If you’re new to investing, you probably have no clue about day trading. Day trading is a trading strategy that involves entering and exiting deals within the same day. The goal of day traders is to use intraday trading strategies to profit from off-price changes in a financial agent.
It is the process of venturing on financial products and assets over one day. Day traders stay updated on what stimulates the market for a short period. They can also place hundreds of orders in a single day to potentially profit in the future.
The “day trader” term originates from the stock market, wherein trading is only open during business hours. In this context, day traders never leave deals open overnight since they aim to capitalise on intraday price movements.
In comparison, the crypto market is open 24 hours a day and seven days a week, so it may not make sense for day traders to handle the demand. However, day traders profit from market volatility, something that the crypto market is practically known for.
Scalping is a common trading strategy among day traders as it involves taking advantage of small price movements that occur in short time frames. These can be gaps in liquidity, bid-ask spread, and other market inefficiencies.
Scalpers often trade on margin or futures contracts to boost their results with leverage. Since the percentage price target tends to be smaller, the larger position sizes make more sense. This usually is true for most day trading strategies.
- Range trading
Range trading is a simple strategy that mainly involves candlestick chart analysis and support and resistance levels observation. Traders look for price ranges within the market structure and generate trade ideas based on those ranges. For instance, if the price fluctuates between a support and resistance level, a range trader might buy at the support level and sell at the resistance level.
The idea of range trading is rooted in the assumption that the sides of the range will hold as support and resistance until the field is broken, meaning that the lower side of the spectrum will likely propel the price up. In contrast, the upper side of the range will possibly push the price down.
- High-frequency trading (HFT)
High-frequency trading is a variety of algorithmic trading strategies generally used by quantitative traders or quant traders. It involves generating algorithms and trading bots that can swiftly enter and exit many trades over a short amount of time.
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Best Cryptocurrencies for Day Trading
- Tether (USDT)
Tether is appraised to be one of the best cryptocurrencies and one of the most popular stablecoin. Currently, it grabbed attention for having one of the highest 24-hour trading volumes. This high trading volume is also one of the reasons why more traders are favouring it.
- Ethereum (ETH)
Ethereum is one of the most popular cryptocurrencies in the world, second only to Bitcoin. Aside from being a cryptocurrency, another reason why it’s so popular is that it’s a blockchain platform. With this platform, it is possible to produce new coins and develop decentralised applications. A good amount of volatility provides for a substantial opportunity to profit and within a short period.
- Binance Coin (BNB)
Binance Coin was released by one of the most reputable exchanges as its cryptocurrency. The trust came in quickly as it was from Binance itself. It has growing demand and is reasonable, making it an ideal currency to start with day trading.
- Tron (TRX)
Tron grabbed attention for its associated developments; in combination with high volatility, it is one of the most valuable cryptocurrencies for day trading. It was initially created as a platform to clear all borders on the web.
The price of EOS has reached new heights several times, putting questions on its level of volatility. Thus, making profits on account of this volatility is worth a mention. Another feature is that it has active team support available in most of the exchanges across the world.