Top Cryptocurrency Day Trading Strategies for Steady Profits

Chart Patterns | Technical Analysis | Trading

 

There are a lot of theoretical trading strategies out there from novice traders (watch out who you follow on YouTube). There are also just as many experienced traders who really know what they’re doing and share a wealth of  helpful trading strategies with the general public.

Coming from a trading background in forex, I will preface this guide by stating that a majority of it is based on fundamental technical analysis, excellent money management skills, and most importantly…..experience! 

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How well you train your mind to deal with certain aspects of trading will be just as important as the strategies you implement below. 

For starters, I want to go over some of my own personal and time-tested cryptocurrency trading strategies. These are just some of the techniques I  found, through my own trial and error,  helped me generate steady profits, day trading the volatile cryptocurrency market.

What Exactly is Day Trading?

The entire goal of day trading is to produce quick and steady profits over the course of a few hours (or day if you’re swing trading)? Day trading can be a quick way to make money if you know what you’re doing. It can also be equally as quick losing it, if you don’t know what you’re doing.

The term day trading was derived from traditional stocks where quick”in and out” hourly trading during the day was always present. The market opens at 9:30 a.m. EST and ends at 4 p.m. EST. On the other hand, cryptocurrency exchanges never close, so trades can resume 24/7.  Due to this fact, cryptocurrency trading can be very lucrative no matter what your particular schedule is.

Now remember, if you decide to enter the day trading arena, you can’t exactly hold a coin over the long term. Any trade over a 24 hour period of time would be considered swing trading. We’ll cover that in another guide. For now, let’s go over some of the day trading strategies that have helped bring in steady profits….day in and day out.

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(SIPAS) Steady Incremental Profit Accumulation Strategy

day trading cryptocurrency for steady profitWhen first embarking on your day trading journey, it’s best to eliminate any sort of wild swings or fluctuations within the marketplace. This is why I highly recommend you start out trading USDT to bitcoin or other altcoin pairs so that you’re not dealing with fluctuations on both sides of a currency when trading pairs. USDT is a stable baseline commodity that will not fluctuate while you’re trading against an altcoin.

Assuming the cryptocurrency exchange you’re using has USDT (all the major exchanges do), your goal for the day should be to produce 1% to 2% from several different altcoins, which show a history of stability over the last 2-3 days, in order to produce a minimum of 7-12% profit within a 12 hour period of time. This comes out to well over 50% profit, over the course of a week.

Alternatively, if you can only find one altcoin that has been consolidating over the last 2-3 days, then go with that. What we’re trying to avoid are massive fluctuations in price. Utilizing this simple yet effective strategy can double the profit of your initial investment in just under two weeks.

I recommend this to novice traders because it’s safest trading strategy you can implement from day 1. A profit of 1-2% per chart is much more easy to obtain than say, 5-15% on a more volatile coin. Trading these massive swings in price can work, but for beginners, I recommend you walk before you run.

If you’d like to aim for a higher percentage of profit, that’s not a problem either, but realize you should be ready to face any consequences that result from being a bit too greedy. Remember, greed is what inevitably drains your profits, not the lack of knowledge on chart or candlestick patterns. Generally speaking, if you stick to around 1-2% increments, you’ll avoid any significant losses that may occur from your natural instincts of wanting more.

The Fundamentals of Day Trading Crypto

  • Always make sure to define a goal before entering a trade. Your main objective is to get in and out of the trade as quickly as possible. Greed is a human flaw that can have you suffering heavy losses within minutes as the cryptocurrency market incurs many heavy swings.
  • Never buy a coin based on FOMO (fear of missing out). You made a good trade, but the moment you sold, the coin rallies again for a much more sizable profit. Before you enter the market again, remember that succumbing to FOMO is one of the fastest ways to lose money. Just don’t do it.

    Never buy a coin under pressure, as long as there is profit to take. Remember, if you’re walking away with profit, your winning. Don’t look back. Fight the urge to speculate on the “what ifs”. Just know, you’ll rarely buy in at the bottom and sell at the peak of each swing.

  • Be careful with exchange fees. Multiple trades accumulate large fees, so place 1 buy order and a 1 sell order if possible to minimize fees. If you post a buy or sell order and somebody accepts that price, the deal is made. You pay a fee for the trade to happen. In this situation you are the “maker” because you set the price.

    If you accept somebody else’s price (that is already listed in the order books) then you’ll end up paying a higher fee on some exchanges. In this situation you are the “taker”. It’s always advisable to be a maker and not a taker on the exchanges that charge different fees for each. Make sure to check “the structures” pertaining to the exchange you’re trading.

    For example; Bittrex charges the same fee regardless if you’re a maker or taker. HitBTC charges a 0.10% fee for takers and no fee for makers.

  • Consider using a trading bot. This tip is for the risk takers that want to work smarter not harder. You don’t necessarily want to stare at charts all day do you? The trick behind using a bot is to not entirely leave it to trade for you on “complete autopilot”. It does require some supervision.A trading bot’s job is to to buy and sell cryptocurrency as you see fit, under the current trading situation. This as opposed to trading on every overbought/oversold RSI signal. Believe me when I tell you, this is a quick way of losing your cryptocurrency.  

    trading bot cryptocurrency day trading investing

    You want to set the trading bot to buy and sell your chosen coin at 1-2% intervals, according to the strategy I outlined for you above. Make sure the coin you’re trading is stable over a 24 hour timeframe (longer if possible)

    From that point, you want to assign the trading bot to do the heavy lifting of buying and selling between the 1-2% intervals as opposed to you manually doing it within the exchange. 

    Alternatively, you can work this strategy on an overall bullish trend (look at daily chart), but make sure you set a stop loss on these trades.

You can tweak the trading bot, as per your preference, through following indicators like Stochastics or RSI on the 5- 30 minute timeframe. I’ll most likely write another article (or video) in the future with regard to bot trading. For now, use the strategy above to steady profits.

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  • Buy the breakout of a resistance. A common strategy is to monitor a strong resistance and purchase the breakout. Resistance is a level at which the price of a coin cannot break past without it dropping back down to a lower level called support. Once a breatkout occurs, you should consider buying upon close of the candlestick or bounce off resistance (which is now your new support).

    It’s smart to set trading alerts in order to be notified of these breakouts. We offer a free trading notification service here. I highly recommend you take advantage of this service or others like it, when utilizing this strategy.

    Buy-the-breakout-of-a-resistance-line-trading

  • Use limit orders and stop losses. Make sure you create a stop loss order after your initial buy in on any trade. This is the price you set to exit the trade if your coin drops below a certain point. If the price does in fact fall lower than your stop loss, the exchange automatically sells at your set price, to minimize your loss.

    On the other side of the spectrum, set a sell limit order to cash out of a  trade when the coin reaches your goal (1-2%). Setting both a limit order and stop loss will allow you to step away from the trade without watching the chart like a hungry vulture. It’ll also eliminate any emotional attachment from your end, thus creating mistakes out of bad habits.

    These are just a few fundamental day trading strategies you can use in order to create a stable income for yourself day trading without putting too much risk on your shoulders. If you follow these strategies and don’t stray too far away from the fundamentals, you’ll most likely enjoy many days of rewarding success.

  •  

Good luck and happy trading!

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