Day trading is an investment strategy that uses frequent trades in a variety of securities to generate profitable returns. It is different from buy-and-hold investing. Day traders rely on a variety of tools and resources to succeed. Day trading can be a difficult process because of the high risk involved. This is why you need to find a strategy before you get started.
Although crypto is a new and exciting digital currency, it has its risks. Before you decide to invest in it, it is important to understand the various factors that go into making a cryptocurrency investment. Regardless of the market conditions, a day trader should have a comprehensive understanding of crypto and trading principles.
1. Choose A Trading Platform
Day traders start by choosing the platform they will use. Most of the time, US-based traders can only use domestic regulated crypto-trading platforms. Finding the right platform for crypto trading is an important step for successful traders. Several factors determine the platform that’s right for you.
The first choice is often not the best one when it comes to choosing where to trade in crypto. There are numerous factors to consider when it comes to choosing a crypto exchange such as how long they have been around and what cryptocurrencies they support. Platforms such as SoFi Invest offer countless currencies to day trade with. Trading crypto with SoFi Invest is easy through their free downloadable app. With SoFi Invest, Crypto can be traded 24/7 and is purchasable in dollar terms, allowing you to buy tiny fractions of coins – all within a secure platform.
2. Choose Investments
For day traders, market volatility is essential. It can be scary to enter the crypto market, but it’s the essential evil that day traders need to avoid. When choosing what to invest in, you need to consider the volatility, asset liquidity and trading volume.
Finding a crypto asset with high volatility and high liquidity is a good start to identifying the right one to trade. However, making the right trade should not be based on these two conditions alone.
3. Determine Your Trading Strategy
There are many strategies that a day trader can use to make money in the crypto markets. One of these is developing a winning strategy that is backed by proper research. Some of the most popular day trading strategies are listed below.
Arbitrage occurs when the price of a cryptocurrency pair changes from one exchange to another. This can be done by taking advantage of the difference in the value of the two digital assets.
Another option is bot trading. A trading bot is a type of software tool that enables investors to buy and sell securities. It is typically used for pre-set conditions to help maximize profits and reduce risk and losses.
4. Learn To Read Trading Charts
One of the first things that a trader needs to learn is how to read the charts. Once you have this skill, you will be able to tell the difference between a rising and falling trend.
5. Find A Solid Trading System
A solid trading system is very important to becoming a successful trader. It is not only about the technical aspects of trading, but it is also about the business aspect of the trade.
Day trading can be very lucrative when you learn the ropes. Before the new regulations take effect, traders should take the time to prepare themselves. They should also make sure they’re aware of the various tax considerations related to crypto. Any crypto investment is very risky and can turn into a loss. Having a solid trading plan will lessen risks and increase profits.
