Best Crypto Day Trading Strategies

view original post

In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win. You’ll find the nerves of steel and intuitive trading platform through research, research and more research. Let’s take a look at the X-factor in this gumbo — the trading strategies you’ll use. 

BZ

Pro Tip:

Some of the most popular day trading strategies are range trading, scalping and arbitrage. If you want to save time, you can instantly copy professional traders plays with eToro, and learn as you go.

Range Trading

In many cases, a cryptocurrency will trade for a long time inside a certain range. Bitcoin, for instance, traded between $8,601.40 and $10,210 for a 30-day period. This ±9.4% range seems volatile until you realize that Bitcoin can realize a ±42% change in 24 hours. 

Cryptomarket caps are small enough that they can be manipulated by a single big mover. In some cases, those big movers will systematically manipulate the price of a coin up and down to profit from a range. If you notice these patterns, you can take advantage of them as well. 

If you are range trading, you want to pay attention to overbought and oversold zones. Overbought means that buyers have saturated their need, and the stock will probably sell off; oversold means the opposite. Chart indicators, included in any reputable stock chart program, can help you find these zones. Common indicators used for this purpose include the Stochastic Oscillator and relative strength index (RSI).

Attribution: Wikimedia

Pionex

Pionex is a platform that allows you to use customized trading bots to automate your crypto investments. You can trade manually if you wish, but there are 18 bots to choose from that can do everything for you.

The trading bot selection includes:

  • Grid Trading Bot allows users to buy low and sell high in a specific price range.
  • Leveraged Grid Bot provides up to 5x leverage.
  • Spot-Futures Arbitrage bot helps retail investors to make passive income with low risk. The estimated return for this strategy is 15~50% APR.
  • Martingale bot performs DCA buy, one-time sell to capture fluctuation profit.
  • Rebalancing bot helps you to hodl the coins.
  • Dollar-Cost Averaging (DCA) Bot Sets repeated purchasing at regular intervals to offset the effects of volatility.

Plus, the Smart Trade terminal allows traders to set up stop-loss, take profit, and trailing in one trade.

With low fees of 0.05% for makers and takers and low risk, you can enter the crypto market much more easily than if you started buying on your own. Plus, you can sign up for free.

Try the Pionex mobile app to get the same experience you have on the website, live chat with the staff or email with any questions. Remember, you only pay maker and taker fees. Plus, you can save time that you would’ve spent scouring market data and investing doing something else.

High volume investors are also welcome to join the Market Maker program, which requires entrants to deposit $300,000 or more or hold $300,000 of crypto assets like Bitcoin, Chainlink, etc. Additionally, the market maker program charges no maker fees.

Scalping

Scalpers take advantage of increased trading volume to profit. Scalpers may exit a trade seconds after entering, and many use automated bots to increase the frequency of their trading cycles. Ideally, scalpers want to exit a trade before any news item or short-term fluctuation has a chance to change the market’s sentiment on a coin.

Attribution: Quora

It is best to have a large bankroll to take advantage of this extremely short-term day trading crypto strategy. Although the ROI of each trade is very small, staking a large amount means the scalp comes back with a substantial amount of money (0.5% of $100,000 is $500, enough for a luxury car payment). Trading frequently — sometimes making 10-20 trades per minute — also means those small gains add up. 

Playing Bitcoin Volatility

The Chicago Mercantile Exchange (CME) offers options on Bitcoin futures, opening up a wealth of volatility strategies for traders. Crypto has 5X the volatility of traditional asset classes. Volatility trades are ideally directionless, meaning there is a possibility of making money whether Bitcoin goes up or down.

The long straddle is one directionless volatility strategy using Bitcoin options. To initiate, you buy a call and put option at the same time for the same strike price and expiration date. The Bitcoin straddle is profitable when Bitcoin falls or rises away from the strike price by more than your premium. To exit the trade, you sell the call and put at the same time. 

In simple language, a big move up or down is in your favor. 

Attribution: Wikimedia

Arbitrage

Arbitrage involves buying cryptocurrency in 1 market and selling it in another market at a higher price. The difference in the buy and sell price of an asset is known as the “spread.” As a generally unregulated market, crypto allows anyone to create an exchange. This can lead to major differences in the spread because of the differences in asset liquidity and trading volume. 

In the crypto market, traders usually hold a portfolio on an exchange they are trading. To start an arbitrage opportunity, open accounts on exchanges you believe will show significantly different prices for the same asset.

Attribution: Holdbot

At one point, Bitcoin traded at a 40% higher price in South Korea than in the U.S. This was known as the “kimchi premium,” and it showed up more than once. Traders profited by simply purchasing Bitcoin on U.S. exchanges and immediately selling it on South Korean exchanges. Although the discrepancy will not usually be this large, the low barrier to entry for new exchanges brings new arbitrage opportunities more often than in traditional asset markets.

Traders should also take trading fees into account when attempting arbitrage. The fees to make a trade on an exchange may wipe out the gains from the trading spread.

Looking for more trading strategies? Head over to Coin Market Manager.

Best Online Cryptocurrency Brokers

The trading platform you choose will likely make a big difference in your day trading results. The strategy that you choose should make a difference in the platform you choose because different platforms will have different strengths. For instance, scalpers need a fast execution time while volatility traders may profit more from an instant news feed. 

Take a look at some of the best online cryptocurrency brokers and what they have to offer.

get started securely through eToro’s website

Disclosure: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Best For

Crypto Trading

1 Minute Review

eToro, headquartered in Cyprus, England and Israel, has provided forex products and other CFD derivatives to retail clients since 2007. A major eToro plus is its social trading operations, including OpenBook, which allows new clients to copy trade the platform’s best performers. Its social trading features are top notch, but eToro loses points for its lack of tradable currency pairs and underwhelming research and customer service features

Best For

  • U.S. based cryptocurrency traders
  • Social and copy traders
  • Simple user interface
  • Community engagement and following other traders
Pros

  • 25 cryptocurrencies
  • Expansive network of social trading features
  • Large client base for new traders to imitate
Cons

  • U.S. traders can only buy cryptocurrency
Best For

Sign Up Bonuses

1 Minute Review

Crypto.com strives to make cryptocurrency a part of everyday life by offering a full suite of services for crypto users. The company offers a Crypto.com App, Exchange, Visa Card, DeFi swap, DeFi Wallet, DeFi Earn, Crypto.com Price, staking, crypto lending, and many other services. What really sets them apart, however, is the combination of super low fees and incredibly generous rewards programs for their users.

Best For

  • Traders who want access to a secure, low-cost cryptocurrency exchange
  • Passive investors who want to earn interest on their balance without frequent trading
  • Mobile investors who prefer to handle all their crypto needs via their phone or tablet
Pros

  • Low fees
  • High security
  • One-stop shop for all your crypto needs (wallet, trading, spending, and more)
  • Lots of ways to earn interest, rewards, and rebates
Cons

  • Low privacy
  • Customer service response time could be improved
Best For

Global and Active Traders

1 Minute Review

Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 135 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.  

IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

Best For

  • Access to foreign markets
  • Detailed mobile app that makes trading simple
  • Wide range of available account types and tradable assets
Pros

  • Comprehensive, quick desktop platform
  • Mobile app mirrors full capabilities of desktop version
  • Access to massive range of tradable assets
  • Low margin rates
  • Easy-to-use and enhanced screening options are better than ever
Cons

  • Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
Best For

Earning Rewards

1 Minute Review

Coinbase is one of the Internet’s largest cryptocurrency trading platforms. From Bitcoin to Litecoin or Basic Attention Token to Chainlink, Coinbase makes it exceptionally simple to buy and sell major cryptocurrency pairs. 

You can even earn cryptocurrency rewards through Coinbase’s unique Coinbase Earn feature. More advanced traders will love the Coinbase Pro platform, which offers more order types and enhanced functionality.

Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.

Best For

  • New cryptocurrency traders
  • Cryptocurrency traders interested in major pairs
  • Cryptocurrency traders interested in a simple platform
Pros

  • Simple platform is easy to operate
  • Comprehensive mobile app mirrors desktop functionality
  • Coinbase Earn feature rewards you with crypto for learning about available coins
Cons

  • Higher fees than competitors
Best For

Low Minimums

1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For

  • Active traders
  • Intermediate traders
Pros

  • No charges to open and maintain an account
  • No account maintenance fees or software platform fees
  • Intuitive trading platform with technical and fundamental analysis tools
Cons

  • Only offers 14 coins
Best For

New Investors

1 Minute Review

Gemini is a cryptocurrency exchange and custodian that offers investors access to 26 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.

Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader. 

In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

Best For

  • New investors looking for a simple mobile and web app
  • Experienced investors who need a more advanced platform with more tools
  • Users looking for a 1-stop-shop to buy, sell and store all of their coins
Pros

  • Easy and quick signups — can get started in as little as a few minutes
  • Multitude of platforms to accommodate traders of all skill levels
  • Hot wallets include insurance to protect your from theft and hacking attempts
Cons

  • Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
Best For

Mobile Traders

1 Minute Review

Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users. 

When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments. 

Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.

Best For

  • Cryptocurrency investors looking for a wide selection of supported projects.
  • Investors who prefer mobile trading.
  • Anyone interested in earning interest on their crypto investments.
Pros

  • Simple, straightforward and intuitive mobile platform
  • Wealth of investment opportunities
  • Allows users to earn interest on select crypto investments
Cons

  • Only available for mobile users — no desktop platform
  • Limited routes to contact customer service team

Tip From A Pro

We’ve got top forex & crypto trader Ezekiel Chew, who makes 6 figures a trade and trains the bank traders behind the scenes, to share with us about crypto day trading strategies and what exactly it takes to be successful in crypto trading.

Ezekiel believes there are three key aspects to successful crypto day trading:

1. You’ve first got to learn how to read the charts. And one of the best ways to learn this is through price action; the technique that the majority of professional traders use. Once you have learned how to read the charts, you will know why the market is going up, down or sideways and then will you recognize which strategy to put into play in that direction.

2. Trade with a proven trading strategy or a combination of strategies. A proven strategy is one that is comprehensively back-tested and has been shown to work consistently. It is only in this way that you will have the confidence to stick with it during the lull periods.

3. Have a solid trading system. One that is defined not only by the technical aspects but also the business behind trading; a proper structured trade that is in line with the overall trading plan that has been proven to work. In contrast to what most new traders think, trading is not just about strategies, but the system itself also contributes greatly to becoming a successful trader.

Most of all, Ezekiel has a famous trading mantra – “Win big, lose small” that he and his students abide by.

“Trading is all about having an edge in the game and knowing the mathematical probability behind each trade”. By winning big and losing small, a single win can potentially cover 3 or more losses. If you apply this methodology in the long run, you will be a winning trader.

To learn more about Ezekiel’s method of trading backed by mathematical probability, you can check out his one core program.

Trading Crypto Doesn’t Have to be Cryptic

Regardless of the strategy you choose, you must be willing to accept losses in a volatile market like cryptocurrency. Have your exit plan ready before you enter any trade. Don’t follow the hot tips crowd; invest only in coins that you actually believe in — even for just the day.

Also, keep in mind that the market provides endless opportunity. So don’t bite your head off if you’re playing cautious and miss one, and don’t chase the gazelles that have already run off of the farm. Trading is more than anything an emotional journey — you must keep a clear head and stick to your chosen strategy through thick and thin.

Frequently Asked Questions

Which crypto coins are the best for day trading?

Day traders look for volatility. Volatility is most prevalent in micro coins, or coins with small market caps compared to other cryptos. Right now, any coin with a market cap lower than $1 billion is considered small cap. Some small-cap coins with good trading volume include SiaCoin (SIA), Basic Attention Token (BAT) and Fusion (FSN).

Answer Link

How much can you make day trading crypto?

High volatility microcoins can gain price multiples in 1 day, providing exponential returns to lucky investors. High volatility also means those coins can move in the wrong direction just as quickly. As the potential reward goes up, so does risk.

Answer Link

Are there any restrictions for day trading cryptocurrencies?

There are no restrictions on cryptocurrency day trading.

Answer Link

Can I day trade cryptocurrencies with $200?

You can open an account at a cryptocurrency exchange using $200 and start day trading. 

Answer Link

Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.