Crypto day trading has become a popular form of trading seeing that traders are able to take advantage of daily price fluctuations to make a profit. One benefit of trading crypto is that you can do it whenever you like regardless of time or day. These trading strategies consist of the same structures that have been used across financial markets. Seeing that close to 40% of day traders only trade for one month due to failure, individuals interested in day trading would need to know which strategies are best to use when investing.

1. Scalping

Scalping is a strategy used where traders aim to make profits off of small price moves across small time periods. Examples of these are gaps in the bid-ask spread of the market, or gaps in liquidity. To profit off of the price fluctuations, these traders trade by using leverage, such as margin or futures contracts, in order to increase their profits. This strategy works both ways, where it may work against traders by increasing their losses. To avoid this, these traders may use volume heatmaps, order book analysis, or technical indicators.

Traders which use the scalping strategy should use the services of DayTradingTrainer.com. This website offers a service which provides trading signals for the top 50 cryptocurrencies. A private algorithm and indicator produces the trading signals, which are highly accurate and are continuously released. These signals are perfect for scalp traders as they are able to be released every five minutes. According to Cody Rose, the founder of DayTradingTrainer.com, the website aims to “educate the public and provide professional guidance”.

2. Technical Analysis

This strategy uses mathematical indicators and chart patterns when predicting the price fluctuations. Technical indicators are generated by computer programs, but some are generated by people analyzing the latest charts. These indicators assist traders in avoiding day trading at price points which are risky. Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. Moving average convergence divergence (MACD) is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. MACD triggers technical signals when it crosses above (to buy) or below (to sell) its signal line.

3. News and Sentiment Analysis

This strategy sees traders looking at headlines as well as market sentiment, and is often used for Bitcoin day-trading. This is done because big news items are able to affect crypto markets at a fast pace. An example of this is when Turkey banned Bitcoin and other cryptocurrencies as payment options in April 2021. This caused Bitcoin to decrease by 10% due to a global crypto market selloff.

4. Range Trading

This strategy assumes that prices move within a specific range. Traders using this strategy observe candlestick charts, as well as support and resistance levels. This may result in buying when prices reach support levels, and selling when prices reach a resistance level. Traders should keep in mind that a limitation of this strategy is that assets will break out of the range at some point. A vital part of this strategy is pivot points. If traders are able to calculate the pivot points, they would have a more informed perception of what price levels will experience.

5. Bot Trading

This strategy, also known as high-frequency trading (HFT), sees traders use algorithms as well as trading bots which are programmed to complete large numbers of trades at a fast pace. This strategy is basically automated scalping. Traders should note that this strategy will require the trader to have richer knowledge in trading strategies and programming, but may prove to be extremely lucrative if done correctly. It is often assumed that once programmed, the trading bots do all the work, but this is not true. These traders have to be prepared to do constant monitoring, testing, and updating of the algorithms they use to make sure the trading bots operate optimally in the specific market conditions. Traders need to be wary of pre-made trading bots which are sold. It is not common for dealers to sell trading bots that are highly profitable, therefore the ones for sale might not be a smart investment.

The bottom line

Day traders buy and sell cryptocurrency during trading days in order to make a profit. Although it can be extremely profitable, day trading can also create large losses. The range of strategies mentioned are all equipped to create profits for traders, if used correctly. To find a strategy, or strategies, day traders need to explore and research all options to discover which strategies suit their goals.