It’s been more than 10 years since the launch of Bitcoin, and hence the start of a global cryptocurrency hype. Today, crypto day trading is a popular hobby that involves both high risks and high rewards. For some, it has even become a full-time job and a primary income.
The goal is to buy low, sell high, and make a profit from the difference in price movements. It’s an extremely volatile market with lots of opportunities for both profit and loss. Before getting started, it’s a good idea to check out a Day trading guide for beginners in order to improve your crypto trading experience.
Before you start day trading crypto
When you start day trading crypto, there are a few things you need to know and keep in mind.
Proper risk management with stop loss
Since cryptocurrencies are volatile, there’s a chance you could lose your initial investment. The only way to protect yourself from losses is by setting stop-loss limits and profit targets. This means that every one of your trades has an exact price at which it will be sold if the market moves against you. You should also make sure not to spend more than you can afford to lose.
You can’t predict all price movements
You need to be able to make your own decisions and understand the risks of every trade you make, but it’s almost impossible to predict short-term price changes accurately with any degree of certainty. It can take months or even years before a coin starts mooning (showing rapid increases in value).
Do your own research
There are many different opinions on what will happen next for cryptocurrencies. Crypto day trading is not an easy way to make money for this reason. It’s important that you learn as much as possible about the markets before putting any of your hard-earned cash into them.
Prepare your portfolio for downturns in the market
You need to be prepared for the possibility of downturns. This means having a solid portfolio with coins that have low correlation. That way if one coin drops in value, another might increase so your total balance doesn’t change much overall.
How to get started with crypto day trading
First off, you need a platform with good reviews and a user-friendly interface. There are many different alternatives out there with varying fee structures as well as payment options. It’s important to find one that meets your needs.
You can choose between trading with actual cryptocurrency or using Contracts for Difference, CFDs. The second option, CFDs, is often recommended for beginners since you don’t need to own any actual crypto.
Instead, you’re speculating on the price movements using “normal” money. With cryptocurrency CFD day trading, you can make predictions on digital coins such as Ethereum, Bitcoin, Tether, and Dogecoin.
Buying and selling crypto via an exchange, instead of using CFDs, requires you to have a digital wallet where you store the coins. You will also need an account with a crypto exchange.
Make sure to do your research before starting crypto day trading and pick a broker with a good reputation!