day trade crypto

Day Trading Cryptocurrency Explained In-Depth with Strategies 2022

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  • Post last modified:February 3, 2022

Day Trading Cryptocurrency

Cryptocurrency is defined as a virtual currency, in the sense that it does not exist in physical form.

But is exchanged exclusively electronically, whose transactions are carried out directly between two subjects in peer-to-peer mode, or directly between two devices, without the need of intermediaries (i.e., banks) to purchase goods and services, as if it were legal tender in all respects.

You keep your crypto money in a digital wallet (computer wallet or electronic wallet).

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Cryptocurrencies got their name from the fact that cryptocurrencies are used to verify transactions.

This means that complex encryption is used when storing and transferring cryptocurrency data between an e-wallet and a public ledger. This encryption is designed to enhance security.

Day trading refers to purchases and sales of stock market values ​​that are made within a day, unlike normal trading.

The history of day trading began in the 1970s with the onset of the computerization of stock market trading.

Private traders in the USA had the opportunity for this type of stock exchange transactions from 1996 onwards.

However, day trading only became popular thanks to the Internet, as traders can track the prices of securities here in real-time.

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Day trading makes it possible to take advantage of short-term price fluctuations in stock market values. Day trading makes it possible to open or close several trading positions in quick succession.

By selling within a day, stock market traders want to avoid price gaps that are difficult to calculate – the so-called gaps – and at the same time also make profits from small price changes.

In extreme cases, traders buy and sell their stock market values ​​within minutes or even seconds – such day trading is also called scalping in stock market jargon.

Day trading with cryptocurrencies works like day trading with any other stock market value.

Due to its very high volatility, the crypto market is particularly well suited for this form of trading.

The exchange rates of cryptocurrencies often show very strong fluctuations within a trading day, which results in very attractive return opportunities for crypto trading.

Day trading cryptocurrencies can be compared to trading on the foreign exchange market (Forex, FX).

Forex traders do not speculate on the price development of a single currency but rather on changes in the exchange rate between currency pairs, for example, between the US dollar and the euro.

Day trading with cryptocurrencies is possible both with reference to conventional means of payment – for example, US dollars or euros – as well as to other cryptocurrencies.

Day Trading Cryptocurrency Strategies

  • Contrarian investing 

This strategy assumes that the price increase will reverse and fall. Contrary buys are made during the falls and short sales during the rise, with the express expectation that the trend will change.

  • Scalping

Scalping is a daily trading strategy that involves opening and closing positions very quickly to make small profits from a large number of transactions.

Open trends tend to follow a trend, and multiple transactions in and out of markets are often based on price movements.

This short-term strategy takes a few seconds (or at most a few minutes) to maintain a position.

In high volatility markets such as cryptocurrencies, adopting a scalping strategy can be again, as you can earn cash immediately when the market moves in your favor, and you can limit your losses when the market moves.

  • Follow the trend

As with scalping, this trading strategy involves opening a position that follows the market trend.

The purpose of the trend is to maximize profits by keeping the position open for as long as possible and following the price trend, rather than opening and closing several positions in quick succession.

Trend trading is a trading strategy that can be used for short, medium, and long-term trading as it is based on the duration of a market trend.

The use of trend monitoring requires knowledge of technical indicators to identify emerging trends and try to predict the impact of macro and microeconomic news and events on markets.

  • Swing Trading

Swing trading is a trend-based fluctuation strategy that aims to take full advantage of volatility and open long and short positions depending on the market’s direction.

While this is a win-win strategy, it is difficult to trade by accurately defining the maximum and minimum price levels as reverse movements in the market always signal a new swing.

As with trend trading, this strategy requires a good understanding of technical indicators and market impact factors.

  • Position Holding

Position holding involves holding a position for a long period (weeks, months, or even years). Because of this, the volume of transactions related to this strategy will be much lower than the volume of other transactions.

Suppose you intend to invest in long-term cryptocurrencies.

In that case, you should carefully weigh the characteristics of the selected market, for example, taking into account the type of technology, the exchange rates of the currency issuance, and the consideration of the main competitors.

  • News Trading

Investors using this strategy will buy when positive news is announced and sell when bad news occurs.

This can become greater volatility, which can lead to greater profits but also greater losses.

  •  Automated Trading

Automated trading uses software that automatically executes market orders.

The software is fully customizable, and historical data can be tested before live commands are entered.

Automated trading systems constantly monitor the markets and open and close sites at the right time, even when you can’t manage your trades independently.

Of course, you need to closely monitor the market situation, as even a small software bug can ruin your trades and cause losses. Find out more about automated trading.

Tips for Crypto Day Trading

  • Invest in Crypto Trading Education 

While this often sounds like a cliché, trading education is key. Without a thorough education on day trading cryptocurrency, there is no way to figure out how to trade cryptocurrency on a day-to-day basis.

The satisfactory news is that resources can be found in abundance today (some free).

Starting with online courses from psychology books to trading to coaching sessions, you can find great materials for learning the basics of cryptocurrency trading at your own pace.

Just make sure you look for reliable sources as some traders may spread false information for speculative purposes.

  • Information on Bitcoin and Altcoin

Before starting the day of cryptocurrency trading, you should also have a thorough understanding of Bitcoin and Altcoins.

With more than 7,000 coins in circulation, cryptocurrency investors should do their research and explain their financial goals.

When choosing a cryptocurrency, consider trading volume, market capitalization, and sentiment. While Bitcoin, Ethereum, Binding, and Ripple are some of the safest currencies to trade, several undervalued cryptocurrencies have great potential.

  • Information on Blockchain technology

Another key step in cryptocurrency day trading is learning more about blockchain technology and its alternatives.

While no one expects you to understand the intricacies of blockchain technology, you should be familiar with its effects on cryptocurrency trading and volatility.

  • Practice how to day trade and learn from your mistakes

Once you have learned about cryptocurrency and blockchain, it is time to start cryptocurrency day trading. If you need more practice, though, consider a demo account.

Even with demos, they can play a bad joke on traders – as they involve no real risk and emotion – demo accounts offer wonderful opportunities for cryptocurrency traders to test their skills.

As previously mentioned, day trading requires a lot of skill and attention, so practice over again. 

  • Find a reliable exchange.

When you are ready to start your Day Trading Cryptocurrency, it is time to choose a reliable broker that permits you to trade any cryptocurrency pair you are interested in.

Consider if your broker is safe and even if their platform offers reliable trading tools.

  • Choose a cryptocurrency pair for daily trading.

Another step in learning how to trade daily is choosing a crypto pair. Like forex, in cryptocurrency trading, we trade pairs; in other words, you trade one cryptocurrency for another.

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For instance, after your morning coffee, you buy a Ripple token worth 0.000017BTC. Hours later, you sell it at 0.000020BTC.

So you made a profit of 0.000003 Bitcoin or $ 0.039. It’s not much, but you can slowly increase your wealth if you make multiple trades like this.

Whether you choose to trade a cryptocurrency or a cryptocurrency pair, ensure you’ve done your research and grasp the factors that affect the cryptocurrency of your choice. 

  • Learn advanced crypto trading analysis

In order to learn to trade daily and understand all the factors that influence cryptocurrencies and price fluctuations, you need to learn different types of analysis.

Basic and technical analysis are the two main methods of analysis used by cryptocurrency traders.

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Image by Csaba Nagy from Pixabay

Fundamental analysis is a complex method that analyzes various markets, global events, interest rates, and more.

On the other hand, technical analysis deals with statistics, data, trends, and volumes, all the factors that determine the rules of supply and demand.

It should be noted here that dynamic analysis can also be applied, which is defined as the ability of the cryptocurrency market to maintain certain trends for a certain period.

Having said that, sentiment analysis is also vital and often used by day traders.

Basically, it addresses how people feel about cryptocurrency. And we all know that cryptocurrencies can be a banking alternative as they are decentralized and transparent. Attractive enough, right?

  • Follow the Cryptocurrency news.

However, trading analysis methods and tools (such as Moving Average Convergence Divergence and Relative Strength Index) are not enough.

To understand the market, you have to follow the crypto news. News, events, regulations heavily influence cryptocurrency trading and potential partnerships, so staying up to date is key.

That said, the Internet is full of cogitative posts, tweets, and fake news, so make sure you have access to reliable information.

  • Create an effective risk management strategy

To learn how to trade daily, you need to learn how to manage risk and accept losses. Exit strategies are critical to success.

You need to set the appropriate stop and limit orders. 

Let’s take an example: Imagine you are a UK cryptocurrency trader interested in a cryptocurrency pair.

If you want to buy a $ 5,000 order but don’t want to risk more than 10% risk, you should set a stop-loss order at $ 4,500.

If things don’t go as planned, your broker will take action for you before your pair’s value drops to $ 4,500.

Experts recommend setting a stop loss near the entry point, which is good advice for less experienced cryptocurrency traders.

  • Explore the mazes of Cryptocurrency trading psychology

To learn how to do cryptocurrencies day trading, you need to understand the importance of trading psychology.

Even when you’re at the point of losing, you need to remain objective. Never ask for a cryptocurrency investment loan; never exchange money that cannot be lost.

As mentioned above, there is no place for greed and over-frequency in daily cryptocurrency trading.

Cryptocurrency day trading can feel like an emotional tsunami, so always stay in control and within your capabilities.

Robinhood Crypto Day Trading

Robinhood is one of the most famous cryptocurrency trading platforms.

With the growing interest in cryptocurrency trading and people trying to take advantage of the daily volatility of cryptocurrencies, day trading is becoming an important strategy. 

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The day trading of the cryptocurrency is quite simple, and, unlike stock trading, you do not need to have up to 25,000 USD to be able to make 5 or more daily transactions in a week.

This way, you can trade cryptocurrencies as many times as you want.

Moreover, you can trade every day of the week because the cryptocurrency market never closes.

If you choose to trade cryptocurrencies on Robinhood, remember that you are not the owner of the currency you have chosen to trade.

You just have to bet on the cryptocurrency price, which is ideal if you want to invest only in cryptocurrencies.

When you trade, the value of your investment can increase in the same way as if you bought it directly.

However, if you want full control over the coins, you need a somewhat complicated process.

To do this, you need to convert the Fiat directly to Robinhood and then take the Fiat directly from the platform.

However, this can include waiting times, fees, and even the risk of a currency fluctuating.

Is Day Trading Crypto Worth It?

Day Trading cryptocurrencies can give you some very lucrative benefits, provided you get it right.

Let’s discuss some of the benefits you can get from cryptocurrencies day trading. You can also use the oil profit benchmark to clear your doubts based on your needs.

Benefits Of Day Trading Cryptocurrency

  • Operation 24 hours

Perhaps the unique feature of crypto trading is that it can be done at any time of the day, as the market runs every minute.

It goes without saying that a market that is always open offers many opportunities.

  • volatility

It is important to understand that volatility is a normal feature of the cryptocurrency market. It is not unusual to see large dips and spikes in a single day.

The Bitcoin market could open at $ 15,000, and a few hours later, you may find that it has dropped to $ 12,000.

An experienced trader knows how typical these fluctuations are, and experienced players will not affect this volatility.

If you think about day trading, the volatility of the cryptocurrency market can benefit you a lot and can allow you to take advantage of huge opportunities for profit and gain.

  • Openness and transparency of data

Cryptocurrency markets don’t typically charge currency exchange fees.

This means that all-important data related to day cryptocurrency trading is accessible to everyone without restrictions.

For example, merchants who want to view order books can do so without logging in.

Additionally, many crypto trading interfaces provide a wide range of built-in tools for technical analysis.

While this is not a factor that could be a business or a change in your decision to start day trading with cryptocurrencies, it is certainly a significant benefit that you may need in the future during the first steps to trading your cryptocurrency.


Day trading is certainly a difficult type of investment to master and can be very fruitful and risky.

It takes a large amount of time, skill, and discipline, and many of those who try eventually fail, but don’t worry.

The techniques and tips described above can help you create a profitable strategy with very low risk.

With enough practice and constant evaluation of your performance, you can significantly improve your chances of beating the odds.