Day Trading Cryptocurrency: Ultimate Guide (2022 Edition)

Cryptocurrency Arbitrage Guide: Everything You Need To Know

The market is moving. You hear success stories left and right from friends. People start calling themselves experts and swears by their day trading cryptocurrency strategies. That was the atmosphere during the 2017 cryptocurrency bull market. At this moment of writing, cryptocurrency is in a bear market and its all doom and gloom. But that is not entirely warranted as people who are successful in day trading cryptocurrency can make a killing in both bull and bear markets. The opportunities for day trading cryptocurrency are bountiful. Can you image buying bitcoin at $3000 and selling it near $15,000? Or shorting bitcoin from ,000 to ,000? Easier said than done but the possibility is real.

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What Is Day Trading Cryptocurrency All About?

Trading cryptocurrency opens a whole new avenue to the enterprising individual trading cryptocurrency. Cryptocurrency markets are volatile, and this is both a boon and a bane. The same forces driving prices up rapidly can just as easily push it down. However, with skill and tactic, a person might be able to day trade cryptocurrency successfully.

In this day trading cryptocurrency ultimate guide, we will dive into the different aspects of cryptocurrency trading. This article on day trading cryptocurrency will cover topics such as exchanges, wallets, technical and fundamental analysis as well as some common words of wisdom for those looking to enter markets.

It is important that the reader understand that this article serves as a basic overview of day trading cryptocurrency and should not be taken as financial advice. The information covered here is for discussion purposes.

With that out of the way, let’s get started!


Exchange Setup

Without and exchange to trade on, it would be impossible to day trade cryptocurrency. So, let’s not go into the realm of day trading cryptocurrency strategies, profit and losses just yet. This section might be a bit dry but bear with it a little as we explore the crucial first step of setting up an exchange account.

An exchange will allow you to buy and sell cryptocurrencies across different markets such as BTC, Eth, and USDT. The first exchange a day trading cryptocurrency enthusiast might encounter is likely to be a fiat to cryptocurrency exchange. This type of exchange allows a person trading cryptocurrency to use fiat to buy funds such as BTC, Eth, and USDT to start trading on other exchanges.

Now you might ask why the hassle. Well, due to certain regulations, it has become the most common footpath for a person to get into day trading cryptocurrency.


Fiat To Crypto Process

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Once a fiat to cryptocurrency exchange is set up. The next step will be choosing a crypto to crypto exchange to be the first platform for cryptocurrency day trading. However, whether its fiat to cryptocurrency or cryptocurrency to cryptocurrency, both types of exchange will require a user to go through an account creation process that might involve a KYC verification. Therefore, to expedite the process for getting started on cryptocurrency trading, make sure that identification documents are nearby.

Once an account is created and KYC verified, it is always a good practice to add another layer of protection to your account by enabling 2-factor authentication or 2FA for short. This is to enhance the cybersecurity of the cryptocurrency trading account from malicious fraudsters and hackers. Common ways people lose funds from their cryptocurrency trading accounts besides trading losses are theft through cybercriminals. Phishing, keylogging and outright scams are the methodology of these malicious individuals. Therefore, it is always prudent to adhere to cybersecurity best practices such as storing passwords offline, check if the URL is correct and not a phishing site and enabling 2FA.


Choosing A Suitable Platform For Crypto Day Trading

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The part on exchange creation is choosing the exchange platform that day trading cryptocurrency will take place. Apart from the obvious reason of financial regulation. Cryptocurrency trading exchanges should be considered base on factors such as the availability of cryptocurrency tokens for day trading cryptocurrency, markets available to trade cryptocurrency, cryptocurrency-trading fees, number and types of features, security level and withdrawal fees. This is by no means an exhaustive list. Rather it serves as a basic consideration set for anyone interested in setting up an exchange for day trading cryptocurrency.

When touching on the subject of security, cryptocurrency wallets are naturally brought up and for good reasons. The next segment in this day trading cryptocurrency article will explore this subject deeper.


Cryptocurrency Wallets

In 2014 Mt. Gox was hacked.

Now in 2019, Bithumb got hit.

It seems that no cryptocurrency exchanges are safe from hackers. Time and time again, these incidents have proved that exchanges are not a safe way to store cryptocurrencies. While day trading cryptocurrency might involve opening and closing trades in a short time frame. The funds might be placed on the exchange for opening orders for the next trades.

So, where do we draw the line between the convenience of storing on the exchange and security?

This is a tricky question as ‘what is a large sum’, might differ from person to person. In general, trading cryptocurrency is a highly personalized affair, but it is always wise to set aside unused funds in secure wallets to mitigate or negate the impact of a devastating cryptocurrency hack.


Types Of Wallets

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Cryptocurrency wallets come in various forms. 

First off there are hot and cold wallets. Hot wallets are online, and hackers might be able to hack it with various tools and methods. Cold wallets, on the other hand, are offline. This means that the private keys required to access cryptocurrency tokens never leave the device. As such, cold wallets such as hardware wallets are considered the safer option. Examples of hardware wallets are the ledger and Trezor.

Second, there are alternatives to store cryptocurrencies when day trading cryptocurrency. In the course of learning how to trade cryptocurrency, it will not come as a surprise to encounter numerous services to help safeguard funds. These can come in the form of paper wallets, mobile wallets etc. It will be too lengthy to delve into the pros and cons of each but the common theme to learn is that no wallet is infallible. It is prudent that the individual day trading cryptocurrency is aware that there ARE pros and cons to each. For example, paper wallets are offline, but you will be in trouble if you lose the paper. Mobile wallets are very convenient, but you are using and by extension putting trust on a third-party application to handle the gateway to funds.

In short, it is important to safeguard the funds for day trading cryptocurrency.


Charting Tools

This is probably the exciting part of this article! The actual tools that people day trading cryptocurrency use. What is the best cryptocurrency to buy, when do I buy and when do I sell. These are recurring questions more predictable than clockwork. Sorry to burst bubbles but if a person has a definitive, 100% accurate answer to that then he or she is probably a time traveller because the answer does not exist.

We will first discuss the technical tool before going through fundamental analysis for cryptocurrency projects.


Analysing Trends

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Successfully trading cryptocurrency involves being on the right side of the market. While it is possible to have success day trading cryptocurrency against the trend, it is still more advantageous to have the market sentiment favouring the direction of a trade position

There are many technical tools for analysing trends. The most common and widely used are the moving averages. In learning how to day trade cryptocurrency, this is perhaps a good start to exploring the types of tools at one’s disposal.

Moving averages are based on past prices and are considered trend following. It is for this reason that it is lagging, as it is based on past data. One might find that a sizable profit margin has been given back to the market before signals that a trend change has occurred.

Typically, it is used as a form of support or resistance line where the trend is considered in place when it is above or below a moving average. This tool is highly complex, and a variety of strategies can be formed around it.


Support And Resistance

These common trading concepts appear regularly not only in trading cryptocurrencies but also in traditional markets. Support is considered a price level with a concentration of demand that might be able to cause a pause in selling pressure that’s causing a downtrend. Resistance, on the other hand, is a concentration of supply at a price level that may be able to stop the ascend of prices due to increased selling pressure.

The advantage of using support and resistance in day trading cryptocurrency is the ability to use it as potential trading cryptocurrency trade entries and exit points. When learning how to trade cryptocurrencies concepts such as demand and supply will be crucial to the cryptocurrency trader’s knowledge. As such, the support and resistance lines or price levels are a good place to start the learning process.



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Oscillators are common tools that people day trading cryptocurrency use to aid in trading cryptocurrency. It can be used as a tool to determine oversold and overbought areas among other tactics to aid in making a trading cryptocurrency decision. The common oscillators used are RSI, MACD and stochastic. Oscillators are useful when the market is trending sideways as they help determine when the indicators are divergent from price action. The field of oscillators is vast and complex. Thus, it can be seen as a more advanced tool. An individual looking to up his or her day trading cryptocurrency game should consider learning more about them in detail.   


Fundamental Analysis

Day trading cryptocurrency might be a short-term endeavour, but it would be foolish and downright dangerous to ignore the fundamentals of a cryptocurrency being traded. Can you imagine if you were to trade cryptocurrency but the token that you thought was the best cryptocurrency got delisted! It would be devasting to the portfolio indeed.

To avoid this kind of worst-case scenario when trading cryptocurrency, it is best to do some due diligence and be in the know. Fundamental analysis of cryptocurrency is tricky as there are likely no financial reports or years of history to go on. So, proxies are used to help gauge the ‘health’ of a project whose tokens are being considered for day trading.

For starters, when considering the best cryptocurrency to day trade, it is always wise to investigate if there is any negative news. If a token being considered for day trading has news about fraud, delisting, scandals etc. then it is best to avoid them.

Secondly, look at the social media and the whitepaper of the token being considered for day trading cryptocurrency. If there are red flags such as inactivity, shallow and generic whitepaper then again it is best to avoid them.

Account Management

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This last segment of this article will deal with an important yet oft-overlooked factor when day trading cryptocurrency; account management. It is important to consider factors such as the risk margin, profit margin, distribution of funds and taking profits in fiat. Without account management, day trading cryptocurrency can become messy and confusing. 

With that, we conclude the day trading cryptocurrency ultimate guide for 2022. This subject is very broad and branches into many topics. If you would like to know more, explore for all the relevant information.

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