Cryptocurrencies can be traded and have a massive advantage; Crypto markets are accessible 24/7. That means you have more hours each day to trade than to swap stocks. Also, you can take advantage of day trading forex so that there are no overlap times when volatility is highest.
On the other hand, digital currencies come with a package of very high volatility. It can move to hundreds and even thousands of dollars in just an hour, especially when trading cryptocurrencies like bitcoin.
Bitcoin lost nearly 40% of its value in less than 30 minutes when a heavy sell-off hit the markets. The volatility means that brokers usually offer cryptocurrencies on the basis of low leverage and high margin. Additionally, the BTCUSD crypto pair suffers significant rollover fees, so it is usually not a good decision to leave crypto positions on your FX platforms overnight. So day trading cryptocurrencies are the way to go.
In order to be able to trade profitably, some useful tips are given in this article.
1. Choose how you want to trade cryptocurrencies
There are two ways to trade cryptos in day-to-day business. You can buy crypto on an exchange where you can sell it, or you can accept the contracts for difference (CFDS) of the cryptocurrency of your choice with long and short orders on an FX broker’s platform.
Each method has its variations, disadvantages, and advantages. So you need to decide which form of crypto day trading is right for you after considering all of these factors.
2. Stick to the popular cryptocurrencies
Not all cryptocurrencies are generated equally, so they do not have the same functions. You cannot distinguish digital currencies like Dogecoin, Ethereum, Bitcoin Cash, and Ripple, which are on the top list of the best crypto day trading.
The popular cryptocurrencies are your fund makers. You have more volatility; A larger trading volume is more likely to result in the movements that you need to experience in a few hours to enable profitable trading.
It is good to stick to pairings that present the above cryptocurrencies so that you can be sure that you have good freedom of movement and make your crypto trade successful. You can also do your research, access the crypto market and see which cryptocurrencies are also doing well in terms of range of movement.
3. Make sure that your account has sufficient funds
The limit requirements for trading cryptocurrency CFDs are very high; Typically, you’ll have to provide half the cost of setting up a position in your chosen cryptocurrency as margin. Losing 3% of your account does not create a barrier to your account size. But a loss that converts into 20% or 30% of your account is enormous. Your account will have difficulty recovering. If you have an adequately funded account, it will be activated.
4. If you are on a tight budget, trade other less sophisticated cryptocurrencies
Bitcoin is the digital currency that imposes the highest margin of any crypto traded. You can always trade other cryptocurrencies that do not require high margin requirements. Trading in other digital currencies such as Ripple and Litlecoin, for example, is characterized by margin costs that are well below those of Bitcoin.
5. Use correlations to improve your results
Litecoin and Bitcoin Cash have the strongest correlation with the price of Bitcoin. They were both generated using the Bitcoin blockchain and therefore followed the price movements of Bitcoin with a high degree of validity. On the other hand, Litecoin also correlates to a lesser extent with Bitcoin.
Sometimes you need to be aware of what is happening in a correlated asset to be able to imagine what could happen to the others. There are cases when an asset moves ahead of its correlated asset. Do this to your advantage.
6. Be aware of the news
They need to be updated when it comes to trading cryptocurrencies. Finding a credible source for the latest crypto news is a must, especially when you notice some very instantaneous, sharp price moves on any crypto. Usually the news sources for the crypto moving situations are on social media platforms.