Best Strategies for Crypto Day Trading
Crypto is a highly volatile sector. You need an intuitive trading tool or app, a robust game plan, and a brave heart to make it big. Honestly, in only a day’s research, you can find the best app or tool for crypto trading. For a brave heart, you need to prepare yourself mentally, which, too, is pretty achievable. However, the right plan and the trading strategies are not the most easily attainable. But, fret no more. We are here to help you. In this article, we will share with you some of the best strategies for crypto day trading. So, let us get started and address these strategies one by one.
Shop for high liquidity and high volatility coins
As discussed already, the primary choice you have to make for crypto day trading is shopping for coins with high liquidity and supremely high volatility. Of course, not everyone will want to day trade bitcoin. However, you cannot overlook the fact that it is the most liquid crypto out there. In this case, you can shift your focus to the altcoins. Therein, shop for the coins that have excellent volatility and liquidity. In the crypto world, you can find over 1,600 altcoins. The number is growing every day.
“If you are new to the market, it is impossible for you to focus on more than 1,600 adults. So, instead, what you can do is pick the top 10 of them and streamline your research on them. This will save you some time and narrow your selection,” comments Stuart, an online educator who offersjava assignment help services.
As much as we agree with Stuart on this, we have a parallel approach. If you are into day trading, you can also opt for smaller cryptocurrencies. However, there is a little disclaimer that we would like to give here – It can be a situation of higher risk and higher gains. So, weigh your risks, and only then move forward. Always bear in mind, the volatility is massive, and what grows unstoppably can also come crashing down.
Use the five-minute chart
For day trading, you can use one simple strategy, that is, the Money Flow Index. Utilize this indicator to keep a tab on the smart money activity. It will help you know when the institutions are buying or selling and their coins of preference. For the Money Flow Index, you will have to take into account three periods. Let us discuss this further in the next point.
Always keep a close tab on the MFI, and wait for it to hit the 100 Level
“If there is an MFI reading of 100, it clearly signifies that the whales are making an entry into the market. Realistically speaking, a truckload of smart money cannot hide its entry. You can keep a tab on their market activity via the Money Flow Index,” comments Jacob, an educator who offers ‘do my assignment for me‘services.
As much as we agree with Jacob, we again have a small disclaimer to give. The technical indicators are only valid as long as they are valid. It implies they may not always be precise and correct. So, to ensure that you make a more informed decision, we have come up with a few more conditions. So, in the present day, you should essentially skip the initial two MFI 100 readings and keep a tab on the crypto price reaction. Make sure that the price holds up after the first and the second MFI reading. If there is a drop in the price following the initial two MFI readings, there is a good chance that the day might be slightly bearish afterward. Now, let us discuss the right place to get Bitcoin and some technical conditions that you must bear in mind.
Only buy if MFI is 100, and the next candle shows a bullish trend
Be patient, observe the third MFI reading, and see if it is over 100. There is no mandate that there has to be a third MFI 100 reading. You can take every other MFI as 100 readings. So, this implies that if the time does not permit you to go with the third MFI 100 reading, you can opt for the next one if all the other conditions prevail. It is also safe to ensure that the next candle you get after the MFI 100 reading is bullish. Ensure that the candle’s close is on the upper end. It will be depicted by the candle having smaller wicks.
Now, we will move to the next most pivotal thing that you need to bear in mind when you indulge in day trading, that is, where should you have your protective stop loss, and how much profit will you be content with.
Keep your guarding Stop Loss below the day’s low, and your profit can be booked after the hour of your entry
“Typically, it is recommended to keep your guarding stop loss below the day’s low to ensure that you do not lose a lot of your money,” comments James, an educator who offersfinance homework help services.
Let us explain why James says so. If the line breaks below the day’s lower low, it could indicate a sway in the market sentiment from bullish to bearish. Hence, it is ideal to come out from that trade. It may also mean a reversal day.
Now, you may think as there is flexibility in terms of the exit strategy, so there should be the same with profit too, but that is not true. In terms of profit, there is one rule that you must always abide by – take out your profits within the initial sixty minutes or an hour after the trade gets triggered. If you keep holding the trade for long, it might indicate a poor success rate.