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Day trading crypto – Good strategy or waste of time and money?



In the past, only brokerage firms and financial institutions in general had the means to repeatedly buy and sell assets during a trading day.

However, day trading has become available to everyone due to the growing popularity of just trading. Individual investors can even use automated trading systems for short-term trading.

What is day trading?

Day trading, sometimes referred to as intradayis the practice of short-term trading in listed assets.

The day trader tries to take advantage of more or less small price movements. For example, instead of buying Bitcoin at $20,000 to target its highs at $70,000, the day trader may simply sell at $20,500.

His profits on one trade are usually very small, but the idea is to make several trades during the day or week and take advantage of the accumulation of small profits. Therefore, day trading is more difficult than buy and hold.

Day traders often use price action for their decision making. Since there may not be enough fundamental news in a day to move prices significantly, the day trader often uses technical analysis to exploit the micro-movements of cryptocurrencies.

In day trading, one can use technical indicators and price action. But today there are several automation or semi-automation tools that help in decision making.

What units of time are used in day trading?

The daily chart (D1) is often shown to analyze Bitcoin, for example. But when day trading, this chart only adds one candle every 24 hours. That’s not enough shares to blow up.

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Shorter units of time, such as the one-hour (H1) or 15-minute (M15) chart, are often used in day trading.

This shows faster price movements as well as exploitable technical patterns. Basically, volume, supports and resistances are the main elements that day traders look at.

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Day trading and crypto swing trading, what is the difference?

The majority of cryptocurrency traders day trade and swing trading. Swing trading takes advantage of fairly prolonged movements of cryptocurrencies, for example over several days or several months. Unlike day trading, which often involves trimming positions at the end of the day.

Is cryptocurrency day trading worth it?

When the market remains quiet for a long time, as is often the case with cryptocurrencies after a bear market, retail investors get bored and tend to switch to shorter time units for day trading.

Day trading has its advantages and its disadvantages.

  • Advantages include limited exposure to the market, you are less likely to be surprised by a big move as you will be actively watching prices.
  • In addition, if you have developed a profitable strategy, day trading can allow you to earn regular income from the cryptocurrency markets.

But day trading has more drawbacks.

  • Since you exit your positions very often to take profits, you are almost certain to miss a good portion of the extended moves. Aside from the FTX CEO Sam Bankman, Few investors have built their crypto fortune through day trading!
  • Day trading can be time consuming and, as positions are often trimmed, profits are limited.
  • The percentage of losing cryptocurrency traders is higher among day traders than among long-term holders.

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