In this guide, we’ll show the basics of cryptocurrency day trading and the easiest day trading strategies. You will learn how to use them in the volatile market of cryptocurrencies.
We will explain terms and trade functions so that beginners can start day trading without fear of incurring substantial losses.We will show how to trade cryptocurrency with a step-by-step guide. SimpleFX’s WebTrader is an easy-to-pick-up tool, and perfect for learning the basics of bitcoin day trading strategies.
Why cryptocurrency is perfect for day trading
Cryptocurrencies are traded differently from other centralized assets, Forex and stocks included. Due to lax regulation and decentralized nature, bitcoin trading relies on market trends entirely, while governmental institutions have low impact power.
The cryptocurrency price is also extremely volatile, which makes it a perfect instrument for CFD day trading.
To limit risks associated with day trading strategy, investors need to do detailed analysis on an hourly basis. Through short-term research, traders can detect these small trends and use appropriate orders.
Day trading is thus one of the best strategies when investing in volatile markets, such as cryptocurrencies.
How to trade bitcoin on a CFD platform, such as SimpleFX WebTrader?
The concept of day trading cryptocurrency with CFDs (Contracts for Difference) is simple. Traders form a “contract” with the company by creating instructions without an actual order. CFD platform does it in
their name instead. Through orders, a trader specifies time and prices upon which investment should be carried out.
The major benefit of a CFD marketplace, such as SimpleFX, is the lack of ownership claims on cryptocurrencies during the process. It makes it easier for beginners to capitalize on the price difference in time. At the same time, SimpleFX would carry out all necessary processes for trade to find its way in the market instantly.
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What Makes an Expert in Trading?
How to trade bitcoin like a pro? Skilled traders always have several strategies and tactics under their sleeve. In different situations, various strategies would perform better, depending on market trends.
Before we delve deeper into day trading styles, we need to explain the concept of buying and selling orders. Buying order is where a trader predicts that price value shall rise.
The other is selling order, where a trader predicts that price value shall decline.
Charts help bitcoin day traders determine the trend with indicators set to track down and record situations that can predict the future value of the digital coin.
These are the indicators in crypto day trading for beginners:
- Moving Average
- Bollinger Bands,
- Relative Strength Index (RSI)
- Crypto price
You can find each one of them on SimpleFX WebTrader.
These offer the roadmap of the coin trading, translating the ups and downs into a trend that you can capitalize on.
Three main day trading strategies
As for the strategy styles, there are three types of day trading that investors use:
- Trend Trading is one of the most popular day tactics for cryptos, as it follows the general movement of the market. If the price goes down, the trader would create a sell order to capitalize when the value goes further down. back up.
- Counter-Trend Trading is a lot riskier approach then trend trading. An investor has to predict when and how strong the market will move in the opposite position.
- Range Trading is something in between the first two tactics, with traders “dancing” between two prices. It is used when market fluctuations move both ways in a short period of time.
- Reaction Trading is somewhat a mix of all three, with a difference in the analysis. The three above styles use technical analysis through price/volume chart analysis, while reaction trading does not. It focuses on speed due to how volatile the crypto market is. In a matter of minutes, bitcoins price can decline from $6.200 down to $6.000, only to climb back to $6.300. In that period, there is no time for the complex thought process leaving the traders to use their unique experience.
First, three-day trading strategies would work for beginners in cryptocurrency investment. They are easy to understand and implement in the market. The final, reaction tactic is reserved for experienced investors, who have accumulated both large losses and profits over a year or two. There is no best day trading style, as these follow a different route when trading on market movements.