Making 100 dollars a day trading cryptocurrency might be easy for professionals but it’s not a cup of tea for beginners. If you too are a novice crypto day trader, you should first learn and then apply day trading crypto strategies carefully.
Day trading is done in traditional markets. Crypto day trading refers to a short-term trading strategy that involves the simultaneous purchase and sale of crypto assets. Day trading crypto is high-risk because of the volatility and liquidity present in cryptocurrency markets. It requires more knowledge about crypto and blockchain technology to be consistent.
Day trading is an investment strategy that involves frequent trades of one or several securities during the day to make a profit. While traditional buy and hold investors are focused on long-term performance, the day trader is more concerned about making immediate profits.
Day traders who are successful use a variety of resources and tools. These include stock screening and trading simulator software. They can capitalize on short-term price movements in stocks and bonds and other commodities and currencies.
It can be difficult to take profits in crypto from price movements and discrepancies within a short time frame. Day trading crypto can make you rich but it also has a high risk. You should also keep this in mind as well.
Strategies To Make $100 a Day Trading Cryptocurrency
In recent years, the crypto markets have been a popular choice for day traders. The crypto markets are not like the traditional market. They never close. Day trading crypto is possible without a subscription to a brokerage or margin account. This makes it more accessible than the stock market.
While crypto is an exciting new industry, there are risks to those who invest in it. With thousands of new cryptocurrencies emerging on trading platforms and exchanges, investors in crypto should consider the market’s volatility and speculative nature.
Day traders should understand crypto and trading principles regardless of the market. You should only invest what you are willing to lose. Here’s how to start day trading crypto if you are a skilled risk manager and have nerves of steel.
Also Read: What are the Top UK Trading Platforms of 2022?
Choose a Crypto Trading Platform
Day traders must decide which platform they want to use as their first step. US traders cannot use any crypto-trading platform that is not regulated in the country. This is why it is important to research this factor when choosing the right platform.
When choosing the platform to sell or buy crypto, liquidity in exchange, asset liquidity, and fees should be top of the trader’s mind. Because of the volatility in the crypto market, the value of digital assets may fluctuate wildly. Traders who want to maximize their profits in this market must move quickly.
When it comes to crypto trading, the first choice may not be the best. The many options and differences among the various crypto exchanges can make it difficult for novice crypto day traders to choose from.
These are the main things to keep in mind when searching for the right trading platform.
- Years of active: A longer period in business can indicate stability and credibility.
- List of supported cryptos: It can be useful to know what cryptocurrencies you can trade in advance to help you choose the right platform. A smaller exchange that supports more cryptos and has more trading pairs may be more useful for day traders interested in altcoins than an exchange with fewer options.
- Transaction Fees: These are the fees charged by exchanges when sellers or buyers execute a trade. To monetize their businesses, all cryptocurrency exchanges charge a transaction fee. The exchange may charge a transaction fee or no fee for trades above $10,000. This is to encourage large-scale trades.
- Deposit methods Like a brokerage account, users, must finance their exchange account using capital. While many exchanges permit wire transfers and bank transfers, fewer allow credit card funding, PayPal transfers, or gift card transfers.
- User Reviews: One of the best ways for evaluating which exchange you should choose is to visit different crypto communities and read user feedback.
- Liquidity An exchange’s liquidity, also known as exchange liquidity, refers to the speed and ease with which an asset can be converted into another without changing its price. High liquidity crypto exchanges can quickly buy and sell assets with minimal difference between the ask and bid prices.
Quick Tip: For traders who want to see a deeper comparison of crypto exchanges, CoinMarketCap and Cryptowisser are reliable resources that allow them to compare various platforms based on liquidity, trading volume, and supported cryptos.
A few internal factors can influence exchange liquidity. There is a high trading volume of listed crypto assets active traders on an exchange to fulfil orders. Low fees that encourage makers to open positions. Several funding options allow more traders to access the platform.
Prospective traders need to consider whether their exchange makes it easy and affordable to transfer their assets to another cryptocurrency wallet. Your exchange should allow you to transfer funds and assets from your account to other wallets if your trading session is interrupted.
Make wise investments
Once you have your platform set up, you can choose the areas you are interested in investing in. Market volatility is a necessity for crypto day traders. Day traders can profit from the same chaotic market conditions that scare away investors who prefer to buy and hold. Day traders need to participate in the crypto market’s volatility and liquidity.
Tally Greenberg is the head of business development at Allnodes and believes that being a successful crypto day trader requires more than just reading charts. Greenberg states that knowing the basics of the blockchain, its governance, size, and protocols will help you assess the condition of any potential investment. You should be ready to learn and keep up with the latest news about your chosen assets’ blockchain developments.
Greenberg says traders can gain an advantage by having a good technical knowledge of the technology and team behind altcoin projects. Greenberg stressed the importance of careful consideration when deciding which coin to trade. Greenberg stated that investing in the top 15-20 coins according to market capital is a common strategy for crypto. Greenberg says that even though this is a common strategy, it’s important to tread carefully. “Not all coins in this list make sense. You’ll have to do extensive research to find out. Day trading in crypto is risky. You should only invest what you can afford to lose. You’ll be successful if you treat day trading as a serious job.
Consider asset liquidity, volatility, and trading volume when deciding what investment to make.
Asset liquidity measures how easily an asset can convert into cash without affecting the price. When a trader executes a trade and the exchange fulfils an order, the price of cryptocurrencies can fluctuate. Slippage is the difference in prices. It can be a matter of minutes in crypto markets that the difference between big profits and big losses.
Lack of liquidity can cause slippage, leading to a crypto market crash. Flash crashes occur when the market sell order exceeds the top buy orders in the order books. Preemptively, traders try to exit their positions as quickly as possible. If there are no buy orders, the asset’s price can plummet. Flash crashes have caused exchanges to refund millions of dollars to affected users.
Day traders need to understand and account for volatility
Volatility refers to the unpredictable nature of crypto price movements. News cycles, economic data, and research reports are all factors that can affect volatility in markets. The same factors can dramatically affect crypto assets, or none at all, in the crypto markets.
Altcoins with small market caps are more volatile than the more well-known and popular cryptocurrencies such as bitcoin and ether.
The trading volume of cryptocurrency is the sum of all transactions over a specified period.
This measure of market interest can be described as overall market activity. High trading volumes indicate greater liquidity. Crypto with high liquidity often comes with a higher price. The crypto market is volatile and highly liquid.
However, not all cryptocurrencies can be considered equal. Crypto day traders need to examine their trading volume carefully to determine if an asset can be sold quickly or at a higher level than purchased.
The crypto market is still very young, and the unique blockchain technology that underpins cryptocurrencies makes it a crypto-specific market. This is evident in the correlation between bitcoin’s price and all other altcoins. The bitcoin price could drop if there is a departure from a country of Bitcoin miners.
The altcoin market falls with bitcoin’s price drops due to falling demand. It is a good start in identifying the right crypto asset to trade. These two factors alone should not be enough to decide to invest. It would be best to consider other factors specific to the crypto. How is it mined and minted? Does the coin generate a lot of interest? If the coin price doesn’t increase by a specific time, when should you reduce your losses?
Choose a Trading Strategy
Day traders can use many strategies to profit from short-term volatility in crypto markets. Crypto day traders should have a winning strategy backed up by research and well-planned plans for when they enter and exit positions.
Arbitrage is when crypto traders purchase a cryptocurrency from one exchange and then sell it on another exchange for a greater profit.
Cryptocurrency pairs can create arbitrage opportunities. Arbitrageurs can profit from the difference in the crypto pair that consists of Bitcoin and a less-known altcoin. Arbitrage, a complex financial process that is usually automated using price-monitoring software to keep the prices of digital assets stable between exchanges, is complicated.
Note: Crypto trading pairs are assets that can be traded directly with each other on an exchange. Arbitrageurs can profit when the price of a crypto pairing consisting of a less-known altcoin or Bitcoin fluctuates between exchanges. Arbitrage, a complex financial process that is usually automated using price-monitoring software to keep the prices of digital assets stable between exchanges, is complicated.
A trading bot is an automated software tool that investors purchase and sell financial instruments at preconfigured times or when certain conditions are met. This maximizes profits. The purpose of crypto trading bots is to increase profits, reduce losses, and minimize risk.
Looking at exchange fees and price movements can be streamlined with crypto trading bots. They also offer opportunities to make a short-term profit on trades. For decades, bot trading software has been an integral part of stock exchange brokerages. Day traders familiar with software programming and APIs may be able to use this tool to their advantage.
The long straddle (also known as the buy-straddle, option-straddle, or straddle) involves the purchase of both an order and a put. In a long straddle, both the call and put orders are placed on the same cryptocurrency, with the same strike price and expiration date.
Because of the volatility in crypto markets, the long straddle is very popular. This strategy allows crypto day traders to bet on the price change of crypto assets. The day trader makes money regardless of whether the price moves in the long straddle. The trader will lose if the price does not move.
Note A strike is a price at which a derivative agreement can be purchased or sold after exercising.
Range trading is a way to capitalize on sideways markets or non-trending markets. It identifies stable high and low prices and shows them as support and resistance levels on charts. To make profits, day traders who use range trading techniques can identify a period to buy crypto assets when they are oversold (at low prices) and then sell them when it’s overbought.
Crypto day traders can use online screeners to find the right cryptocurrency asset to trade. Like most trading strategies, range trading can be used in other markets and beyond crypto. Range trading is a popular choice for crypto day traders due to its clear entry and exit points. This can help minimize losses. The range trader can make small profits quickly, which helps to minimize losses due to market conditions or unfavourable news cycles.
Scalpers are known for leveraging large amounts of liquidity to profit from small price movements. This strategy involves selling and buying bitcoins or other altcoins in a matter of hours and then cashing out small percentage gains at the end of the day.
Scalping crypto is a popular choice for day traders due to its simplicity of automation, low risk and potential profitability. Trading can be made easier by programming trading bots. Scalping allows traders to evaluate their gains and losses in a short time frame rather than long-term investing. Traders can make small but steady profits that can add up to significant long-term gains due to the volatility of the markets.
Technical analysis (TA) is the study and interpretation of historical data, such as volume and price data points, to identify market trends. TA gives traders a scientific way to identify trade opportunities and make profits.
Technical analysts can apply their strategies to any security or market as long as they have historical trading data. Cryptocurrency can use TA to guide traders and help them evaluate past performance.
Traders are arguing about whether TA should be applied to crypto markets. Many traders believe that technical analysis is impossible due to the lack of global regulations and many crypto exchanges. Some traders believe the relative strength indicator (RSI) indicators are worthwhile. The RSI indicator measures the relationship between the crypto’s price and actual demand. The RSI indicator can identify if an asset or security has been overbought/oversold. Traders can use it to plot entry and exit points based on momentum.
The Money Flow Index (MFI) is another important oscillator technical analysts analyze crypto. To determine whether BTC’s price is trending towards a bullish divergence or bearish, the MFI can be used alongside the RSI.
It is best to use technical analysis in crypto in conjunction with other strategies. Crypto day traders need to be familiar with TA and include it in their arsenal. However, they should also consider news, fundamental analysis and correlation arbitrage, and other market drivers. Technical analysis has a unique aspect that focuses on developing a strategy for entering and exiting positions.
Advantages and Disadvantages of Day Trading Cryptocurrency
Crypto investments are high-risk, high-reward investments. Cryptocurrency is a new type of digital asset, so investors need to be aware that crypto investments could disappear.
Traders must take the time to learn about the rules and regulations regarding taxing crypto profits. For example, crypto is not exempted from short-term capital gains tax. Day traders are subject to marginal income tax on any crypto held for less than one year. When reporting your earnings online or with an accountant professional, you should include crypto gains.
- Anybody can trade cryptocurrencies if they have access to it. Retail investors and day traders can access the crypto markets, research and interact with them without additional barriers, except for verifying their identity and funding an exchange account. For those who wish to own bitcoin but can’t afford a $60k+ investment, they can purchase and sell fractions of any crypto.
- The crypto markets are available 24/7, all year. The crypto markets are open 24/7, and traders can buy and sell at any time. Market hours for the New York Stock Exchange and the Nasdaq are from 9:30 a.m. until 4 p.m. ET. ET.
- The blockchain technology behind cryptocurrencies is decentralized. It’s designed to make users anonymous and allow them to process payments without the need for intermediaries. Day traders who trade on a centralized exchange will find that the cost of crypto transactions is very affordable because there are no government taxes or fees.
- It’s easy to trade crypto. A new trader may not be as familiar with the market, but they could also suffer catastrophic losses.
- The 24/7 market has its double-edged sword. Because cryptocurrency is always open, there are fewer patterns where profitable trades can be made. Day traders in cryptocurrency may be more focused on charts than traditional traders looking for the best time to trade. Trends can be harder to spot so a day trading session could turn into night trading.
- The US government watchdog, FinCEN, is increasing the know-your-client and anti-money laundering requirements for domestic cryptocurrency exchanges. However, the space remains largely unregulated. There is no government oversight, so there is no protection for traders, institutions, and exchanges hacked or swindled. Without a private insurance fund, users who have lost their funds due to an exchange closing down are unlikely ever to be able to retrieve them.
- You could be a victim of pump-and-dump or wash-sales when trading cryptocurrency. To attract traders, a group of people conspires to increase the price of a particular cryptocurrency artificially. After making profits, the traders sell the crypto and tank the price.
Day trading crypto is high-risk and involves the purchase and sale of cryptos frequently in pursuit of short-term profits. Day trading crypto is a risky business. You need to know your trading location, develop a day trading strategy and keep to your exit and entry points.
Remember that day traders often lose money. The key elements that make crypto day trading different from gambling are setting aside time to concentrate on your trades, measuring profit and loss, and sticking with a full-fledged strategy. Day trading is just one way to make profits in crypto. There are many ways to make money.
Make $100 a Day Trading Cryptocurrency – FAQs
What amount of money is required to start trading crypto?
You can open an account for as low as $100. However, you will need at least $500 to place day trades and have stop-loss levels. You won’t make a living trading the markets with that much money. You may still make a few bucks a day, which will help you grow your account over the long term.
How to make profits with crypto without selling?
There is no way to make profits without selling.
What is the maximum amount you can make per day from trading?
Let’s take an example. The average American salary is $118,912 per annum or $57 per hour. The top 10% earns more than $195,000 annually, while the bottom 10% make less than $72,000 per annum.
Chris Evan was born in Quebec and raised in Montreal, except for the time when he moved back to Quebec and attended high school there. He studied History and Literature at the University of Toronto. He began writing after obsessing over books.