From the beginning, we can all agree that the cryptocurrency market is a lucrative endeavor, so you could watch it happen or be part of it. However, as Warren Buffet points out, when deciding to be part of this market trend, it is equally important to look at market fluctuations as your friend rather than your enemy.
But how do you know which crypto is best for day trading? How do you pick the best to succeed in crypto day trading, or is crypto day trading profitable? Luckily, in today’s article, we discuss anything you need to know to start trading in 2024.
Stay put, as we will explain what cryptocurrency trading by day is and how to pick your cryptocurrencies for day trading by looking at some of the most influential factors against the market sentiment.
As always, please note that this article does not constitute any financial or investment advice, and as a result, do your due diligence to research these statistics further and decide for yourself whether to jump on this train.
Crypto Day Trading | The Good, The Bad, and The Profit
What is Crypto Day Trading?
Crypto-day trading is just as the name says – you buy and sell cryptocurrencies during the day. This approach represents one of many crypto trading strategies aiming to profit from high volatility, short-term price movements, and fluctuations.
Furthermore, day trading can be applied to stocks, options, futures, and other financial instruments.
How Crypto Day Trading Works?
Since the principal investment strategy is to catch short-term price movements, day trading works by combining the power of market analysis, such as technical and fundamental analysis and other technical indicators, with trading patterns and momentum investing based on short-term market trends.
If you’re new to day trading, it is essential to understand from the beginning that crypto day trading focuses on catching the movement rather than contemplating the utility and the value of your securities in the hopes of acquiring immediate gains.
Those more seasoned know that the beauty of day trading lies within the potential of quick wins, even though it comes with significant risks. A good foundational knowledge base, a solid trading plan, and researching the latest crypto news and reports could be the way for successful traders.
Moreover, since day trading often requires borrowing money, it could also increase potential profits and losses, so day trading cryptocurrency becomes more recommended for more experienced traders.
Crypto Regulations for Day Trading
In the US, the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) coined pattern day traders, making it a definitory term for those who perform four or more day trades within five business days.
As such, by using this trading strategy, crypto investors must maintain a minimum cash balance of $25,000 in their brokerage account.
The main scope of this regulation is to bring awareness to its possible pitfalls, ensuring sufficient resources while analyzing and accepting the risk tolerance.
Regarding margin day trading, the Federal Reserve Board made public a new regulation stating that when you borrow funds from your broker, you should not exceed 50% of the securities purchase price.
However, besides understanding the regulations, FINRA advises that proper risk management strategies are equally vital to ensuring that we stay afloat.
The Benefits of Crypto Day Trading
1. Market Volatility & Potential High Returns
Since the cryptocurrency market is known for high volatility, its frequent price fluctuations can influence experienced traders by offering ample opportunities for big wins. So, analyzing and leveraging the price charts can be a definitory action.
For example, Bitcoin is considered a highly volatile crypto, so its price swings could generate massive profits, yet it all depends on your day trading strategies.
2. High Liquidity and Scalability
The general rule is that when the crypto market is highly liquid, it means an excellent opportunity to buy and sell digital assets. As such, advanced traders could enter and exit trades quickly, capitalizing on short-term price fluctuations.
On the other hand, scalability consists of the trading volume and risk exposure, allowing traders to perform such activities based on their capital and different strategies.
3. Diversification & New Asset Class
Depending on your trading style, through day trading cryptocurrency, you could diversify your portfolio and gain a deeper understanding of some of the most emerging cryptocurrencies.
As such, while you profit from the growth of a digital asset, you could also mitigate the risk management associated with the said currency.
4. Global Market Access & 24/7, 365 days
Compared to traditional investing, day trading cryptocurrency is borderless and active 24/7, 365 days. It can also offer you global access to a pool of liquidity and other trading opportunities, regardless of location or time zone.
5. Immature Cryptocurrency Market
Compared to other financial instruments, such as forex and stocks, the crypto market has a low entry barrier, meaning that getting on the market is more accessible, but maintaining your position or showing growth needs your undivided attention.
Risks of Day Trading Cryptocurrency
1. Risk Management and Financial Loses
As seen in general within the crypto landscape, there are risks associated with trading; in the case of day trading, it is even higher. As such, there could be potential pitfalls of day trading cryptocurrency. If you are in this case, please refrain from performing revenge trading, as this is not quite a rational decision and often could lead to more losses.
2. As Rewarding It Is, As Stressful It Gets
Indeed, day trading cryptocurrencies could be highly rewarding, yet ensuring significant gains and only living off it requires large trading volumes. Constantly checking the technical analysis, trading volume, short-term price fluctuations, market trends, and market sentiment and implementing risk assessment strategies could be difficult for day traders.
As a result, day trading is not for everyone and is like a full-time job, so wisely pick your battles.
3. Be Aware of Day Trading Gurus
Looking up someone with a specific authority within the crypto industry is excellent. Still, please be aware of the day traders’ gurus who quickly advise on big profits with little to no effort or, worse, shady newsletters.
Regardless of your experience, educational materials or webinars are a valuable resource, just as SEC advises.
How to Pick Cryptocurrencies for Day Trading?
Choosing some of the best cryptos for day trading requires some considerations, but remember, there isn’t a silver bullet to it. It all comes down to having a solid trading plan and specific crypto properties that make a reliable digital asset for day trading.
But allow us to break it down even further and explain it in detail.
1. The Volatility of the Crypto Market
When the market is highly volatile, there are rapid price swings, thus more opportunities. Moreover, it is essential to remember that these golden opportunities come with a significant risk.
2. High Liquidity
Select currencies that boast high liquidity, meaning that they require a faster execution of trades. Usually, when a crypto has increased liquidity, many crypto investors buy and sell the assets.
As an unwritten rule, look for the crypto pairs with high liquidity and relatively low volatility.
3. Trading Volume
If you want to enter and exit the trades quickly, choose currencies with a higher trading volume, as this is a good and potent sign that the said crypto has more active market participation.
4. Crypto Exchanges Availability
When deciding to start day trading cryptocurrencies, looking for a cryptocurrency with a high availability within the most popular exchanges is essential. And as we know, a higher trading volume could represent multiple winning opportunities.
Additionally, finding the sweet spot between high trading volume, liquidity, and low trading fees is the golden ratio within the crypto market.
5. The Market Capitalization
Selecting a high market cap cryptocurrency could be suitable for ensuring a safe trade since they are less likely to plunge in value. No one says you could not opt out of low market cap cryptos, yet the risks are even higher.
Given these criteria, choosing the best crypto for day trading strategies requires a skillful mix to quickly perform your trade and hop on the next train, hoping to hit the jackpot. But for now, let’s move further and discover some of the best currencies for day trading in 2024.
The 7 Best Cryptos to Day Trade In 2024 and Beyond
In the following chapters, we will discuss the most awaited moment for all-day traders: finding out what cryptos are suitable for day trading.
1. Bitcoin (BTC)
First and foremost, Bitcoin is one of the best day-trading cryptocurrencies due to being the first and the most prominent crypto by market cap. Even though Bitcoin’s price movements over the years changed, it still showed us resilience against market volatility.
On the other hand, when trading BTC, this currency has increased liquidity, meaning that sellers and buyers are available to trade at any given point. As discussed earlier, you can enter and exit the market quickly without hanging around.
Furthermore, we can observe that Bitcoin’s price movements are determined by the sentiment rather than the tech behind it. As of today, 16th January, Bitcoin is in a 64 Greed Index.
As we all know, a greedy state means the price swings upward and might keep going. As such, the market could be due for a correction.
So, given these details and the current market situation, it is recommended to use technical analysis charts, trading bots, and other aggregators. It is essential to have a solid ground and an extensive understanding of the risks involved.
2. Ethereum (ETH)
Undoubtedly, Ethereum is on our list, and advanced trades already know it. ETH is considered a top crypto for day trading as the second largest traded crypto, with a market cap of $303,823,710,708.
Due to its increased liquidity, ETH is highly traded and could be a promising cryptocurrency for day trading. Other influential factors include Ethereum’s scalability power that addresses some of the essential aspects of sustainable crypto, not to mention its major upgrade from 2022, migrating to a Proof-of-Stake mechanism.
So, if you want to start day trading, be sure to look for a secure cryptocurrency exchange that offers low trading fees and increased liquidity. Additionally, it is wise to implement risk management measurements and only invest what you are willing to lose.
3. Binance Coin (BNB)
The Binance Coin, also known as Binance’s native token, has been on the market since 2017, and given its fruitful endeavors and utility, BNB has become a popular choice for day traders and avid investors.
With a 24-hour trading volume of $2,239,288,662, Binance boasts high liquidity, thus becoming an opportunistic day trading investment. There is also a high volatility, with BNB being known for its price swings. But please remember that the higher the volatility, the bigger the risks are, so be cautious of the potential pitfalls.
If we dig deeper and put it into a different perspective, we’ll see that BNB had its glory time in May 2021, with an all-time high of $686.31. However, despite this, the token remained pretty stable compared to other cryptos.
So, even though you’re not day trading, keeping an eye on the BNB Coin is a must, as it’s set to branch out into new markets, such as decentralized finance.
4. Ripple (XRP)
Who hasn’t heard about XRP, at least the SEC vs. Ripple lawsuit? With a winning lawsuit, a market cap of $31,214,506,900, and an open payment network, XRP seems to be one of the top cryptocurrencies for day trading.
First of all, there is a fast transaction speed, just a matter of seconds, on the Ripple network, compared to other popular currencies.
So, this could be an influential factor for short-term day trading strategies. Another critical factor is the XRP Ledger Consensus Protocol, which allows its network to process up to 1,500 transactions per second.
For investors, day traders in particular, we recommend looking at different technical indicators to identify buying and selling momentum and assess the risks. On top of this, by researching the latest news and monitoring the market trends, you could maximize your profits.
5. Cardano (ADA)
Founded in 2015 by one of Ethereum’s co-founders, Cardano is considered a robust crypto for day trading. This decentralized and blockchain-based medium utilizes the Ouroboros Proof-of-Stake consensus mechanism, an energy-efficient model.
Another aspect that makes ADA suitable for day traders is the self-executing smart contract, which automatically honors the agreement between day traders. Additionally, ADA often stands at the heart of decentralized finance applications and others.
Given that Cardano has a low market cap, it is highly susceptible to being influenced by market forces, thus creating space for short-term wins. And since ADA is a 3rd generation crypto that offers scalability, interoperability, and energy efficiency, it could also be a popular choice for day traders on the hunt for high transaction speed and low trading fees.
However, do your own research before investing, and take everything with a grain of salt.
6. Dogecoin (DOGE)
If you’re looking to get into the day trade crypto, then maybe a meme coin could be your lucky charm. Indeed, the meme coin had its controversy, often associated with Elon Musk, yet its short-term price fluctuations and active trading community made Dogecoin a robust day trading crypto.
As you can see in the price chart above, Dogecoin had its ups and downs, and we can safely conclude that this crypto was highly volatile in the past. Starting with 2021, when the DOGE price increased to 10,000% in just a few months due to the Elon Musk controversy, meme culture, and other regulatory factors, it didn’t last long.
Other than that, DOGE still enjoys a relatively high trading volume, $346,944,997, meaning that new opportunities are on the rise. Thus, crypto day traders should monitor it objectively, analyzing the technical indicators to profit from short-term price movements.
Lastly, we all know that deep down, anyone’s in love with this meme coin due to its cultural vibe, active community, and possible return on price.
7. Solana (SOL)
Here’s a cryptocurrency that makes the headlines in this well-established market – Solana. Since its inception in 2020, SOL has integrated the PoS along with a new Proof-of-History mechanism, which has the potential to process multiple transactions per second at low fees.
Moreover, Solana has become widely popular since its blockchain is heavily used in De-Fi, Stablecoins, NFTs, and blockchain gaming.
Given that some showed a spike in its prices, some analysts predict that SOL could make the headlines soon, making it a valuable cryptocurrency day trading. Still, please do your own research before investing or making any trading decisions.
How to Start Day Trading Cryptos?
Now that you’ve learned the basics of day trading and discovered the top 7 cryptocurrencies, it’s time to dive into the practicalities of getting started. From the beginning, we’ll say that it is not rocket science, yet it implies some technical knowledge to understand the market fluctuations and how to spin them in your favor.
But let’s get right to it!
The Basics of Day Trading
A good crypto and trading knowledge base could set you apart from most investors. Day trading requires a good understanding of the market, fundamental analysis, robust trading strategies with or without trading bots, and other risk factors.
Secure Cryptocurrency Exchange
In 2024, the market is afloat with many crypto exchanges, but understand that not all of them are the same; some are centralized, others are decentralized, some have good reputations, and others have high trading fees. So, choosing between these crypto exchanges could be daunting, but you could get ahead with some research on cryptocurrency guides and reviews.
Find out Your Trading Strategy
Lastly, cautiously experimenting with different trading strategies could be the way to ensure a long-lasting, practical approach. Yet, keep track of these within a trading journal and take note of anything that sparks interest and works for you.
As always, start small, especially in day trade. You can increase your efforts once you’re confident about your trading abilities. Indeed, a crypto day trade is more complicated than it seems; it is wise to remember that it’s like having a full-time job that requires your undivided attention and analytical mind.
Often, day traders jump into the water without a safety line, and even though they make it to the shore, they’ve pushed their luck.
As you embark on this adventurous journey, it is essential to remember that this venture requires a keen mind, unwavering discipline, and a deep understanding of market dynamics. Additionally, keep in mind that crypto day trading isn’t a get-rich-quick scheme. Instead, it requires dedication and an unwavering commitment to continuous learning.
So, embrace the challenges, the learning curve, and the potential for rewarding profits, and don’t put all your eggs in one basket.
Which crypto is best for daily trading?
Your choices are widely available, from the most well-known crypto, Bitcoin, to Ethereum, Dogecoin, Solana, Cardano, Ripple, and Binance. Research these cryptos further to ensure you’re trading on the safe side.
What Set Up Is Best for Day Trading Bots Crypto
There isn’t a best bot trading strategy, as these might vary depending on market conditions, technical and fundamental analysis, risk tolerance, the latest crypto news, etc.
Is Day Trading Profitable?
We could not say whether it is a profitable or not endeavor as it all depends on your approach, market changes, and other influential factors, such as the chosen currency, the tech behind it, and other significant factors.
Our advice is to start small and, depending on your gains, put more effort into it.
Is Day Trading Illegal?
Day trading crypto isn’t illegal or unscrupulous. However, it is vital to check the crypto regulations surrounding this topic. SEC and FINRA had many publications on the subject and offered some guidebooks along with the day trading regulation.