Day-trading is the practice of buying and selling positions on the same day. Day traders profit off of small market movements. Day traders conduct technical analyses before making moves. Day traders aim to take advantage of market volatility, especially situations like announcements, news headlines etc. Cryptocurrency is another branch of day trading which is growing very rapidly. There are different strategies in cryptocurrency day trading, some being vastly more profitable than others. Here, we discuss 3 of the most widely used and profitable cryptocurrency day trading strategies
High frequency trading High frequency trading is when quantitative traders, traders which use computers to conduct complex mathematical equations to determine their next moves, use bots to rapidly buy and sell cryptocurrency positions. These bots are faster than any human could ever possibly. These bots trade in milliseconds. High frequency trading is the strategy of choice for many experienced traders, as it is very difficult to make an algorithm that suits you. To make their own High frequency trading bot, one needs to be proficient in mathematical problems, programming structures, and have a good understanding of trading concepts. Once you find one that works, though, HFT is extremely profitable. Usually, hedge funds and investment companies have their own High Frequency trading algorithm which no one has access to, and are kept secret.
Scalping Scalping is the most common strategy of cryptocurrency day-trading. It is also the most basic strategy. It involves people buying future contracts, and trading them within short time frames. This reduces the risk factor. To scalp without risking losing big, a proper formula for position sizing has to be employed.
Range trading Range trading is based on two principals, Support and Resistance. Range traders buy one level, and sell the other based off of complex analyses and charts. This strategy is very beginner friendly and does not require advanced market knowledge. Range trading depends on the price of an option going up or down below a certain level. This can either result in a profit or loss depending on the trader’s positions. There is always the risk of the price passing or dipping below a certain level, which is referred to as the market breaking. This results in heavy losses for range traders. To sum it up, cryptocurrency day-trading, when done using proper strategies and tools can be extremely profitable. This does not remove the risk factor from the equation, though, and losses are a given of any cryptocurrency day trader’s journey to success.