Crypto Day Trading: What It Takes to be Successful
Not for the weak hearted
May 8, 2021
Ever thought about day trading in the cryptocurrency market? I mean, who hasn't? the idea of working your own hours, being your own boss and getting filthy rich in the ever-booming cryptocurrency market is very attractive...
But... do you have what it takes to be a successful day trader in the cryptocurrency market?
Let's take a look...
What Is Crypto Day Trading?
We'll dive into the key pros and cons of intraday trading to help you decide whether intraday trading is right for you.
This speculative trading style involves opening single or multiple trades one day and leaving those trades at the end of the current trading day.
To put it simply, daily trading is buying and selling stocks/cryptocurrency on the same day based on price and market fluctuations.
A day trader will typically hold a position for a few seconds to a few hours.
Benefits of Day Trading Cryptocurrency
Given the right circumstances, day trading can be an incredible career option with many benefits. Let's look at some of them. Day trading is not for everyone.
Successful day traders need to be motivated, disciplined, prudent and financially independent.
If you are pursuing a career in intraday trading, check your own personality profile against this list of key traits and personality traits.
The crypto markets are extremely volatile. This is great for a day trader as it provides more trading opportunities and a better profit margin.
Be Your Own Boss
Most day traders work from home for starters and don't have tough bosses telling them what to do at all times. Better still, successful traders can make enough money to lead a comfortable life. You stay focused during the negotiation rounds and take part in intensive preparatory and research sessions. After deciding on a profitable strategy, stick with it until it stops working.
Markets are Open 24/7
One of the unique aspects of cryptocurrency is that the markets are open 24/7. This is great if you want to trade for an hour or two before or after work. It really gives you the freedom to trade whenever you want.
Earn a Good Living
Day trading allows you to make a comfortable living. There aren't many things that can match the emotional high that comes with a sweet benefit that comes just through a person's exertion. As a day trader, there is an opportunity to make a very good living, provided you have a well thought out strategy.
Multiple Different Strategies
A Variety of Trading Strategies Daily traders have different trading strategies that they can use to trade in all of the major markets. Some of the most popular daily trading strategies include trend tracking, breakout trading, and countertrend trading.
Negatives of Day Trading Cryptocurrency
There is never a guarantee of profit, and the market can be unpredictable at the best of times.
Here are a few drawbacks involved with day trading cryptocurrency:
While high volatility is good, you still need to predict price movements to make any profit. The cryptocurrency market is notoriously unpredictable, and even the most skilled traders can have trouble predicting the markets at times.
It Requires Capital
Unlike other jobs, you're going to need some initial capital to get started. The rule of thumb is to generally risk 1-3% of your capital on a single trade. So, if you're only looking to trade part-time, you can start with as little as $100.
However, if you want to earn a full time living off day trading cryptocurrency, you're going to need at least $50,000 initial capital to profit enough to pay your living expenses.
Most traders will start as part-time traders and grow their capital gradually. Once you're confident in your strategies and skill, you can switch to a full-time day trader.
Subject to Market Trends
In the financial markets, success is usually closely linked to the current market environment. When the market is when there are no major moves up or down, day traders often lose their money by shaking their accounts and holding on to losers for too long.
What It Takes to be a Successful Crypto Day Trader
Like anything worth doing, becoming successful at day trading in crypto is not easy. Let's take a look at what it takes to be a successful day trader...
This goes without saying, discipline is by far the most important thing you need to have as a trader. You need to be able to control your emotions at all times while trading. It's not uncommon for a trader to get over-confident from a few winning trades in a row and start to think of themselves as a trading genius... 5 hours later and their trading account is blown up, and they're sitting with face in hands wondering where it all went wrong.
Always, always, always, trade according to your strategy and a level head.
Knowing Your Chart Patterns
Knowing and recognising a chart pattern accurately can be the difference between a successful and unsuccessful trade. The more patterns you can read, and the faster you can read them, will gradually increase your ability to make quick and accurate trading predictions. Don't try day trading unless you can read the chart and understand all its conveying information. You can start by studying these 10 candlestick patterns.
Only Trading a Few Markets
You should pick 2-5 markets and only trade these markets. Why? Each market behaves in different ways, like its own unique personalities. For example, Chainlink, Uniswap and Aave follow Ethereum's price movements and swings with relative accuracy. Why? They all run off the Ethereum blockchain.
You need to research your chosen markets thoroughly, know their tendencies. Upcoming events like press releases, court rulings and project announcements will all cause a price movement. You need to know when anything substantial is occurring in your chosen market.
Setting a Stop-loss
In the volatile cryptocurrency market, it's essential to set a stop-loss for every single trade. If somebody decides to dump a huge amount of their cryptocurrency and you don't notice immediately, you'll either be forced to cut your losses and sell at a lower price, or you can hold the position until the price rises back up, this could take weeks and the last thing you want as a day trader is having capital tied up in a position for more than a day or two.
Always calculate your profit margin, and set your stop-loss just below it.
Note: Take into account the normal price swings of your market. The last thing you don't want is to get stopped out of a winning trade just because you didn't account for the natural swing of the market.
Practice Practice Practice
Lastly, you're going to need to practice. People aren't born professional traders. Trading is a skill developed over thousands of hours of practice and countless mistakes. The only way to get good at trading is by doing it, ALOT.
Why Most Day Traders Fail
You've probably heard countless stories and opinions of how day trading does not work.
I'm here to tell you that it is 100% possible to become very successful at day trading.
The reason why so many fail is that getting good at day trading is going to take time, dedication, and a lot of hard work. Many people will see day trading as something they can master within 3 months and start making millions.
Realistically, day trading is a skill. You need to refine your skill over a long period of time. You wouldn't expect a mechanic or carpenter to master his/her trade in 3 months, so why would you expect to master day trading in the same amount of time?
Binance has the very best volume out of all cryptocurrency exchanges, additionally, they also offer extremely low trading fees at 0.05%-0.1%. The high volume and liquidity at Binance means you'll be able to be in and out of trades within seconds which is crucial as a crypto trade
Daily trading can be worthwhile. As mentioned above, some people have become extremely rich in a short period of time. However, this type of trading can also go wrong and is usually stressful. It's also risky. The kind of risk that you should only commit to on the money you want to lose.
So if you want to start intraday trading, you will likely need to do a little planning and research. Find a mentor and develop a solid business strategy that makes sense to you.
We hope you enjoyed this article and we hope it helps you in your trading journey!