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Published On: Jun 9, 2023
16 min

Crypto Day Trading: Maximizing Profits in the Fast-Paced Cryptocurrency Market

Day trading cryptocurrency can be a successful and profitable venture, but it's essential to have a comprehensive understanding of the process before you begin.

In this comprehensive guide to day trading cryptocurrency, we'll cover everything from finding opportunities to protecting your investments. We'll start by outlining what day trading is and how it differs from other investment strategies. Then we'll explore some of the most essential concepts and terminology you need to know before starting. Finally, we'll give you tips for finding great opportunities in the ever-changing world.

What Is Day Trading?

Day trading is a common strategy where all positions are closed on the same day they were opened, and the trader tries to close as many positions for profit as possible.

Over several hours or less, day traders buy and sell several financial assets and, in turn, reap profits from speculating on short-term price movements. It is even familiar for some people to refer to day trading as intraday trading.

Customarily, the term "day trader" is inherent in the stock market, mainly forex and stocks. However, since the advent of the internet and the birth of cryptocurrencies, many have taken up day trading crypto.

It is important to note that even though day traders enter and exit market positions several times during a single day, the trader makes sure to close all positions at the end of the day.

Is it hard to Day Trade Crypto?

Crypto-day traders have a tough time of it. An extensive amount needs to be done for one person or even multiple people to start successfully as crypto traders. Still, with patience and discipline, they can become successful!

Our guide covers every aspect, from what starting capital you'll need to how often your strategy should change based on market conditions - we won't leave any stone unturned when looking at this subject matter, so if being a trader seems like something worth considering, then read more here.

What are the most common day trading terms?

  • Fiat Currencies
  • Altcoin
  • Mining
  • Token/Coin
  • Blockchain
  • Block

Fiat Currencies: Centralized currencies minted by central banks on behalf of governments.

Mining: Creating new units of digital currencies by confirming transactions.

Token/Coin: The individual unit of a currency.

Block: Confirmed transactions that are bundled together through mining or validation.

Blockchain: A series of blocks organized and linked sequentially distributed ledger.

Altcoin: Non-Bitcoin cryptocurrencies.

How to start day trading cryptocurrencies?

First, you must acknowledge that successful day traders have a profound knowledge of the market and a reasonable amount of familiarity with trends.

It would be best if you had some cryptocurrency to start trading, or you can choose a platform like Altrady that offers a free paper trading plan, which means you can practice your trading strategies without using real money.

See Why Altrady It's a Day Trader Dream Come True

There are many ways you can get your hands on it. The best way would be to open an account at an exchange and fund that with fiat currency (like US dollar or Euro), then buy Bitcoin to enjoy all of its benefits like low fees, etcetera, and stay up-to-date about new opportunities as they arise.

A typical day trader uses technical analysis to draw up trade ideas. Therefore, before you start day trading, you should have a structured approach and a strongly rule-grounded strategy.

Commonly, many people who take up trading crypto approach the market from the perspective of a gambler rather than taking up an analysis. This approach makes the chances of failing and losing money incredibly high.

As a day trader, the high volatility of the crypto market is your best friend. Because of this, the liquidity and trading volume of the cryptocurrency you choose is critical to the success of your trade.

Seasoned day traders typically trade highly liquid market pairs (especially in Forex currencies), which is vital mainly when exiting a position.

Before trading any cryptocurrencies, it is essential that you first check how liquid the crypto is. Several crypto exchanges and cryptocurrencies are illiquid and do not offer instant execution, which is characteristic of liquid Forex currencies.

Cryptocurrency charts can be read in the same fashion that a day trader would with any other asset. Day traders use technical analysis, which considers an asset's price history and key indicators to predict its future price movement.

Crypto day trading checks

  • Liquidity.
  • Volatility.
  • Trading Volume.

Crypto Day Trading Strategies

The best way to make money is through trading strategies, not by gambling or betting. A good strategy can distinguish between one lucky streak and long-term success! You have many options when deciding what type of market you want - depending on your competencies, so don't think that just because someone else is doing something doesn't mean it's right for YOU!!!

Here are a few crypto trading strategies you could use to understand how to day trade crypto in more detail.

1. Range Trading

As the name states, range traders look for price ranges within the market structure and use this to produce trade concepts grounded on those ranges.

It is a relatively simple strategy involving analyzing candlestick charts and using support and resistance levels to guide trade decisions. For instance, if the price of crypto or stock falls within a support level and a resistance level.

In this situation, a day trader could buy the crypto at the support level and sell it at the resistance level. On the other hand, a day trader could short the resistance level and exit at the support level.

Range trading is rooted in the notion that the edges of the range will hold as support and resistance until the range is broken. This means that the lower edge of the range will likely raise the price, while the upper edge of the range will likely lower the price.

When using range trading, day traders are usually prepared for the possibility that the market can break out of the range.

Naturally, this involves setting a stop-loss level where the range breakout is established. Once you have identified patterns in the market, it is possible to exploit them to your advantage.

For beginners, range trading is a relatively straightforward strategy when undertaking crypto day trading.

A good understanding of candlestick charts, support and resistance levels, and momentum indicators are necessary to increase your chances for profit.

2. Scalping

This strategy is widespread among day traders and is highly effective if well utilized. Scalping involves taking advantage of small price movements over short time frames.

Altrady has his proprietary scalping scanner named quick scanner, and you can find more info about it here.

Learn About Altrady Scalping Scanner

The primary weapon in a scalper's arsenal is taking advantage of increased trading volumes to profit. Seasoned day traders can attest that when using the scalping strategy, they can often enter and exit market positions within seconds.

To augment their results with maximum leverage, scalpers often trade on margin or trade futures contracts.

Sometimes, day traders may need to avoid assuming risk management principles do not apply when using scalping because this strategy involves trading with leverage. Successful scalpers are conscious of margin requirements and apply appropriate position-sizing rules.

Scalping is a day trading strategy more suitable for skillful traders because of the high risk and needs for fast trade execution. Conversely, extensively making repeated bad trades could swiftly blow up a good trading account.

3. High-frequency Trading (HFT)

This is a type of trading strategy that involves making use of algorithms. It is often familiar with quantitative traders.

In high-frequency trading, a day trader develops algorithms and automated trading bots which quickly enter and exit several market positions over time. For day trading as humans, it gets to a point where fatigue kicks in.

However, automated trading bots run day and night effectively after receiving the parameters to look out for.

This is one of the most straightforward strategies, right? Just set up algorithms, develop an automated bot, and let it do the work!

However, it is more complex than it looks. HFT includes monitoring and tweaking the algorithms to keep up with the rapidly evolving market conditions.

Large trading firms mainly use high-frequency trading, which is an exclusive industry.

Because this strategy is more commonly used by successful trading and hedge funds, high-quality information concerning the market takes time to come by, especially for individual investors and the general public.

This strategy is more suitable for advanced traders since developing efficient HFT bots requires a substantial grasp of advanced market concepts, ICT, and mathematics.

And yes, of course, there are HFT bots for sale, but have you considered why someone would sell a profitable trading bot rather than use it themselves?

4. Arbitrage

This strategy involves purchasing cryptocurrencies from one market and selling them to another market at a higher price.

The discrepancy in the buying and selling prices is referred to as a "spread" in trading. Because the crypto market is generally unregulated, it allows anyone to create an exchange.

This is one of the reasons why significant differences in the spread of crypto exist and differences in asset liquidity and trading volume.

Traders in cryptocurrency often hold a portfolio on an exchange they are trading. You can check out this compilation of some of the best crypto portfolio management tracker platforms.

Suppose you decide to take up the arbitrage strategy. Open accounts on exchanges that you believe will exhibit significantly different prices for the same asset within different markets.

For instance, during the "kimchi premium"—when Bitcoin traded at a 40% higher price in South Korea than in the U.S.—traders profited from purchasing Bitcoins from U.S. exchanges and immediately selling them on South Korean exchanges. Astonishingly, it has happened on more than one occasion.

For this strategy, even though it is mainly straightforward, it would require that you are well-versed in crypto market concepts, up to date on discrepancies in the market prices, and use one of the best arbitrage apps out there.

What are the best cryptocurrencies for day trade?

The crypto market is virtually flooded with thousands of cryptocurrencies, and this is forecasted to continue rising as many more people take up crypto while slowly moving from fiat currencies (government legal tenders).

This proliferation offers an excellent opportunity for day traders who take up crypto trading.

Tether (USDT)

Tether is considered one of the best cryptocurrencies for many reasons. First of all, USDT has one of the highest 24-hour trading volumes among crypto, making it an integral part of the crypto market.

Also, Tether is considered one of the most stable coins because of minimal price fluctuations. This increases the confidence for potential buyers that immediate losses from sudden price drops are not expected.

Bitcoin (BTC)

This is the most popular cryptocurrency and is also the oldest crypto. Because of its high adoption globally and consequent high demand and value, day trading Bitcoin is a desirable investment.

Bitcoin's characteristic nature is what makes it the most preferred and, at the same time, the most traded crypto. Moreover, there are currently around three million available bitcoins for mining out of 21 million, making Bitcoin an asset in the trading world.

Ethereum (ETH)

Second, only to bitcoin, Ethereum is another massive cryptocurrency, and it has amassed an enormous following of both investors and traders.

Ethereum's high popularity and adoption by millions because, in addition to being a cryptocurrency, it is also a blockchain platform. Ethereum's blockchain allows investors to integrate intelligent contract protocols into its blockchain.

As stated earlier, crypto-day traders exploit the high volatility of assets to maximize profits when trading. Ethereum shows a high level of volatility which is suitable for making profits within short durations. In addition, Ethereum is listed on multiple exchanges, which makes it relatively easy to trade in the same.

Litecoin (LTC)

This is the first open-source person-to-person Altcoin globally that has maintained its positional stability by capitalizing on the market. Lite coin is a branch of Bitcoin and is speculated to be the seventh-largest cryptocurrency worldwide.

The widespread use and popularity allow for almost zero instant rate disbursement to individuals globally. The majority of those who prefer Litecoin point out that its great storage capacity and fast transaction confirmation time is the reason.

Binance Coin (BNB)

As one of the world's leading crypto exchanges, Binance launched their very own cryptocurrency known as Binance Coin.

It has quickly gained popularity in the crypto market and exhibits great promise since a reputable exchange owns it.

BNB has quickly grown in demand and liquidity likewise and is even rated among the top 10 cryptocurrencies globally by market cap and high liquidity. This makes it highly appealing to crypto day traders, and it usually is ideal crypto to start day trading with.

What are the most notable Crypto Day Trading Platforms?

There are several tools in the market, so it may be advisable to experiment with different crypto day trading platforms until you discover what fits your specific needs and trading style.

Altrady is one of the best tools traders should add to their arsenal. Trading platforms streamline crypto trading by allowing trade on multiple exchanges from a single platform rather than having multiple windows open to trade in several exchanges.

Altrady is the only platform in the market built from the beginning for day trading, so day traders consider it the day traders' paradise.

Exploring the various tools can be the difference between discovering a hidden treasure that could boost your portfolio or falling victim to buying exaggeratedly priced cryptocurrencies.

What is a good exchange for Day Trading?

When deciding on a specific exchange to use for day trading cryptocurrencies then, there are a few things that you need to factor in, namely:

Liquidity - The ease of buying and selling assets. An exchange with high liquidity is preferable to one with lower liquidity.

Security - The security of exchange allows you, as a trader, to be at peace and trust that your funds are safe. On several occasions, exchanges have been victims of hacking, and millions siphoned from them. So it would help if you chose an exchange that assures you of the high safety of your funds.

Fees - Seasoned traders who have been in the trading arena will inform you that there are usually fees paid to exchanges. These fees should always be included in the profits when trading. Therefore, a cheap exchange is preferred to more expensive ones.

Charting and Technical Analysis for Day Trading

These help you visualize various trading indicators and draw trend lines which help in market visualization.

As a trader, especially a day trader, it is imperative that you practice with these trading indicators and trend lines as you steadily grow your technical analysis skills. Once you master this, it is assured that you will have the upper hand over other traders.

Technical analysis as a market skill is one of the greatest assets that a day trader can hold and crypto trading charts can help you with that.

Day Trading Tips

As lucrative as day trading crypto may seem, some small portions of advice go a long way in improving your endeavors.

  • Start slowly (don't punch above your weight).
  • Increase your market understanding and learn patterns that work for you.
  • Progress upward steadily and take up more challenges.
  • Avoid Huge Risks
  • Learn, Learn, Learn

It doesn't matter how confident you are about your capabilities and skills in day trading cryptocurrencies; it is prudent to take baby steps.

Refrain from diving right in headfirst but rather progressively ease into the process. The crypto market has a vast potential for great returns, but at the same time, it is unpredictable and can result in massive losses.

As a day trader, especially for beginners, you should start slowly with small trades and then progress steadily into more prominent and higher staking trades. Understanding the market is essential to avoid making rookie mistakes when undertaking trades.

When day trading, especially cryptocurrencies, overconfidence is your worst enemy. This is mainly because of the crypto market's unpredictable nature and high volatility.

For successful day trading, you must educate yourself as much as possible on cryptocurrencies and the crypto market. The high proliferation of cryptocurrencies and variations in use make them significantly different from trading in the stock and Forex markets.

With every new day comes something new in the crypto market; therefore, you need to be constantly up to date and learn new trends.

A tremendous amount of this education comes not only from reading but rather from the trading process itself. Nothing beats the hands-on experience and lessons from undertaking actual trading activities.

Alternatively, you can consult professional advisors concerning pressing questions you might have.

Experienced day traders will tell you that you should always avoid risking more capital than you can afford to lose when day trading crypto. This is especially true when trading with leverage because massive losses are also possible, even though there is a potential for high returns from small investments.

Experts advise that when assessing trading opportunities, a day trader should spread capital across many trades and reduce the risk if a single trade goes south.

By practicing the 1% rule—which states that no more than 1% of a trader's capital should be risked on a single trade—you can avert the financial stress of losing your funds in a transaction.

Frequently Asked Questions

Is Crypto Day Trading Profitable, and Can I Make a Living from It?

The answer is yes, especially when executed correctly; day trading cryptocurrencies is profitable. The high crypto volatility and the sheer number of currencies provide an excellent opportunity to profit from day trading crypto.

Successful crypto day traders make up to $500 daily, but this requires a lot of practice and experience. Do not think that you will succeed immediately!

Why Do Most Day Traders Fail?

Several factors might cause the downfall of a day trader, but the most common is the "get rich quick mentality." Several people take up day trading (especially crypto day trading) while assuming that profits will be instant.

It is vital that before starting day trading, an individual should get adequate information about the crypto market and its nature. The crypto market can offer tremendous gains but, at the same time, also significant losses.

Do not jump right into the deep end before polishing up your swimming skills. Start with small trades before taking up larger and riskier ones.

Final Views

By this point, you are equipped with enough knowledge to start crypto day trading on your own and make some cash from it.

Day trading offers great potential to reap massive profits from the growing crypto market, but it needs to be executed properly.

It is also an excellent way to grow your crypto portfolio. So now that you are well informed take advantage of the opportunity to start this journey of crypto day trading!


Catalin is the co-founder of Altrady. With a background in Marketing, Business Development & Software Development. With more than 15 years of experience working in Startups or large corporations. 


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