A Beginner’s Guide to Day Trading Cryptocurrency
Cryptocurrency is digital money that is getting immensely popular among investors in recent years as a speculative asset. It is a virtual and decentralized currency that can be used as a medium of exchange. Many cryptocurrencies have emerged in the past few years and gained investors’ attention. Some of them are Ethereum, XRP, Litecoin, and NEO. Many companies like IBM, Microsoft, and Square are now accepting these cryptocurrencies as a method of payment. Additionally, other companies like Tesla are also planning to accept popular cryptos, such as Bitcoin, as a method of payment.
These cryptocurrencies have become a reason of concern for the government due to their high volatility and decentralized nature. However, it continues to attract a large number of investors every year. There are many apparent reasons behind such immense popularity of cryptocurrency, and one of them is security. Many cryptocurrency wallets available on the market are very safe, and someone can’t break into your account and steal your Bitcoins.
Why Should You Choose Intraday Trading?
One of the best ways to invest in cryptocurrencies is intraday trading. Intraday trading refers to a trading strategy in which the investors buy and sell the assets on the same day. This type of trading has become extremely popular among equity traders with the advent of quick, convenient, and cheaper online brokers. There are many good reasons to choose intraday trading with cryptocurrencies. The value of cryptocurrencies is determined based on global demand and supply. So, intraday trading reduces the risk of losing your overnight from the market actions of traders on the other side of the world.
Moreover, this type of trading requires a trader to have good fundamental knowledge about the assets and the market itself. Another great advantage is the higher return when it is combined with an effective trading strategy. Apart from that, the market for the cryptocurrencies like Ethereum and Bitcoin is considered immature. Although there are many experienced investors in the market yet there are a lot of people who are newcomers to cryptocurrency trading. Unlike equity markets, it becomes much more difficult to predict the cryptocurrency market due to its immature nature. Hence, intraday trading enables traders to invest only for a certain period during the day and selling the stock after the target is achieved.
How to Pick Cryptocurrency for Intraday Trading?
The first question of every beginner is how to pick crypto for day trading? If you are a beginner, it could be a difficult task to pick cryptocurrency for day trading. There are many things that you should keep in mind before picking a cryptocurrency for trading. Although we already have some of the best cryptocurrencies like Bitcoin that we can use for day trading. However, the market situation does tend to change over time, and a cryptocurrency might also see a downward trend after a long upward trend. It is even more important to know for the day traders as the price of cryptocurrencies can see different trends on different days.
Follow Indicators: Market indicators help traders make the right decisions at the right time. An intraday trader needs to be able to monitor and make the analysis of the short-term price movements.
Follow the news: News can have a big effect on the overall cryptocurrency market. The good news about cryptocurrency can increase the value by many times. Bad news, on the other hand, can negatively impact the cryptocurrency price. One of the recent examples is the recent news about the Tesla company investing 1.5 billion USD in Bitcoin and planning to accept it as a mode of payment. Elon musk also supported the idea of investing in cryptocurrency to beat inflation instead of holding cash. This led to an increase in the value of Bitcoins touching an all-time 56000 USD.
Liquidity: Liquidity refers to how quickly you can buy and sell the cryptocurrency for legal tender money or fiat money. Liquidity is another great factor to be kept in mind before investing in cryptocurrencies. High liquidity ensures that you can buy or sell cryptocurrencies at any point in time. A high liquid cryptocurrency also means that it is bought and sold in volume, which means that you can trade in cryptocurrencies without impacting the price.
How to Start Trading in Cryptocurrency
Stock markets are regulated by a regulatory body in many countries of the world. However, this is not the case with cryptocurrencies. Most cryptocurrencies in the market are loosely regulated or have no regulations at all. Hence, it is easier for newcomers to enter the market and start trading. It becomes easier for a trader to start investing in the stock market for intraday traders. The first thing you need to do before starting to trading in Bitcoin is doing a fundamental and technical analysis of the market. Fundamental analysis refers to evaluating and getting familiar with the cryptocurrency and the market itself.
On the other hand, technical analysis refers to evaluating the asset and the market using mathematical and statistical factors. These factors include historical prices of the cryptocurrency, recent trends in the market, and patterns in the price movement. Creating an account on a cryptocurrency exchange is the next thing to do before starting Bitcoin trading.
There are many cryptocurrency exchanges in the market where you can create your account and start trading. Some of the best cryptocurrency exchanges are Binance, Coinbase, Cex.io, Kraken, etc. After we are done with our fundamental and technical analysis and created an account at a Bitcoin exchange, we can start with cryptocurrency trading.
Cryptocurrencies are one of the most popular speculative assets of the present day. Cryptocurrencies like Bitcoin have ended up more than doubling their value in less than 6 months, gaining the attention of investors all around the world. However, it is important to have basic knowledge about the blockchain market before starting day trading. There are many factors one should keep in mind before picking cryptocurrencies for day trading. These factors are trend analysis, following the news, and investing in liquid stock. With an effective strategy, day trading can give a higher return than other forms of investing.
Featured image: InvestInBlockchain