Guest post by Mark Schwarz of aBitGreedy.com. Mark has been trading in bitcoin and other altcoins since 2013 and is a blockchain programming engineer. Please do your own research before following any advice listed in this or any article about investing, especially on cryptocurrency. 

Day trading is not a new concept. In the foreign exchange and the stock markets; day trading is a career for some people. These days, day trading has become one of the best ways to make money in the cryptocurrency space. Thanks to the high swings in prices, some people are making thousands every day as cryptocurrency day traders. Unfortunately, the risks of day trading are also high and sometimes devastating. So, is day trading worth it?

What is Day Trading and why is it important?

In the cryptocurrency space, day trading is defined as the process of buying and selling coins within a 24 hour period. The primary reason why many people day trade is to capitalize on the small profit margins each cryptocurrency goes through as people buy and sell. Day traders spend their time in front of a computer analyzing charts on trading exchanges or hedge funds.

While day trading helps increase the liquidity of cryptocurrencies and stocks, it has always been a controversial topic. Many financial advisors who hate day trading argue that:

In spite of the backlash toward day trading, some investors maintain that there is a lot of money to be made. Proponents of cryptocurrency day trading have the high-profit margins as proof that a day trader can make much more in this industry than in stock markets.

Cryptocurrency Day Trader’s Starters Pack

How to Day Trade the Right Way

Step 1: Open a Day Trading Account

The first step in your day trading journey is to open an account in a respected exchange. Most experts will advise you to start with a free practice account. Day trading platforms like ‘eToro’ offer you a demo account where you can watch experts trade as you follow their lead. Some exchanges are not particularly designed for day trading, but you can use them for this service. Binance.com is a great example. Learn more about it in this guide.

Step 2: Learn about Trading

Cryptocurrencies are extremely volatile assets. Due to this, traders can either make high amounts of profits or lose all of their funds. For beginners, day trading cryptos is a risky job. Avoid making too many mistakes putting on the work at the start of your career. Research widely to know which cryptocurrency broker you should work with. Evaluate transaction fees, terms and the list of cryptocurrencies each broker provides.

Step 3: Create a Portfolio

Create a list of cryptocurrencies you will be using for day trading. Most traders divide their assets into several categories.

You can have a portfolio based on as many cryptocurrencies as you want. But beginners are advised to start with only a few coins. This is important because you will need to research about each coin and keep up with market trends on a daily basis.

Step 4: Follow the news and Participate in Forums

It’s not enough to watch charts on the exchanges. Stay updated with cryptocurrency news. News influence market prices a lot. In the history of Bitcoin, there have been several occasions when bad press made the coin’s value plummet. Positive news coverage has also helped coins like Ripple and Ethereum soar in prices as well. Follow popular news websites like coindesk.com and Cointelegraph.com.

Forums like Reddit and bitcointalk.org can also help you get valuable information about particular cryptocurrencies. Contribute to such forums and exchange ideas with other traders.

Step 5: Know when to trade

The goal of an everyday trader is to buy when the price of a cryptocurrency is low and to sell when it’s high. The goal is to sell just at the right time. The foundation of making profits day trading is technical analysis. Observing the charts, trends and reading news will help you speculate coins successfully.

Step 6: Set a Stop loss and a Percentage to sell

Successful day traders look for a stable income. They understand there are losses in the art, but they don’t have to lose all of their funds. That’s why a stop loss limit is important. It allows you to decide the amount of loss you are willing to take before you can dump that coin. A take profit margin helps you build a stable income by taking profits after a specific percentage.

Tips every Day Trader should know

Conclusion

There is much to learn about day trading before you can become an expert. Learn from experienced traders. That way you will avoid losing your money in the trade. Hopefully, you have learned why day trading can be dangerous and why you don’t have to be afraid. With the right information, you can become a successful trader.