Would you like to learn the cryptocurrency of day trading and earn $500 per day? We often hear about all the money you can make with day trading stocks. But what about daily cryptocurrency trading? In today’s lesson, you will learn how to do daily cryptocurrency trading using our favorite crypto analysis tools.
Our Team at Trading Strategy Guides is fortunate to have over 50 years of combined day trading experience.
We will share with you what it takes for daily trading to live and hopefully by the end of this trading guide, you will know if you have what it takes to succeed in this business.
First, when day trading, it is essential to have a structured approach and rules-based strategy. Like swing trading or positional trading, you won’t trade every day and you won’t make money every day. So, you need a daily trading cryptocurrency strategy to protect your balance.
The high-volatility nature of Bitcoin and other cryptocurrencies has made the cryptocurrency market like a roller coaster. This is the perfect environment for day trading because during the day you will have enough swings up and down to make a decent profit.
Moving forward, we’ll teach you what you need to learn how to trade cryptocurrency, and share some ready-to-use rules-based day trading strategies.
Table of Contents:
How to Trade Cryptocurrency Daily
The unique features of the cryptocurrency market require a solid understanding of how it works. Otherwise, your experience can be like skydiving without a parachute.
The good news is that we will provide you with everything you need to survive daily cryptocurrency trading.
Day trading on the cryptocurrency market can be a very profitable activity due to the high volatility. Since the cryptocurrency market is a relatively new asset class, it has led to significant price swings.
Before trading Bitcoin or any other altcoin daily, it is prudent to wait until we have a high volatility reading. The good news is that even when we have a low volatility reading compared to other asset classes, this volatility is still high enough that it can generate a modest profit on your trades.
Daily cryptocurrency trading also requires the right timing and good liquidity to make accurate entries.
Many of the cryptocurrencies and crypto exchanges are very illiquid and don’t have the liquidity to offer the instant execution you might find when trading Forex currencies
Before you day trade Bitcoin or any other alt coin, it is also important to check how liquid the cryptocurrency you want to trade is. You can do this by simply checking the 24-hour volume of cryptocurrency trading.
CoinMarketCap is a good free resource to read and measure the market volume of a particular coin.
Note* Always remember that not having enough liquidity could lead to a substantial slippage and consequent greater losses.
As stated earlier, daily cryptocurrency trading does not require trading every single day. We like day trading cryptocurrencies only when all conditions align in our favor. In this case, avoid trading on weekends and limit trading only on days with the highest volume.
Put on your seat belt because later, we will reveal how professional traders are trading cryptocurrencies.
Crypto Day Trading Strategy
The idea behind crypto day trading is to look for trading opportunities that give you the potential to make a quick profit. If day trading suits your personality, let’s dive in and go through a step-by-step guide on how to trade cryptocurrency.
Now, before going any further, we always recommend taking a piece of paper and a pen and writing down the rules of this scalping strategy.
In this article, we will look at the “buy” side.
Step #1: Collect coins with high volatility and high liquidity
As discussed earlier, the number one choice you need to make is to choose coins that have high volatility and high liquidity. If you’re not day trading on Bitcoin, which is the most liquid coin out there, and you like altcoins, try choosing those coins that have good liquidity and volatility.
There are more than 1600 coins on the market and growing. By following only the best cryptocurrencies, you will reduce your selection area.
Day trading smaller cryptocurrencies can also be a very profitable business, but there are higher risks. Remember, cryptocurrency prices can plummet as fast as they have risen.
Moving forward, you will learn how you can make money with cryptocurrency trading.
Step #2: Apply the Money Flow Index Indicator on the 5-Minute Chart
This specific day trading strategy uses a simple technical indicator, the Money Flow Index. We use this indicator to track smart money activity and to assess when institutions buy and sell cryptocurrencies.
The preferred settings for the MFI indicator are 3 periods.
We will also change the default buy and sell levels from 80 to 100 and from 20 to 0 respectively.
How to use the IMF indicator will be outlined during the next step.
Step #3: Wait for the Money Flow Index to Reach Level 100
An MFI reading of 100 shows the presence of great sharks entering the markets. When buying, smart money can not hide their footprints. They inevitably leave traces of their activity in the market, and we can read that activity through the MFI indicator.
Technical indicators are not always correct, so to fine-tune our day trading strategy, we have added a few other conditions. That is to say, during the current day, we must skip the first two MFI readings of 100 and study the reaction of the crypto price.
The price must hold up during the first and second readings of the 100 MFIs.
If the price falls after the first two readings of MFI 100, then this suggests that we will most likely have a day on the downside.
Let’s now determine the appropriate place to go to buy Bitcoins and what are the technical conditions that need to be met.
Step #4: Buy if MFI = 100 and if the next candle is bullish
Now we can wait for the third MFI reading above 100. It doesn’t have to be the third reading MFI = 100, you can take every other MFI = 100 readings. If your time does not allow you to capture the third reading 100 on the MFI indicator, you can simply choose the next one as long as all other technical conditions are met.
Next, we also need the candlestick when we got the MFI=100 reading to be a bullish candle. The closure of this candle must be near the upper end, giving us a candle with very small wicks.
This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits.
Step #5: Hide your protective Stop Loss below the day’s low. You take profit during the first 60 minutes after opening the trade.
The obvious place to hide your protective stop loss is below the day’s low. A break below it will signal a change in market sentiment, and it is best to exit the trade. This can also signal a day of reversal.
We are more flexible when it comes to our exit strategy. However, the only rule you need to adhere to is to take profits during the first 60 minutes or the first hour after your trade has been triggered. Keeping the trade longer than an hour will result in a lower success rate. At least that’s what our backtest results showed us.
Conclusion
If you have taken the time to read the entire one-day trading cryptocurrency guide, then you should be able to buy and sell Bitcoin and alt and make some daily profits. If you are interested in learning how to trade cryptocurrency daily, make sure you equip yourself with enough information before diving into the market.
Daily cryptocurrency trading can be a great way to grow your crypto portfolio and is a very profitable alternative to the holding mentality that is crippling the crypto community.
Doing a day of cryptocurrency trading can be much easier due to the high volatility nature of the cryptocurrency market. High volatility fits very well with day trading, so you have the right environment to succeed. You may also be interested in reading our guide on the best cryptocurrency investments for 2019.
