC / USD will go up from $ 6,500 for a couple of hours. Before jumping onto the market, you need to find the nearest resistance point on the hourly chart to calculate the trading potential. For example, the nearest resistance on the hourly chart is $ 6,350. This means that your target level will be there.
Risk / reward ratio 1: 3
Daily cryptocurrency trading is similar to traditional intraday speculation, which means that the best money management strategy is when you risk less and you can earn more. Many beginner traders make the same mistake when they put the risk / return ratio at 1: 1.
This strategy is wrong because you do not know in advance the percentage of your winning and losing trades. By increasing the premium component in your money and risk management strategy, you simply increase the odds of being above zero over the long run even if your strategy is not the best.
Be patient
When you look at trade flows or some trading films, you might see that speculators are always on the run and can do many things in just one second. However, the truth is out there, because a trader must be patient and expect a good opportunity to come before making any decision.
Cryptocurrency traders do not trade every minute of a day because it is impossible. To be sure, there are few trading opportunities within 24 hours since the price could make a couple of serious moves during the day. The rest of the day, the trader will do other things related to his family, official work or even hobbies.
Do not be afraid of trading
One of the most important things the cryptocurrency trader needs is to fight his own fears and avoid situations in which he is paralyzed by his own predictive results. Crypto Day trading requires investor speed, which means you have to act quickly once the trading signal is found. If you wait too much or start thinking too much, you will simply lose the signal and you should find another one, which could arrive the next day.
Do not overheat your funds
Daily cryptocurrency trading is a good opportunity to earn more. However, some traders forget money management and order to risk more than they can afford. This can lead to high profits or huge losses.
Professional traders are not gamblers. They always think about how to protect their money before doing anything on the market. The first rule of a successful trader is not to earn, but to save his funds.
Avoid investing too much in a single trade
Intraday trading is full of opportunities. There are several crypto coins that can attract your attention. However, if you invest too much in one of them, you will lose the opportunity to exchange others. Furthermore, risking too much for an exchange leads to greater losses, as we have already said.
These are the main tips and strategies for intraday trading. However, we would like you to pay attention to some other important things that every successful trader has to follow.
Conduct
We have already mentioned self-discipline in our previous articles that talk about trading psychology and other important business characteristics. However, for intraday cryptocurrency merchants, self-discipline is the key to success.
What does it mean to remain disciplined in intraday trading? First of all, stick to your strategy to avoid overtrading and ordering when there is not a clear signal.
Why do so many traders lose their battle of intraday cryptocurrency? The main reason here is that they simply break their own rules. In general, most unsuccessful operations are the result of a lack of discipline.
Be ready to adapt to any situation
Intraday trading of short-term cryptocurrencies requires adaptability by every trader and investor. There are no two days of equal trading. This can pose big problems for those who simply use their strategies according to their manual "prescription".
It must be said that every strategy has its examples in the past, but when you compare it in real time, the result could be very different. Professionals of professional cryptocurrencies always know where to use their trading strategies and where to avoid using one or the other.
When there is a trend, it is best to apply the trend following the system while during the fluctuations of the range, the operators have to implement special flat strategies.
Using this or that trading system does not mean you will be on the market 24 hours a day, 7 days a week. Traders must do some sort of pre-market analysis, which means they need to understand if current conditions allow them to trade or it is better to do nothing "sitting on your hands".
Be mentally hard
Cryptocurrencies of day trading is not a simple task to do. You will have to face many problems, including losses. Losing trades accompanies every trader on his way to luck. Furthermore, by exchanging cryptos every day, you will have losses almost daily.
What is the main difference between successful traders and those who are not successful? It's not about winning all trades or being bumped over a long period of time. It is about taking more money in profit operations and losing less when the forecasts are wrong.
What does it mean for the trader to be mentally tough? First of all, the investor needs to squeeze every drop from a trend that means staying on the market until the opposite signal arrives. Many beginner traders try to close their positions once the price rises above their breakeven level. However, this approach is totally wrong because the more you take in a single operation, the better the results will be.
It may seem strange, but traders are able to have steady profits even if they lose operations. Let's say you have a losing business and a winning one day. If you stick to the 1: 3 risk / reward ratio, you will end up making money as your losses will be less significant than profits.
Suppose you lost $ 100 in your first trade, but you won $ 300 in the second. The net profit will be $ 200 (without trading fees in a natural way as we do not treat them in this article).
When you trade encrypted on a daily basis, you need to be prepared to lose series and it means that there will be times when you will close several transactions without profits. This is another serious test for your mental skills. Only those who have the ability to resist emotions are able to overcome all problems.
You have your opinion
Intraday cryptocurrency traders have to rely on themselves just because they do not have enough time to consult expert opinion or look for external signals and trading alerts. When a trader is at the beginning of his career, he always needs help from books, articles, videos, etc. However, once you are able to create your own strategy, you must start working independently.
To tell the truth, a trader is a lone wolf who seeks his own prize without any help. The best cryptographic traders have their opinions on the market and are able to predict prices without paying attention to what the experts will say.
The independence from the point of view of others is important not only for the fact that you will have to make quick decisions. When you rely on some people who make predictions, you almost avoid using your strategy. This could cause serious problems once those who have provided you with signals disappear.
You should be independent of not only your opinion or external recommendations, but also the indicators and different trading techniques. What does it mean? Cryptocurrency day traders should never forget that price is the key to any analysis.
Sometimes you can find those investors who rely on their indicators more than they rely on price. This is wrong because only the price is important when exchanging the encrypted, especially when working with hourly charts.
Plan your next steps in advance
The intraday trader must plan his steps in advance as he needs to make decisions very quickly. Of course, day trading is much more difficult than any other strategy because it requires more skill and full control of emotions.
Who sticks to the past, has less chance of winning. Planning the next step in advance means you have to have a strategy that allows you to find entry points when you finish your last operation.
KISS (keep it stupid simple)
This is one of the most popular rules among professional traders. Many beginners think that successful traders use some sort of Holy Grail strategies that are very difficult and are based on different trading tools. However, the truth is that the most profitable strategies are the simplest, especially for crypto intraday traders.
Successful traders use the KISS method as they have many things to do during trading and need to significantly simplify their systems in order to make decisions in the right time and not many minutes after the signal.
Final words
Intraday trading of cryptocurrencies is not as easy as it may seem at first. Many beginner traders try it but lose because they are not prepared for this rhythm of trading.
