What Is Day Trading
If you are interested in investing you must hear the expression day trading. In the past, this investing strategy was only available to people how worked for large financial institutions, trading houses. With the rise of internet-based trading platforms and programs, it is now available for the average investor. Daytrading might seem promising and can be very lucrative. For a novice investor might seem overwhelming because, without a well-defined strategy, it is quite dangerous.
Day trading means buying and selling a security on the same day. This strategy occurs on any market but most commonly on the foreign exchange and stock markets. That doesnt mean you cant day trade with cryptos. A successful day trader is well educated on the market where he/she is investing and also well-founded. They use short-term trading strategies to capitalize on the price movements on that day.
They are constantly listening to events that cause short-term market moves. Trading based on market news is a popular technique. These can include economic statistics, corporate earnings, interest rates, if you look at cryptocurrencies you can look for announcements for where it becomes a viable payment, what top market analysts say, the popularity of that given crypto, etc.
Avoid Bitcoin Trading Tips
Ever had a so-called trader start telling you how, when, and what to trade? He claims to have made a stack, so it gives him the authority to help you.
It happens all the time.
There is always someone with a hot tip out there.
Its going to go!
Dont miss out!
When you are taking tips from people, you are relying on their judgment and thinking. And there may be no judgment or thinking behind the recommendation at all. But there is almost always an underlying motivation. Every bit of free outside advice on a trade has an underlying motive.
Why, for example, would someone share something so valuable?
Are they long?
Or are they quietly offering their position while telling you to buy it?
Do they need you to be their security blanket? You know, hold their hand by being in it too.
Are they seeking notoriety?
What do they expect in return?
Or do they know something they shouldnt? Are they putting you at risk by sharing it with you?
And if you are following their thinking, how do you know what to do next? Because when things go wrong, they wont have an answer for you. And they wont share your losses.Traders that own their results dont take tips.
News And Sentiment Analysis
News and sentiment analysis is similar to technical analysis, with one crucial difference: it is based on predicting human actions and reactions, rather than price trends. With news and sentiment analysis, you try to predict whether demand will fall or rise for a given cryptocurrency by analyzing different information sources. By analyzing the sources you try to understand the social consensus on that currency and predict what actions people will take. The sources of this data are industry and mainstream news outlets, as well as social media posts.
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Best Crypto Day Trading Platform 2021 List
The best crypto day trading platforms of 2021 can be found in the list below. Scroll down to read our comprehensive review of each platform.
Crypto assets are highly volatile, unregulated investment products. No EU investor protection
How Does Crypto Day Trading Work
Day trading on cryptocurrencies does not differ from any other commodities. Once you register on an exchange deposit your funds you are greeted with an environment that is similar if you ever traded with for example forex. You going to see the trading pairs. If you click on them you will see the charts. Some exchanges like Binance have integrated trading tools.
Once you choose your trading pair, you have the options to put in a trade. You have direct market orders and limit orders. The main difference between the two is with a market order, you buy immediately. You accept the lowest price that someone who sells offers to you. With a limit order, you set a price in and wait for the market to get to you. With a limit order, there is the possibility that your request might not meet the other end and dont get filled.
Once you have made your decision in one of the above you have an open position. Just like with other platforms, like MT4 you can put your stop-loss and take profit in. A stop-loss order means that if the price goes to that limit you sell/buy to get out of your position. That way you dont risk the possibility of losing all your deposits in one trade. Take-profit works the opposite way. Once the market hits a targeted price you close your position taking the profit.
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Choose A Platform To Trade
The first step a day trader has to take is deciding what platform to use. US-based traders can use only domestically regulated crypto-trading platforms, so this is a major factor to consider when researching the right platform.
Exchange liquidity, asset liquidity, and fees are at the top of a trader’s list when choosing the right platform for them to buy and sell crypto. The volatility of the crypto market means the value of digital assets can oscillate wildly. For traders looking to maximize profits in this market, they need to make moves fast.
The first choice isn’t always the best choice when figuring out where to conduct crypto trading. For budding crypto day traders, the options and differences between the many crypto exchanges can be overwhelming.
Here are the major things to consider when shopping around for the right trading platform:
Quick tip: For traders looking for a more detailed comparison of crypto exchanges, Cryptowisser and CoinMarketCap are trusted resources to compare different platforms according to liquidity, trading volume, and cryptos supported.
Exchange liquidity is influenced by a handful of internal factors. High trading volume for the listed crypto assets, the number of active traders on a specific exchange to fulfill orders, low fees that incentivize makers to open positions, and a variety of funding options that bring more traders to the platform.
Limit Orders For Bitcoin Day Trade
Lets examine limit orders by comparison to market orders. Market orders are the fastest way to enter or exit a trade at the best price available at the time. However, instant execution means that the price becomes secondary. When you place a limit order, it will only be triggered once Bitcoin reaches the price you set. Thus, you may get a better price if you are patient enough. Bear in mind that the price should be profitable for you but still realistic. For example, you want to buy three bitcoins for $9,000 per coin. The limit order will not be executed until there is a seller willing to accept the price that matches yours. Or you could be selling Bitcoin for $10,000 and no lower. If the market price is lower, it simply will not execute your order. Here are the benefits of limit orders:
- Better prices for the traders orders
- Protection against drastic changes
- More freedom since the traders dont have to actively watch the prices.
However, some aggressive trading techniques do not suit limit orders. In situations when fast execution is more important than the price difference, you should opt for market orders.
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Not Doing Your Own Research
Most traders during their early days tend to rely on crypto trading signals from people who call themselves experts on social media platforms. These people might end up giving you wrong information, which might result in very significant losses. As a wise cryptocurrency trader, you should always conduct your own research before you follow their signals.
A wise trader does not depend on information from other traders to know when to enter or exit the market. Learn how to conduct technical analysis and keenly follow news headlines that are likely to affect the market. There are many online materials that can teach you basic trading skills so you become a better trader moving forward.
How Hard Is It To Day Trade Crypto On Robinhood
The short answer is: very easy. Unlike the stock market, you do not need a $25,000 portfolio to make more than 5 intraday trades per week. Because the crypto market never closes, youre able to trade at any time or day of the week.
Freedom like this can make trading crypto very enticing to a beginner.
All you need to do after getting your account set up on Robinhood is head over to the cryptocurrency section. From there, type in how much of the crypto youd like to purchase in U.S. Dollars and then submit the order. Afterwards you are free to sell instantly without any regulations.
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Adjust Your Trading During Adverse Personal Events
You and I are emotional beings, and sometimes things happen in life outside of the market. And sometimes, those situations are disruptive.
You might experience a death of someone close to you.
Or have a breakup.
You might have a new baby at home, and your sleep is way down. Or you might have other stressors due to injury, a car accident, or something else.
Any time you experience a highly charged emotional situation, scale back your trading. Either reduce your size or cut back your activity temporarily. Watch your thinking in your trading journal to see if you remain on track. As the issue passes, adjust activities to normal levels.
How Much Money Do You Need To Start Day Trading Crypto
The simple answer to this question is the amount of money that you are prepared to lose. That is to say, you should never invest capital into day trading that you will need for personal living costs and expenses. After all, many day traders lose money so the risks need to be considered before you proceed.
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What Is Crypto Day Trading
Day trading with cryptocurrencies does not differ from day trading with any other commodity. Its the same short-term trading strategy but with cryptocurrencies. The big difference between common markets for trading like the stock market and the crypto market is that the latter never gets closed. As a crypto day trader, you dont have to close your positions before the markets close. A typical day trader however not let their position open for more than 24 hours.
Another big difference in trading volume. Although crypto investing becomes popular, trading volumes are significantly lower than in more established markets. A great example of this is the futures market. According to https://www.cmegroup.com/ volume for the day in the past month was not more than 23000. It sounds a lot but looks at the E-mini S& P 500 futures. Its in the millions.
Its important because the more trading volume you have the more accurate information you can gather. I like to look at the futures market data to get a grasp of the market because in it every transaction goes through the exchange and is recorded. Even if there are trading hours and do it does get closed.
For beginners, Im not recommending starting with crypto day trading because of the reasons I mentioned above. First, be profitable on a more established market, get a feel for trading. It will help you make decisions when you lack the data to back them up.
What Is The Best Crypto For Day Trading
One of the best things about day trading crypto is that there are no restrictions on which digital currencies you can target.
After all, you are only looking to keep positions open for a matter of hours or minutes, so your overarching goal is to profit from short-term trends.
With that said, some digital currencies are better for day trading than others especially those that benefit from high levels of liquidity.
Moreover, crypto traders will often seek pairs that attract higher levels of volatility as this presents plenty of profit-making opportunities throughout the day.
If youre still not sure which cryptocurrencies are the best to day trade for your investment objectives consider the five digital assets discussed below.
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Etoro Overall Best Crypto Day Trading Platform 2021
We reviewed more than 50+ provides and found that eToro is by far the best crypto day trading platform for 2021. Firstly, and perhaps more importantly, this popular trading site is heavily regulated. Not only does this include a fully-fledged license with the FCA, ASIC, and CySEC but eToro is also authorized by and registered with FINRA.
This means that traders in the US and around the world can use eToro in a safe and secure manner. In terms of what you can trade, eToro allows you to buy and sell 18 popular cryptocurrencies. This is inclusive of Bitcoin, EOS, BCH, Ethereum, Uniswap, Ripple, Cardano, Binance Coin, etc. Additionally depending on your location, you might also be able to trade crypto derivatives.
This includes fiat-to-crypto pairs that contain the US dollar, euro, British pound, yen, and more. You can also trade crypto-to-crypto pairs such as BTC/XRP and ETH/BTC. These crypto CFD derivatives are available to most eToro clients unless you are from the US, UK, or Hong Kong. Nevertheless, when it comes to fees, eToro is a 100% commission-free crypto day trading website. This means that you can enter and exit the market as often as you like without being charged any fees.
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Robinhood Crypto Day Trading Pros And Cons
There are many advantages to day trading on Robinhood with crypto, including the following:
Any person with access to Robinhood can freely trade . Outside of verification of your identity and funding your account, there are no additional rules to start .
Robinhood allows the buying and selling of whole coins as well as fractional purchases based on fiat currency.
Crypto markets are open 24/7 all year round, so you can choose to day trade at any time you wish.
Because crypto is on a decentralized blockchain, there is no intermediary there to charge fees or manage your money. Because of these, taxes and fees associated with day trading are very low.
However, there are some disadvantages as well. These include:
Crypto is and risky. With so few limits on , inexperienced novice traders could incur incredible losses quite quickly.
The always-open crypto market might be convenient, but it can also lead to traders obsessively trading with little sleep or outside activities. It can also result in fewer patterns throughout the day that are predictable.
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Is Day Trading Cryptocurrency Legal
Cryptocurrency trading is certainly legal. Moreover, since the crypto market is still highly unregulated, cryptocurrency day trading can be even less restricted than stock market day trading.
A crypto day trader can use their trading platform of choice without worrying about running afoul of the SEC or the limitations placed upon them by a cryptocurrency exchange in accordance with government laws. It should be noted, however, that as major financial institutions such as the Federal Reserve begin to develop their own cryptocurrencies, a cryptocurrency trader might find themselves in a totally new landscape of regulations. Some financial pundits have predicted the advent of federally regulated crypto as potentially the end of the crypto market, citing what happened to unregulated media downloading software, like Napster and Limewire ,once iTunes came around.
Major US banks are also developing their own crypto, and the Peoples Bank of China has already rolled out digital Yuan. Only time will tell how government regulated crypto changes the game, but until then, trading Bitcoin or any other cryptocurrency is a lot like the a gold rush.
What Are The Risks Of Day Trading
Another particular note worth echoing is the particular risks that day traders will encounter. Many day traders will, at first, suffer significant financial setbacks due to the volatile nature of the trades they take part in. As such, you should never trade using assets you cant afford to lose.
Thats why many day traders also go for margin trading since then theyd be working with borrowed funds, but its incredibly risky to do so. The potential for inexperienced traders to get in over their heads is extremely high and the consequences can be dire.
Day trading can also be very stressful and demands undivided attention while looking at computer screens for hours on end, waiting to pounce any time a digital asset changes its course, be that crypto or forex.
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Robinhood Crypto And Robinhood Financial
Your cryptocurrency assets arent part of your Robinhood Financial account. Your brokerage account is with Robinhood Financial LLC and allows trading of stocks, ETFs and options, while cryptocurrency trading is done through an account with Robinhood Crypto, LLC. Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services, as well as a number of other state money service business regulators. Robinhood Crypto is not a member of the Financial Industry Regulatory Authority or the Securities Investor Protection Corporation . Cryptocurrencies are not stocks and your cryptocurrency investments are not products protected by either FDIC or SIPC. Robinhood Financial, LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc.
For these reasons, you can trade cryptocurrencies on Robinhood with a Cash, Instant, or Gold account.
If your Robinhood Financial account is restricted for any reason, your Robinhood Crypto account may also be restricted. You will not be able to trade cryptocurrencies until the restriction on your Robinhood Financial account is lifted.
Your cryptocurrency assets are held in your Robinhood Crypto account, not your Robinhood Financial account, so theyre treated as non-marginable, with a maintenance requirement of 100%. This means your cryptocurrencies need to be backed entirely by cash, and cant serve as collateral for equities positions.