How To Day Trade Ethereum as A Full-Time Job
Day trading in the cryptocurrency market can be very lucrative if you do it right. You can make a profit if your trading is based on thoroughly researched strategies. Indeed, finding an edge is challenging but not impossible. The secret to managing risk is to stop one or two futile trades from resulting in unpredictable losses. If you pursue a risk plan, set strict stop-loss orders, and determine profit-taking levels, you can limit your losses and make gains. You’re not going to trade every day, and you’re not going to make money every day.
Now that you’ve decided to invest in digital assets, find the best cryptocurrency for day trading. You could buy and sell Ethereum. Ethereum is equal only to Bitcoin in market capitalization. It’s a decentralized, open-source blockchain that supports the formation of new tokens via DApps. Developers have been working on a concept called sharding, which makes it possible to process more transactions per second. It involves splitting the blockchain network into smaller partitions. Energy concerns will soon fade. The proof-of-stake consensus mechanism will drastically reduce energy consumption.
The Basics to Get Started
Day trading means buying and selling Ethereum with the goal of making a profit. It involves holding a digital asset for a few seconds or a couple of hours. At the end of the day, you don’t have any open positions, so you don’t risk holding onto a potentially risky position overnight. Professional traders are well-disciplined, never allowing fear or emotion to factor in decision-making. Since you’re going at it alone, get a good understanding of technical analysis and have trading tools to identify chart patterns, trading volume, and price movements.
Here’s what you need to do to become a day trader.
Select An Exchange to Trade On & Open an Account
To day trade Ethereum, you need a good exchange. A cryptocurrency exchange is the cryptocurrency version of a stock exchange. You can trade one Ethereum for another or buy Ethereum using conventional fiat money. There’s a price difference between exchanges of a few cents or even more at times. So, don’t be surprised if the Ethereum price varies from one exchange to the other. Finding the best exchange can take time and effort, but it’s worthwhile. Security, liquidity, fees, history, markets, and user experience are essential aspects to consider.
You can buy and sell Ethereum 24 hours a day. Day trading without an account is possible, but things are restrictive. The signup process is relatively straightforward but may differ from what you’re used to. After providing your name and email address, the exchange will send an email to verify your identity. It will be necessary to add a payment method for deposits and withdrawals. To make larger trades, you must ascertain more information about yourself. You can start trading after a few hours or days of opening the account. As you can imagine, the identity verification process doesn’t happen in a flash.
Get A Digital Wallet
While you don’t necessarily need a digital wallet, it’s a convenient way to store and manage Ethereum. Because cryptocurrency doesn’t exist in physical form, the wallet doesn’t actually hold Ether. It records and holds transactions on the blockchain. Make sure the wallet is mobile-friendly, so you can trade on the go. Use a second phone that serves exclusively as a crypto wallet. It shouldn’t have a data plan and remain powered off. The offline features of hardware wallets make them safer. A physical wallet can be purchased from different stores. It comes with software that runs on your PC or phone.
Build A Trading Strategy
If you want to make the most out of your investment, craft a solid trading strategy. More exactly, have a systematic methodology for buying and selling in the cryptocurrency market. You’re not deceived by market manipulation techniques such as FOMO (fear of missing out) or FUD (fear of uncertainty and doubt). Actually, you’ll make substantial gains by balancing risks and profits. One day trading strategy you can use is chart analysis. You study the price movement of Ethereum and try to determine in what direction it will go to make better trading decisions.
Take another look at the movements in the chart. Can you make a profit? Short-term anomalies allow you to extract substantial profits. An understanding of patterns in digital asset prices will help you identify a suitable trading strategy. Keep track of all the trading strategies you use in a journal to improve your performance. Data on your personal trading style is very important. The more insights you have about your trades, the more experienced you’ll become. Review every trade that you’ve made, whether good, bad, or ugly. Don’t focus solely on entry and exit price.
Close Your Positions at The End of The Day
As far as day trading is concerned, it’s never a good idea to hold onto a position when the market closes for the day. The losing trade won’t be reduced and neither will it transform into a profitable one. Simply put, holding a day trade position overnight is risky. It doesn’t matter if you win or lose, you should sell out. Conditions change after market hours, meaning that the gain could increase. However, it’s more likely that you’ll sustain a loss. Make it a rule to never hold a position overnight.
How Do You Switch to A Full-Time Career?
Day trading Ethereum is a viable way of making a living if you learn to master it well. You should always move forward with precaution. Suppose you want to trade cryptocurrency full-time. In that case, determine how much money you’ll need to earn. Go over your debit and credit card statements for the last few years and get a sense of your living expenses. Make sure you have a financial buffer. It gives you peace of mind during unforeseen events. Even if you have experience trading Ethereum, continue to practice. Day trading is very fast. What sets apart successful traders from not-so-successful ones is intuition, experience, and repetition.
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