Fairly similar to stock trading, day trading in crypto is purchasing and selling digital assets on the same day. It is a high-risk investment strategy that involves frequent buying and selling cryptos to earn a profit by the end of the day. For day trading in crypto assets, an individual needs to thoroughly know the nuances about crypto and the technology used therein (blockchain).
As opposed to the traditional approach of buying and holding assets, crypto day trading involves making quick profits on a day-to-day basis. Like stock traders, crypto day traders rely on multiple tools and resources to succeed in their endeavours. To ace this approach, it is crucial for traders to capitalise on the short-term price movements of digital assets throughout the day by buying and selling crypto assets on a short notice.
If you are wondering how to pick crypto for day trading, here are some of the most important steps to follow:
Select the Right Trading Platform
If you want to start day trading in crypto, your first step should be to choose the right trading platform. Trading platforms are dedicated crypto exchange platforms that facilitate the interchange of multiple crypto assets. Always make sure that you choose a platform that is in sync with your needs and the crypto regulations within the country.
Here are some factors worth considering while choosing a crypto trading platform:
- Years of existence – It is always advisable to use a trading platform that has been in the market for quite some time and has been consistent throughout its tenure.
- Crypto Assets supported – Always see which crypto assets are supported by a trading platform before engaging with it. It would help you prepare your plan of action and the strategy to follow.
- Making deposits – It is essential to be well-versed with the methods of deposit supported by a specific trading platform. See if it supports only bank transfers or it also facilitates credit card funding..
- Transaction fees – This is arguably the most critical factor to consider while you pick an ideal crypto trading platform. The transaction fees would affect the profits you make at the end of the day.
- Ease of conversion – Always check the ease with which a trading platform would help you liquidate your assets. A trading platform typically allows you to liquidate your crypto assets by converting the same into fiat currency (cash). The best crypto trading platforms facilitate quick and seamless conversions.
Picking the Right Investments
Once you have found an ideal crypto trading platform, make sure that you choose the right investments to support your day trading activities. As opposed to the conventional investors, crypto day traders thrive on volatile market conditions. If the crypto market is stable, you would hardly profit in a day. It is the volatile nature of the crypto market and the constant price fluctuations that allow day traders to earn a handsome profit.
For picking the right investments, it is always important to understand the fundamentals regarding various tokens, including their utility, adoption, and the future outlook. One of the most commonly used day trading strategies is choosing the top 15-20 coins according to the market cap. Make sure you thoroughly research all the crypto assets listed on the trading platform to make fruitful investments.
Charting Out a Trading Strategy
Never make the mistake of venturing into the world of crypto day trading without adequate plans and strategies. Day traders need to devise a range of strategies to generate value for their investments. The key here is to know when to enter and when to exit.
Here are two of the most commonly used crypto day trading strategies around the world:
As the name suggests, bot trading involves using an automated software tool that allows investors to buy and sell cryptos at pre-determined times or during pre-determined conditions. This strategy relies heavily on AI and machine learning technologies to help day traders invest the right way. Here, dedicated crypto trading bots are designed to maximise profits and minimise losses for the investors.
This trading strategy involves buying crypto assets on one crypto exchange and selling it immediately on another to make a profit. Here, pairs of crypto assets play an important role in helping investors make profits daily. Arbitrage is a reasonably complicated financial mechanism, automated by advanced price-monitoring software. As the name suggests, a price monitoring software allows users to keep a track of the prices of multiple crypto assets on a centralized platform. It provides users with real-time insights about the price fluctuations, helping them make the right trading decisions.
The Final Word
These were some of the most significant steps involved in picking crypto assets for day trading. Whether you are a first-time trader entering the world of crypto, or a seasoned investor, you need to devise the right action plan before you start trading.
Start trading on ZebPay
If you are still on the fence about starting your journey as a crypto day trader, you can make your first move with ZebPay. At ZebPay, we help you buy and sell multiple crypto assets on a single unified platform. With a user-friendly interface, you can keep track of the real-time price fluctuations in the crypto market and ensure a smooth crypto trading experience.