How to day trade in the Crypto Markets? : A Comprehensive Guide

Zebpay
5 min readMay 20, 2024

Day trading is one of the most popular trading strategies, and day traders are active in the stock, forex, and crypto markets. But is crypto day trading profitable? Should you use this strategy? This article will help you understand the fundamentals of day trading before you get started with it.

What is day trading in crypto?

Day trading is a strategy that involves a trader entering and exiting multiple positions on the same day. Since the trading occurs within the same day, this strategy is known as day or intraday trading. Day traders aim to make a profit from price changes in a financial instrument. Day trading became a mainstream concept on the stock market, where trading is allowed during business days.

How do I pick crypto for day trading?

Day trading can be profitable when there are two favourable market conditions

  • Liquidity: Day traders prefer to be able to enter or exit trades quickly. Slippage could eat into a trader’s profit in a low-liquidity market. The position is sold in increments with slippage, with each trade order having a lower price than the previous trade, leading to smaller gains overall.
  • Volatility: There is no chance of buying low and selling high if there is no volatility. For a day trading strategy to be viable, markets must go up and down on a short-term basis.

Common Crypto Day Trading Strategies

Scalping

Scalping is a day trading strategy where a trader tries to make a profit from small price movements over short periods. There are gaps in the market, such as in the bid-ask spread or liquidity. Scalpers often use this strategy by using leverage, like futures or margin contracts, to increase their profits. It is vital to manage risks with this trading strategy.

Range trading

This trading strategy assumes that asset prices move within a price range. Traders look at support and resistance levels and candlestick charts when utilizing this strategy. Day traders buy when prices are at a support level and sell when they reach a resistance level. Traders also might go short when prices hit resistance and close out the short when the prices reach support.

Sentiment Analysis

This day trading technique depends on how other traders feel about a crypto token. Traders can gauge others’ sentiments around a crypto token by monitoring social media and other crypto trading websites and platforms.

Technical Analysis

This trading strategy is similar to sentiment analysis but depends on past price movements to make market predictions. This strategy involves processing large amounts of data to draw out market performance trends. However, this strategy assumes that past performance is a good predictor of the future performance of a crypto asset.

High-frequency trading (HFT)

HFT is a day trading strategy used by quantitative traders or quant traders. This strategy involves quickly entering and exiting multiple positions over a short period. These time frames can be as small as milliseconds. This type of trading involves a lot of back testing, monitoring, and changing or tweaking algorithms to adapt to changing market conditions.

Selecting the Right Trading Platform

A day trading strategy involves making many trades in a single day, and to perform this successfully, you need a platform with a few vital features. First, the platform should have low trading fees. There are transaction fees on each trade, and they can add up to eat into your profits. So pick a platform that has low fees to make your crypto trades profitable.

Second, the trading platform must be fast and have low slippage. The crypto exchange should also be able to execute trades quickly. Low slippage also means the asset price is close to the expected sale price. In some crypto trades, prices change in the time between your trade confirmation and the execution on the trading platform.

Other day trading strategies

You can use crypto day trading strategies using machine learning.

Bot Trading

You can use crypto bots for high-frequency and range crypto trading to earn passively. This method can make trading easy, as the bot executes all trades and invests your capital between profitable crypto trades.

Arbitrage

Another type of day trading is arbitrage trading. This trading involves taking advantage of the difference in price on two different crypto exchanges. This trading can prove risky, as you have to transact before the gap in price diminishes.

Day trading drawbacks

Timing the market can prove to be difficult, and traders also have to compete with sophisticated bots. Another drawback is trading fees. Trading fees can quickly add up when executing multiple trades, which can eat into your profits.

Conclusion

Day trading involves buying and selling crypto assets throughout a trading day to make profits. The trading day in the crypto space is even longer, as you can make trades 24/7 in the crypto market. However, day trading can be risky with no guarantees of profits, and you should do your due diligence before using a crypto day trading strategy.

Visit ZebPay blogs and stay up to date with all the latest crypto news. Begin your crypto trading journey with ZebPay, India’s oldest crypto exchange which is powered by the latest tools to help you trade seamlessly.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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