Day Trading Cryptocurrency 101 – Ultimate Beginner’s Guide

Want to learn how to day trade cryptocurrency and make a profit? Well that’s not something we can guarantee, but we can give you all of the honest facts to set you up for the best shot at success.

Truth: The price of Bitcoin is far higher than it was in the past.

You’re probably not buying into the hype right now. How can you make such killer returns when holders from two years ago have seen 20-30x gains?

The value of Bitcoin could grow to $50,000 or more within a year. However, that’s not a safe bet and new investors shouldn’t make long-term plays.

This guide is completely beginner-friendly.

We know that thousands of “strategies” exist in any market. The only one-size-fits-all approach is a safe one. Worry about the more advanced trading methods later when you get comfortable.

Is Day Trading Bitcoin & Altcoins Right for You?

Trading cryptocurrency on GDAX with iPad

Many types of people get involved in day trading Bitcoin and other cryptocurrencies. The most common faces in these markets are Forex traders, online poker players and stock investors. Wall Street is also embracing the industry now too.

The market is built up by hedge funds, ICO projects etc., and there is a certain sense of stability here. Crypto trading is more legitimized than ever before. More importantly, there’s enough liquidity to safely and profitably practice traditional day trading techniques in these markets.

Beware: The Dangers of Crypto Day Trading

We’re not going to lie — you can lose your shirt by trading cryptocurrency. The risks are huge; you need to protect yourself from exchange hacks, frauds, transaction errors and much more.

Cryptocurrency investment. Don't put in more money than you can afford to lose

Even the creator of Ethereum (Vitalik Buterin) will tell you the same:

That message might scare some “dumb money” folks away. It’s key for you smart, knowledge-savvy investors to read between the lines.

Cryptocurrencies are hyper-volatile assets. This is true.

One day a coin might go up 10% or it could double. Another day the price might go down 10% or even cut in half. These movements don’t happen every single day, but what does happens daily is price discovery.

You see the same thing take place in Wall Street’s markets.

The difference is that crypto’s live trading action puts it in front of your face.

There’s actually a chance for anyone to make money here. So, we’re going to push some crucial points — and you’re going to learn how to make money with cryptocurrency day trading.

The Basics of Day Trading Cryptocurrency

How to day trade cryptocurrency

We’re going to list five crucial things you should know before you invest a single penny into day trading crypto.

What does going “long” and “short” mean?

  • Long refers to buying in anticipation of a price increase.
  • Short refers to selling in anticipation of a price decrease.

Exchanges that let you wager on both directions make it more possible to profit from day trading cryptocurrency. These markets move up and down non-stop.

You don’t want a “perma-bull” mentality and some exchanges will only let you wager on a coin’s upside, not their downside.

What does leverage trading mean?

How to leverage cryptocurrency investment

People that leverage trade are borrowing funds to increase their investment exposure. The amount of leverage will vary depending on the platform. Some won’t allow you to run more than 1x while others offer 20x or higher.

5x leverage example

  • $1,000 in margin gives you $5,000 to trade with…
  • You double up from a 20% price move in your favor.

10x leverage example

  • $1,000 in margin gives you $10,000 to trade with…
  • You double up from a 10% price move in your favor.

20x leverage example

  • $1,000 in margin gives you $20,000 to trade with…
  • You double up from a 5% price move in your favor.
  • Maximum you can trade with: $5,000

What happens when the price moves against you? 

price moves against cryptocurrency trader

In those cases, the price shifting 20% in the wrong direction from your purchase price will bust your margin at 5x leverage. A 10% move against you busts you at 10x leverage. A 5% move against you leaves you broke at 20x leverage.

However, you can increase the amount of margin in your account. The price might be close to liquidating your position. Increasing the margin can protect you from losing your investment. Also, you could still end up highly profitable if the trade swings back in your favor.

What is a spread?

CFD-based trading platforms charge a spread for their service. This fee is a premium surcharge on the cost of buying and selling cryptocurrency. The spread rate typically ranges from around 0.5% to 2% (some places as high as 5%) depending on the platform.

Example

1% spread @ $10,000 market price

  • Rate if you buy 1 bitcoin: $11,050
  • Rate if you sell 1 bitcoin: $9,950

Be careful when choosing where to trade CFDs. The spread gets you on both sides, which means you lose value by paying a premium regardless of if you’re shorting, longing or exiting a position.

CFD Trading or Binance … what’s better?

Where to trade cryptocurrency

Do you want to be able to withdraw your crypto coins? If so, trading on binance will serve as a quality option. This exchange has literally more than 250 coins (including many penny cryptos) that are actively trading at any moment. You can purchase what you want and withdraw it into your own wallet, transact on the respective blockchain network and etc.

However, some exchanges (like Binance) do not offer leverage trading. This means that — when trading at this exchange — you can only benefit by holding a coin that increases in value.

This tactic only works well if you buy penny cryptos that have exponential growth potential. Investing in these coins requires a willingness to hold for many months.

Another problem with Binance is that you need to hold Bitcoin or Ethereum to trade any of their cryptocurrency pairs. Calculating the dollar value of all of these coins can be very difficult. We dive in deeper into Binance later in this article. As a crypto to crypto exchange, Binance works a little differently from CFD trading brokers.

🇬🇧 CFD trading does have a massive benefit for budding traders based in countries such as the UK – profits are entirely tax free. The same cannot be said for options such as Binance.

Binance does offer USDT markets.  

Tether cryptocurrency warning graphic

However, this “US dollar-backed token” has received extensive criticism as of late. USDT, controlled by a company known as “Tether”, has yet to release a proper audit. Many in the cryptosphere debate whether they’re running a fractional reserve.

If there is a bad ending for Tether — it will make it very difficult for you to get your money out. Some of these exchanges might even go belly up and result in MtGox-level losses. CFD platforms don’t carry these same risks as they trade through actual currency. Or alternatively, you can get around this problem on Binance by sticking to Bitcoin or Ethereum trading pairs.

Long story short, CFD trading is the easiest option if you’re okay with the selection of altcoins that you can trade. The only issue is that you need to find a platform that offers reasonable fees.

What is technical analysis?

Technical analysis (also known as “TA”) is the method of predicting market movements based on patterns. These patterns are mostly the same in all different markets — from Forex to commodities, equities and securities.

Here’s a glimpse of how technical analysis works…

Bitcoin leaving a short-term uptrend:

What is cryptocurrency technical analysis

Source: TradingView.com

In this chart, we see two weeks of Bitcoin price action where the market follows an obvious uptrend. We know this is the case because the highs keep getting higher and the lows keep getting lower.

The upward channel breaks and it creates a momentous move down. However, the market stayed above the support trend line up until that point. Day traders took notice of this clear trend and what did they do?

Buyers stepped up to the plate every time the market revisited its rising support level. It was respected for a long while before the upward momentum died off. During this timeframe, Bitcoin day traders had the chance to “scalp” for small profits on a daily basis.

After the trend broke, the previous support level was tested.

The bulls couldn’t push the price back above it which resulted in a bigger drop. So, plenty opportunities to go long appeared in the weeks leading up… Followed by the perfect chance to go short when the support line turned into a point of resistance.

This is just a “local” top in a short-term window. Similar action would’ve played out at BItcoin’s $19,000+ ATH level. You should be exiting your position when you can realize a healthy profit. However, it might be worth holding a little longer if you are lucky enough to call a long-term top.

Advice for Beginners: Follow the Trend

Cryptocurrency trading beginners bear or bull market

If things are heading up, look for cheap entries on dips and sell after the price pops a little bit. Wait for the next higher low to form and buy in again to sell at the following peak. Or, go short if the price goes to a lower low and only recovers to reach a lower high.

Don’t get greedy and expect the price to skyrocket every time you go long. Your goal is to to make many small trades that are profitable. You don’t need to pick that one jackpot moment that comes up each week.

What 2% profit per day looks like ($5,000 invested) 

  • 1st Day: $5,100
  • 2nd Day: $5,202
  • 3rd Day: $5,306.04
  • 4th Day: $5,412.16
  • 5th Day: $5,520.40
  • 6th Day: $5,630.81
  • 7th Day: $5,743.43

Not bad… nearly 15 % gains after one week of trading for a profit of $743.43 on a $5,000 investment. This level of profit might not match up to what you’ve seen people make from buying Bitcoin years ago and holding it. That’s okay, discipline yourself and that money will grow exponentially over months.

  • 1st Week: $5,743.43
  • 2nd Week: $6,597.39
  • 3rd Week: $7,578.32
  • 4th Week: $8,705.10
  • 5th Week: $9,999.42
  • 6th Week: $11,486.18
  • 7th Week: $13,194.00
  • 8th Week: $15,155.75
  • 9th Week: $17,409.18
  • 10th Week: $19,997.66
  • 11th Week: $22,971.01
  • 12th Week: $26,386.45 
Will cryptocurrency make me rich

You really could go to the moon.

Trust the process. 12 weeks of day trading cryptocurrency at 2% daily profit can give you more than 5x gains. These numbers are based off of the logic that you reinvest your profits in the following days.

You can’t predict the 50% moves all the time. These 2% plays are much easier to catch on a regular basis. You can really make a fortune by day trading crypto if you have dedication and a strict bankroll management strategy.

Those small, yet profitable trading opportunities typically appear multiple times throughout the day. Make sure to keep your entry points as close to the trend line as possible to minimize your risk and maximize your reward.

You should set a stop-loss below this rising support level to prevent getting caught if the market crashes.

Three fundamentals to learn for a winning cryptocurrency trading strategy include: Candlesticks, Fibonacci Retracements and Moving Averages.

Crypto CFD Trading – What is It?

CFD stands for “contract for difference”.

Buying through a crypto CFD platform will not give you real coins. You’re purchasing a contract that’s supported by the asset’s underlying value. The market value is pulled from some of the main exchanges — such as GDAX, Gemini, Bitstamp and Bitfinex.

CFD platforms charge a spread and overnight rate for their service.

The spread is a fixed percentage rate that applies to the cost of the cryptocurrency you trade. For example, if the spread is 2% and Bitcoin costs $10,000 it would cost $10,100 to buy and you’d receive $9,900 if you sell.

The overnight rate is a percentage you will pay for holding a position through to the next day. Sometimes the overnight fee only applies if you hold a short position — this depends on which platform you use.

Why Day Trade Crypto CFDs?

Bitcoin trading graphic with chart

  1. You profit in dollars when you short cryptos
  2. You don’t need to worry about the exchange getting hacked
  3. Your crypto investments can be managed through a single account

That first point is ignored too often.

Some cryptocurrency exchanges that offer leveraged trading do not let you maintain a fiat balance. Both Bitmex and Poloniex require you to hold crypto funds to go short.

Imagine this scenario: You short one bitcoin at $10,000 through Bitmex with 2x leverage. You’re effectively using $20,000 and doubling your money if the price hits $5,000 and you close your position. You double your bitcoins minus fees, but because the price went so far down — you only broke even.

Simply put, CFD trading cryptocurrencies give you the power to focus on building your dollars. You’re minimizing your exposure to the crazy trading action that takes place in crypto markets. However, when you do feel like trading — you’re able to make the most of the hyper-volatile trading.

Where to Trade Cryptocurrency CFDs

Right now, we recommend three trading platforms that offer CFD crypto trading — Plus500, eToro and IQ Option.

Here’s a little bit about what they have to offer and some pros & cons for each.

Plus500 trading logo

Plus500 provides a solid selection of cryptocurrencies to trade

What cryptocurrencies are offered on Plus500

On Plus500 get exposure to BTC, ETH, BCH, LTC, XRP & IOTA. Disclaimer: All prices are illustrative.

Plus500 is FSCS insured

If the company goes belly up for any reason, deposits of up to £50,000 are protected by the Financial Services Compensation Scheme (FSCS). Plus500 is a sizable CFD trading firm that’s publicly traded.

Start Day Trading Crypto At Plus500 Today!

BE AWARE THAT YOUR CAPITAL IS AT RISK.

Plus500UK Ltd authorized & regulated by the FCA (#509909). You do not own or have any rights to the underlying assets. Please refer to the Disclosure documents available on the Plus500 website.

eToro provides social trading opportunities

eToro trading logo

Social trading gives you the chance to take an expert trader’s strategy and apply it to your own. The best crypto trading experts on eToro have thousands of copiers.

eToro social trading

eToro doesn’t offer leverage for crypto trading

eToro lets you buy and sell crypto CFDs at 1x leverage. This level of exposure requires no margin as it’s backed 100% by your account balance.

At eToro, you can trade nine different cryptocurrencies:

Cryptocurrencies available on eToro

eToro has some other issues that make them inferior 

The biggest downfall with eToro is the inability to place stop-loss orders. You need to clock-in and clock-out of your trade manually to protect your investment.

Another issue is the price spread. While trading Bitcoin (1.5% spread) and Ethereum (2%) is fine, the other crypto CFDs here have 3-5% spreads. You must also factor overnight fees which apply when you go short.

Heard Enough? See What Trades Successful Investors Are Making Right Now!

Need Help Getting Started On eToro? Don’t Panic, Our Dedicated Guide Show You How.

RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK

IQ Option trading logo

IQ Option provides more trading options

IQ Option currently offers the most diverse selection of cryptocurrencies, with 16 different coins available to trade. They offer some of the coins traded on eToro, as well as Bitcoin Gold, EOS, OmiseGo, TRON, QTUM and Zcash

IQ Option is a binary options trading platform

You’re still buying CFDs here. Don’t get confused with the terminology. Instead of “leverage”, you have the option to make use of a trade “multiplier”. IQ Option lets you use up to a 5x multiplier which allows you to trade with up to five times of your account balance.

IQ Option Fees

As for fees, IQ Option charges 2.9% for crypto trading.

Want Access To The Biggest Selection Of Cryptocurrencies Offered By Any CFD Broker?

RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK

General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

Day Trading Cryptocurrency with Leverage

Leverage trading lets you buy or sell coins with the option of investing more than what your account balance can afford. The funds come through a very low-interest loan. If you invest with 10x leverage, every $1 of funds can be used to buy $10 in coins.

This extra investment capital is lucrative to say the least.

A price change of 10% can make you broke or double you up.

Avoid risking all of your account balance if you do leveraged trades. Go high risk if you want, but make sure it’s only a percentage of your investment roll as this is much higher risk.

Leverage trading requires “margin”, what’s that? 

Margin is simply the money you need to put up as collateral to secure the funding for your leveraged trade. If you trade with 10x leverage, your margin will be 10% of the amount you’ll be able to use to trade.

How to use stop loss for cryptocurrency trading

Placing a Stop-Loss Order

Disclaimer: Some exchanges and CFD platforms do not allow you to place stop-loss orders. This trading function is important BUT you have one other option, which is to set up price alerts via a service like Coindera.

Leverage trading requires some smart planning for it to work in your favor. For example, many beginner traders will make use of the stop-loss function. This mechanism lets you have control over when your holdings get liquidated.

If the price falls under a key support level (when “longing”) or goes above a resistance (when “shorting”), a marker order can be triggered right away to prevent further loss.

Example

A coin’s price is range-bound between $50 and $55 after previously trading well above and below this price-point. The next move will be explosive, regardless of the direction.

Let’s say you place your 10x buy order at $50.25 and it goes through.

  • Price moves up to $55.28 = your investment doubles
  • Price moves down to $45.23 = your investment is gone

These figures are not precise due to unfactored borrowing fees.

You would set up a stop-loss order at $49.99 which will trigger a market order when the price breaches this level. Thus, if the large support at $50 caves your trade will liquidate right away. Your holdings will be sold to the highest available purchase offer.

Worst case scenario, for this example, let’s say your coins sell at $49.75 because of some price slippage. Your loss would be roughly 50 cents per coin which equates to around 1% of the coin’s total value.

At 10x, your loss would be 10% if this trade resulted in a stop-loss order due to the price falling below a key support level. With the same level of leverage, a 100% return will occur for every $5.03 upward price movement. Catching a bull trend start to take shape could easily make you 2-3x profits through an intra-day trade.

Don’t get caught by stop-loss hunters!

great white shark above water

The example above works in a completely happy world. However, in crypto land it hard to get excited about a good entry point. “Stop-loss” hunters will seek you down.

What do these people do?

Big players will “shake-out longers and shorters” by breaking support and resistance levels for short periods of time. The purpose of this is to get rid of the people holding their positions prior to a momentous move.

How to Prevent Getting “Stop-Loss Hunted”

Round numbers are psychological levels, not necessarily true points of support or resistance. You might find good entry points when these levels are tested. However, do not be shocked if the price breaches that level briefly before moving swiftly in the other direction.

Avoid setting your stops at right below psychological prices. If you buy in at $50.25 your stop-loss might be better off at $46.50 or even lower. This won’t work if you trade with leverage, but for 1-5x leverage this tactic is key.

Day Trading Crypto – How to Make $100’s Daily?

Bitcoin and Ethereum cryptocurrency trading graphic

Ready to fire up your computer and start day trading cryptocurrency? Don’t be so hasty there are still a few things we need to tell you. As an active speculator, a $10,000 investment into day trading cryptocurrency can generate $100’s in profits each day. In fact, many intermediate-level traders can, with the right discipline, have very few losing days — the key is to minimize your risk exposure.

Two factors play a role in your ability to day trade Bitcoin & altcoins profitably on a consistent basis. Day trading can act as a very rewarding full-time job if you learn how to master these two variables. You must know how to manage your bankroll conservatively and also catch, read and play price swings as they happen.

How to Day Trade Cryptocurrency?

Day trading crypto requires real discipline and comprehension. We will do our best to educate you but please keep in mind that this world cannot be learned overnight. Your dedication is required to grow as a day trader.

With that said, let’s cover some important bases …

Becoming a Day Trader

Cryptocurrency day trading on mobile graphic

We know that trading is the most exciting part of the whole experience. However, becoming a great crypto day trader requires more than just knowing how to find the right trades. Your risk management is something that should be assessed and planned for before you start to trade.

Let’s cover some basic principles before moving forward with some strategic talk.

1. Establishing Your Bankroll

First off, we need to figure out what funds you can allocate toward your day trading budget. Your decision here has to do with what you can afford to lose. Don’t expect to lose everything, but go into it with the mentality that your capital is forever personally unavailable.

Your responsibility is to guard your investment and focus on growing your funds on every trading day. Your day trading capital does not need to make up 100% of your crypto investment fund either. Many day traders also hold certain coins long-term, whether it’s an altcoin from a promising ICO or just one of the larger cryptos like Ethereum.

Fund your account…

Stacks of Ethereum coins for cryptocurrency day trading

Let’s pretend we’re playing with $10,000 for the sake of this guide

You can buy Bitcoin through many different sources. Some popular choices for newcomers include Coinbase and LocalBitcoins. Get your BTC and withdraw it into the exchange where you plan to trade.

Make sure you’re careful with double checking the deposit address you submit. Also, confirm it’s for the crypto you’re trying to deposit as it’s possible to lose your coins by sending them to an invalid address.

2. Determine Your Risk Level

Online trading screen

Everyone has a different level of risk tolerance. For some, the breaking point is whether their capital is refillable or not. If you go completely broke, will you invest another $10,000 to play again? Sure, you might wait six months — don’t go into debt to keep trading, that’s gambling — ask yourself if you will walk away from trading crypto forever if your investment fails.

If that’s game over for you… be VERY protective of your capital.

Before You Start, Understand This… 

Day trading cryptos with lower market caps is dangerous for a beginner. However, this “risky decision” gains you access to coins with massive upside potential. Your job is to read the play and figure out what entry will give you the least risk imaginable. With tight stops in place, you get the high upside potential without taking on a large risk.

You can protect your funds in different ways. First, segmenting your balance and only trading with parts (10-20% chunks, for example) will reduce your loss potential (and also limit your gains). Second, but certainly trickier, by playing the right entries with effective use of stop losses, trailing stops and etc., you can safely enter into positions with 100% of your funds.

3. Understand Risk-to-Reward Ratios

Weigh up risk rewar for cryptocurrency day trading

Countless trade setups are highly profitable. The key to deciphering the potential investment value of each is to figure out their risk-to-reward ratio. This figure tells you the possible profit/loss that could be incurred if you take a particular trade. A 1:3 risk-to-reward would mean a potential $300 profit or $100 loss. Meanwhile, a 3:1 risk-to-reward means there’s a potential $300 loss to make a possible $100 profit.

Here’s a good way to look at it …

Let’s say you can choose between two different trades.

  • Trade 1 – Buy at $100, limit sell for $140, stop loss for $90
  • Trade 2 – Buy at $100, limit sell for $120, stop loss for $80

Which trade should you take?

Trade 1: In this example, there’s a $40 potential profit and $10 potential loss on a $100 trade. This calculates out to a 1:4 risk-to-reward ratio. You can be wrong about these plays sometimes; you need to win more than 20% of your trades.

In Trade 2, the potential price change is $20 in either direction on a $100 trade. There’s a possible profit/loss of $20 which equates to a 1:1 risk-to-reward ratio. Trading with coin flip odds is no better than playing blackjack at a casino.

Now, these “risky plays” sound difficult but it’s all about getting your timing right. You need to find a “breakthrough” or “trend reversal” as it happens and act fast. These moments are actually pretty safe trading opportunities because the coin’s upward momentum is cushioning the price from a big drop. Additionally, any real breakout will have enough buying pressure to push the price up a sizable amount.

Day trading is all about catching signals and milking the day trading volatility. Hunt impending price spikes and constantly scalp for healthy profits and your account balance will certainly flourish. Never marry a coin, always treat it mathematically and evaluate the trade setup itself!

4. Choose Your Exchange

Cryptocurrency exchange choice for day traders

Cryptocurrency exchanges vary in trading options, security, volume, etc. Your first decision should not be “which coins should I buy?” Instead, focus on determining the exchanges that offer the functionality you require and ignore any that are not super trustworthy.

Some things to consider when choosing between exchanges include:

  • Are you buying real crypto or CFD shares? CFD platforms track real exchange pricing but cannot be withdrawn for actual cryptocurrency. These exchanges have higher fees but allow a greater level of security. For day traders, they’re generally not recommended; stick with crypto-to-fiat and crypto-to-crypto exchanges only!
  • What are their trading fees? Most cryptocurrency exchanges will charge 0.1% to 0.2% per trade, if not higher. Binance, the volume-leading crypto exchange, currently charges 0.1% but offers a discount if you pay your trading fees with “Binance Coin (BNB)”.
  • How varied is their selection of altcoin listings? Being a day trader is all about spotting opportunities. If you can’t pick from many coins, chances are all the good scalps will escape you. We currently feel Binance comes on top, not only are their fees ultra low but, they have 100’s of cryptos and get strong trading volume.
  • Is the trading volume low enough to cause potential slippage? You might set your sight on a crypto exchange that doesn’t get massive volume. Even if the high market cap coins get traded consistently throughout the day, the mid-level picks follow other exchanges (sluggishly) … they don’t follow trading indicators. Be on an altcoin exchange where trading volume is steady/picks up fast if a coin breaks out or gets hot press.
  • Will you be able to sell your BTC for fiat if Bitcoin crashes? A big part of your risk management is knowing how to spot market sentiment and act accordingly. For example, when Bitcoin is trending down in the short-term (not crashing) focus on low-risk trades. Increase your level of risk exposure as altcoins become more bullish. When alts aren’t booming, it’s easy to lose big on “choppy trades” so sit out in fiat (preferred) or USDT and avoid alts during crashes, at this time wait to buy back BTC or short it first. Make sure the exchange you use has fiat or USDT crypto pairs just to be safe.

TotalCrypto.io Terminology
Alt or Alt Coin: Stands for alternative cryptocurreny. This term is used to refer to any cryptocurrency that is not Bitcoin.

Our top crypto to crypto exchange suggestion

Binance exchange logo

Join the best cryptocurrency trading platform in the world.

Need help getting started on Binance? Our awesome guide tells you everything you need to know.

If you are willing to go through the extra work to get your funds on an exchange then do your day trading on Binance because the fees are super low. The volume is red hot and the coin variety drastically beats what other exchanges offer. Price swings tend to happen quick and hard on coins traded here. If you know how to catch a spike at the right time, day trading at Binance will be easy money.

The only issue we have with Binance is the lack of an option to leverage trade any of their coins. We view this as an important trading function once you reach the expert level. You can’t always bet on a bullishly volatile altcoin market… sometimes you need to bet against the house.

In fact, if someone held an alt from January to June, BTC dropped more than 60% from its peak. Many alts did the same. A $100 alt became $40 ATH BTC which would equate to $16 left (84% loss) just by “hodling” your investment since the start of the year. Now that’s a silly but eye-opening calculation.

If you are into crypto to crypto leverage trading, the best exchanges right now are Bitfinex and Bitmex. It’s easy to get started on Bitmex but Bitfinex requires new users to have at least $10,000 to trade. However, if you can get onto Bitfinex it gives you access to a wider variety of coins. The maximum margin level is significantly lower, but Bitmex’s maximums are dangerously high.

WinnersBinance (no leverage), Bitfinex (yes leverage) and Bitmex (yes leveraged)

Bitmex provides real BTC liquidity but only offers CFDs for their altcoin-to-BTC pairs. Only Bitcoin can be deposited and withdrawn from here. This means you enter a short in BTC even though you’re betting on the coin going down. On the flip side, your long positions are funded via BTC which means you will see greater gains.

Now you know how to get started…

Crypto Day Trading Strategies (That Work)

Cryptocurrency day trading strategy

Are your funds uploaded and you’re ready to go live as an enlightened crypto day trader? If so, it’s time to figure out your trading strategy. It’s fine to switch up techniques and be versatile but some trade setups just seem to work so well.

Here are some altcoin and Bitcoin day trading strategies to consider…

Strategy 1 – Scalp Small Moves, Catch Big Spikes!

Whether organized or not, sometimes you notice a lower market cap crypto show signs of a big spike in the near future. Being able to catch these moments can give you literally 20-200% gains in minutes to hours. In fact, this strategy serves as a goldmine if you know how to do it right.

Choose an exchange wisely

Binance cryptocurrency exchange flag

Make sure to trade on an exchange that regularly sees high volume across many of its altcoin pairings. This fundamental is crucial as there needs to be regular day trader volume on the site for any conceivable, large pump to take place. It’s also a major factor in everyday price action and that noise is where many of your low-risk scalps for 1-5% gains happen.

Trading at the higher volume exchange also means you’re likely at the head of the pump, giving you the liquidity to enter and exit without any major slippage. You could get stuck holding your bags when buying a pumped coin on 

Find the right coins

Cryptocurrency physical coins

Many techniques work for finding these coins. Check out our guide on comparing coins to get a feel for how the pros get the job done. However, any day trader can do just fine if they observe both the news and the latest developments of various undervalued alts.

Look for coins that are bullishly heading toward the upper end of their trading channel and pressing closer to a resistance level. The golden setup is an upward breakout from within the handle of a “cup & handle” pattern formation on a weekly chart. Further, check and make sure the volume is higher than it was on most days in the past few weeks or longer.

Buy at the right time

Cryptocurrency trading compass graphic

Buy the breakout if all seems fine and put a tight stop loss a little below it. Alternatively, wait for the bounce back after it moves up. A resistance breakthrough creates the #1 Elliot wave movement most of the time, which typically has a pullback and finds support near the breakout price before shooting much higher as panic buys commence.

Pro tip: As of June 2018, Binance’s lag is very noticeable when a coin experiences high volume trading under short time frames. This only seems to affect desktop users; trade through the Binance app and skip the lag altogether. If everyone starts panic selling, your position will get liquidated sooner. Thus, you will reduce your losses/secure more gains..

These pumps are great to profit from, but you should only use a small amount of your day trading bankroll. You can increase your budget if you buy cheaply and can afford to put a tight stop below the breakthrough price.

Sell for the right price

Let’s say you buy at a really good entry and the price appears to be ready to aggressively trend upward. Look up in the order books for a far away price to place a limit sell order. This is your “Hail Mary” and it really does work!

Below are a few examples of buying breakthroughs of sudden pumps and taking greedy profits.

cryptocurrency trading results

This trade example is a personal experience.

I bought at ~5100 sat and sold for 7,900 sat  

I only held my position for 5 minutes & 17 seconds. 

My 5 Minute Trade Made Me Roughly $6,600 in Profit!

This day was the first time I traded POA coin. In fact, It was the first day I heard of the coin. My personal habit is to scour through each of the coin pair listing pages and see how the price action and order books look before investigating the coin for news, value, valuation, etc.

My eyes were drawn to POA’s potential to skyrocket fast. I noticed the coin recently broke to the upside from a long-term cup & handle pattern. This move is one of the most bullish pushes any market could possibly witness.

I always check TradingView to see what others think and to see if there’s any hype behind a call that seems like an obvious play. This chart showed up in my research and verified my own discovery when giving the historical data a closer look.

POA/BTC cup and handle trading pattern

This trade happened when Bitcoin played in the $6,600 – $6,800 price range. This moment was pivotal as the price double-bottomed in the low $6,000’s and bounced up above $9,000 in just three weeks. POA sustained a healthy 50% price bump from breaking through the handle in this chart.

These golden moments increase your capital dramatically. You put yourself into a whole new range when it comes to profit potential. A quick double up is always worth it. Even if you risk only 20% of your funds and make a 100% gain, that’s still $2,000 profits on $10,000 invested.

Best case scenario, if you went all-in with a tight tight stop (<5%) that’s $10,000 profits. All of a sudden, your bankroll grows by twice as much for every 10% made on your next trade. If you do take a loss, it’s no more than a 5% hit which is just a little looser than the “safer” plays out there.

Some Words of Trading Wisdom

Plato wise men quote

Interestingly, you do not need to find a coin that will grow to become a billion dollar crypto. Day trading is about playing the market rhythm more than it is about trying to establish asset value. This is a very important fact to understand guys! 

Since the screenshot…

The coin in the play shown above dropped more than 20% below my entry price. Bitcoin’s price is in the exact same range as it was then. Even though it was an ultra bullish move, it doesn’t mean it will sustain forever. Play the action as it happens (scalper mentality 101), but avoid holding the coin overnight due to the crazy volatility in the altcoin markets.

Another Big Winner Below

In under an hour, I sold for more than 60% higher than my entry price. This trade was a “gut feeling” which is okay if you have stops and manually play the action the entire time you hold the pumped coin.

GRS/BTC trading

Don’t chase pumps all the time, just in rare cases where you might have caught the next double-up before it happens. GRS went to nearly triple my original buy-in price in the same day so it’s hard to tell the top.

Be greedy but technical in your reasoning. The 30-40k satoshi range had many medium-sized sell orders, while the 20-25k range had some sells and a 25k sell well, with 25-30k empty.

If the price were to have a sudden spike, it seemed probably my sell would hit. I bought in after the price calmed for a bit after a false pump when the coin listed on Binance, which is more jet fuel for the fire.

Strategy 2 – Play Trading Channels with Leverage

Cryptocurrency leverage trading

Trading channels tell you where the price will travel before any big breakout or crash occurs. The noise that happens in between is easy to read. If the trading channel isn’t too tight (common when a breakout isn’t near), it’s easy to scalp 1-5% profits daily trading certain alts.

These setups are not beautiful, they’re scientific. Let’s say a coin’s trading volume is dying down as it reaches the top of a trading channel. Most likely, it will mark a lower high than before and seek out its next low (within the channel).

Leverage Trading Bitcoin in Price Channels

Bitcoin price channels

A popular way to day trade is by specifically playing Bitcoin’s market for its volatile price action and high liquidity. Using just your account balance won’t make your daily profit potential worthwhile though. Trading with margin allows you to improve your risk-to-reward without having to chase larger price moves.

Let’s say you use 10x leverage in a 5% trading channel. Every 2% price move is a potential 20% gain/loss, on average. Bitcoin day traders using leverage can, therefore, more than double their investment by calling a 2% scalp five times in a row.

Safely finding volatile scalp trades on margin 

The hard part is determining where your stop loss should be placed. This decision will come down to technical analysis — how’s the volume playing out, where the supports and resistances are, plus more.

Chase crypto signals backed by technical analysis. 

TotalCrypto.io Terminology
Technical Analysis: Is financial analysis that uses patterns in market data to spot trends and make market forecasts. Technical Analysis is commonly referred to as ‘TA’. If you want to brush up on or learn TA then just check out our comprehensive guide to TA and learn how you might use it to predict crypto markets.

TradingView’s Cryptocurrency Signal Finder Tool will give you the complete 411 on what’s going on with the hottest altcoins. You can use this tool to track endless metrics from time interval-based price highs/lows to moving averages, Bollinger bands and more.

TradingView’s Cryptocurrency Signal Finder Tool

The functionality of this tool is actually endless. The learning curve is steep because you need to build strategies based on specific data points. Not every approach will work but some will be major winners. It’s also a great resource if you want to learn ALL the different technical data that can help you make smarter trades.

Notice the “General” tab in the selection box on the far right side of the horizontal menu? Press this and you will have more than a dozen prediction variables. Some examples include “Top Gainers (and Losers)”, “Outperforming/Underperforming SMA50”, “Most Volatile” and “Oversold/Underbought”.

The “Trend-Following” section is especially helpful. Here you will find default filters of SMA20, SMA50, SMA200, BB UP nand BB LOW. We’re looking at price data points which reflect the trading channel the particular coin is fluctuating within at the moment.

Determining a trend gives you the chance to make plenty of scalps at 2%, 5% and higher with minimal risk. The trend-based filters are super useful and even include options like “Bull Bear Power”, “Average Volume (10/30/60/90 day)” and “Volatility by Day/Week/Month”. Another reason for aggressively tracking these indicators is so you can predict and avoid any risky volatility before it happens.

TradingView can be tough to understand at first. It becomes a game-changing tool if you grow to understand how it really works. Take the time to learn the different controls, watch some video tutorials and keep working at becoming the best TA trader you can be.

Playing Bitcoin day trade setups without leverage

Bitcoin day trading image

Here’s an excerpt from “The Basics of Day Trading Cryptocurrency

excerpt from TotalCrypto.io article “The Basics of Day Trading Cryptocurrency”

As demonstrated, it’s possible to turn $5,000 into $25,000 in only three months if your bankroll increases by 2% daily. This amount is an entirely realistic target but we recommend you don’t chase a fixed gain every day as it can influence your trading choices.

Remember, the example above requires 84 days of successful day trading in a row. Even the best traders have their bad days where they come out behind. In the given example, any day where you lose 2% adds two days onto your journey.

Focus on being disciplined with your trading style. If you want to chase 2% gains, don’t get caught up in the market’s emotions. Irrational movements can happen at any time. Unless huge news hits, your most valuable approach is a consistent one.

Happy Trading!

The sky is not the limit image

Crypto day trading is an immense subject.

The different ways to increase profits, reduce losses and safeguard your capital are so varied that no one website can teach it all. The key is to absorb all the information that’s out there and coherently decipher its accuracy.

We’ve been working hard to get all the fundamental content up on our site. The goal of TotalCrypto is to become a one-stop source for authoritative guides & articles on crypto markets, especially when it comes to trading topics.

Some other published pieces on our site that might help you. For complete beginners to Bitcoin and altcoin day trading, we strongly recommend you read this technical analysis guide for cryptocurrency day trading before investing a dime.

Educate yourself, track your progress and learn from your mistakes. Be disciplined and enforce risk management to continuously build up your investment capital. You can certainly earn $100-500 daily from cryptocurrency day trading. Keep up the hard work and both your bankroll and daily earnings could even increase by tenfold!

Further Reading At TotalCrypto.io
1) Need Help Getting Funds On Binance? Our Dedicated Guide Shows You How.

2) Want To Dip Your Toes In Crypto Day Trading By Coping Experts? Find Out Why eToro Might Be The Trading Platform For You.

3) Need Help On Predicting Cryptocurrency Markets? Our Technical Analysis Guide Will Help You Brush Up On Your Skills.

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