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Day trading is exactly how it sounds. It’s trading usually done within the confines of a single day. This style of trading relies less on the buy and hold strategy that you might be used to. Typically day traders will take a much more aggressive approach. Looking to make short-term gains and close positions quickly.
As a general rule day trading requires more skill than many other styles of trading. A good eye for liquidity and a cautious approach to risk management are two key qualities you need to be an effective day trader.
Here are some of the basics you’ll need to know when starting your day trading career.
Day Trading Risks
Day traders can and should expect more losses. Especially at first. Day traders often have win rates of only 50-70%. Because you are working to smaller timeframes and are less likely to leave open trades, cutting your losses and moving on can be a key part of your day. On average only around 10% of day traders are able to make a clear and consistent profit.
Competition is fierce in day trading and you’re likely going to be going up against far more experienced traders. When you identify a trade you want to enter and act fast. Especially as you’re working on the smaller timeframes. You don’t want to let indecision stop you from making a profit.
Day trading can be time-consuming. You will need to have 4-8 hours daily to set aside for day trading. Some days more. If you haven’t got that time a change of strategy is advisable.
Benefits Of Day Trading
Profits– there is good money to be earned day trading. While there are many people aren’t able to make a consistent profit there is definitely potential to earn good profits. Traders with the right skills can do very well.
Analysis– When day trading you are relying much less on fundamental analysis and much more on your own skill reading the charts and reacting to movements. You need to make sure your technical analysis is on point.
No Hodling- With day trading you are far less likely to be holding positions for long periods. You eliminate the risk of things going badly overnight and losing money.
Rules for beginners
Coins– Look for coins with good volume and liquidity. Coins with low volume generally have less demand meaning you may not see enough action to make a profit. Generally, you want to identify only 4-6 coins per trading session at most and watch them.
Trust in what the market is telling you– Use your indicators and react quickly when you spot a good entry/exit points.
Spread your risk-Have a good risk management strategy. Never go all in on one trade. When starting out using 5-10% of your balance per trade is advisable. Set stop losses.
Don’t trade with emotion– If you enter a trade and it doesn’t work out as expected get out quick. Don’t let pride get on the way of you earning profits. And don’t get greedy and turn a profit into a loss.
Set targets– Have a price in mind you want to exit at when you enter a trade.
That’s it for the basics of day trading. For more information on some of the basics of Cryptocurrency click here. For more details on how to make money trading crypto check out this course from Low Cap Crypto CEO Ash Davidson