Day Trading Cryptocurrency: How to Make $500 Per Day
Day trading is a strategy where financial instruments are acquired and traded within the same trading day. These instruments could include stocks, commodities, or in this case, cryptocurrencies. Cryptocurrencies are virtual currencies that are generally traded either peer-to-peer or on social trading platforms. They are based on blockchain operating systems, which can be thought of as ledgers that keep track of cryptocurrency transactions. Bitcoin is a particularly popular cryptocurrency, along with Monero, EOS, Dash, and many others. Trading in cryptocurrencies can be extremely profitable, as evidenced by many crypto millionaires, though some have doubts over how relevant cryptocurrencies will really be in the future.
Like other investments, cryptocurrencies are a risk. Their price points tend to be extremely volatile, and some of them come and go in an instant. It’s impossible to tell which ones might become popular and increase in value and which ones won’t amount to anything. It’s always possible to just buy cryptocurrencies that are already successful, or even mine your own, but even this isn’t future-proof. Take Bitcoin, for example. Its blockchain dictates that 21 million coins is the maximum that can ever be mined, and people are already getting close to this number. This makes some skeptics concerned that the cryptocurrency won’t be adaptable for wider use, but it could maintain its value since each individual Bitcoin can be split as many times as the owner wishes. Regardless of which cryptocurrencies you’re interested in, you’ll have to get your hands on some before you start trading them.
Preparation
In order to obtain cryptocurrencies, you’ll have to set up your digital wallet. There are many services out there that will vary in their features and security, but it’s generally considered best to have an online and offline wallet. The online wallet can be easily accessed and allow you to quickly trade or exchange cryptocurrency at a moment’s notice, and the offline wallet will serve as a backup so you’ll still have access to your cryptocurrency if other services go offline.
You’ll also have to decide how you want to purchase cryptocurrencies. Since you’re planning to day trade, it’s likely best to set up with an exchange platform so you can quickly and safely obtain and trade different currencies. It’s also possible to trade directly with others on peer to peer networks, but you’ll lack the security provided by a middle man.
Trading strategy
There are a few different approaches to day trading, with scalping being the most common strategy. This basically just means you goal is to make a profit as quickly as possible on your positions and move on to the next ones. When it comes to cryptocurrencies, you’ll be looking out for those with high volatility and high liquidity. These terms are used in all markets, but for your purposes, you’re looking for coins that can change in value quickly and that are frequently traded. Bitcoin has the highest liquidity, but you may research other top coins and find ones that better fit your goals. Just remember that lesser-known cryptocurrencies are generally a higher risk.
The money flow index (MFI) is commonly used by day traders to quickly determine when cryptocurrencies are being bought and sold and at what volumes. Generally speaking, positive market activity can be read through the charts, and if the price of cryptocurrency is maintained after high MFI readings, it’s a good time to buy. The general idea is that after two MFI readings of 100, a cryptocurrency that maintains its value is about to see a price increase. Your goal is to buy just before that happens and ride the positive trend through the day to earn profits. The volatile nature of the crypto markets make them great for day traders. For more information, visit https://tradingstrategyguides.com/day-trading-cryptocurrency/.
Day trading can be quite lucrative. With the right preparation and utilizing proper trading strategies, you can be well on your way to making substantial profits.