Day trading cryptocurrencies is a great way to make money. But, you will need some knowledge and skills.
You’ll have to, for instance, decide what you’re going to trade and how much money you need. This is in addition to proper software and other equipment. You must also know when to trade and how to handle your risk.
To help you start, check out this concise but comprehensive breakdown:
What is Day Trading?
This term refers to the selling and buying of securities quickly. This is in contrast to other types of trading where it’s recommended you hold on to them for months or years.
When you day trade, you buy an asset when the price goes down, and you sell it off when the price goes back up. So, you’re not worried if the overall market moves. You’re simply looking for individual assets to trade. As long as the stock market is moving, you can make money.
What You Need to Know
Some day traders are active. They make several trades in one day. Others may just make a single trade in a day. Your specific strategy will depend on a variety of factors. This includes how the market is moving on a particular day and your trading strategy. A price chart will help you decide when to execute my trade.
You’ll also need to know:
- The way trades work
- When to sell and buy
- How to recognize patterns in a price chart
- How to limit losses on your trade
Although it’s possible, don’t consider day trading as a way for you to make a lot of money quickly. But, you can do just that if you perform your due diligence.
Pick one market and learn about that one. Once you learn how to make money there, it’s a lot easier to adapt to other markets.
You can start trading on the Forex, or Foreign Exchange, Market for a couple hundred. In this market, you’re able to trade currencies like the US dollar and euro. You can open an account for about $100, but it’s recommended you start with some more.
Utilize limit orders
A limit order lets you put restrictions on how much you can buy or sell. A limit order to buy kicks in at the limit price or lower. A limit order to sell kicks in at the limit price or higher. When the stock reaches your specified price, an automatic trade happens. This can help you from experiencing deep losses.
Tools You’ll Need
You also need a couple of basic tools to start:
Your computer should have a fast processor and a decent amount of memory. This reduces the chances of lags or crashes when you run your training program.
You don’t need a top-of-the-line computer, but you don’t want something cheap either. Computers and software are always changing, so make sure your computer can keep up with the times.
A slow computer will cost you money. This happens when it crashes while you’re placing trades. It can also cause you to get stuck in a trade.
A quick and reliable internet connection
If your internet connection isn’t the best, don’t start trading until it has a more consistent service. Using a mid-range internet package should do the trick.
There are several trading platforms you can download. When you’re starting, your trading style isn’t well-developed. Pick a few options, try them out, and see which one you like best.
Additional Tips and Suggestions
You must take a couple of months to practice and develop a strategy. When you feel confident in your strategy, start trading with real money.
Use a demo account to practice your trade strategy. These accounts let you practice all day, even when they close the market.
No two days are the same in the markets. It’ll take practice to see the trends and to learn how to execute trades without hesitation. Practice for about 3 months, until you’re making a profit consistently.
Most traders notice a decrease in performance when they switch from the demo. Demo trading lets you practice and figure out your strategy. It doesn’t mimic the current market.
If your trading isn’t going well when you begin, it’s natural. Stick with your strategy. You will eventually see an improvement in your performance.
Day trading is complex and emotional. Hedge your bets and make life more comfortable with cryptocurrencies.