How to Start Day Trading Crypto: A Beginner’s Guide
The first Bitcoin payment for goods bought two Papa John’s pizzas. Since then, cryptocurrency has moved from being a fringe investment to a mainstream financial tool.
Day trading crypto can be a profitable venture, but it can also be risky. There’s no way of knowing what will happen with the value of a cryptocurrency.
It could go up or down. It could even crash and become worthless overnight. For this reason, it’s important to learn how to day trade crypto safely before you start investing your money in cryptocurrencies.
Here are some tips to help you get started.
Understand the Basics of Crypto
Satoshi Nakamoto created cryptocurrency in 2008. It provided people with a way of making payments online without involving centralized financial institutions, such as banks and credit card companies.
The crypto exchange uses blockchain technology. This is a public ledger that records all transactions on its platform.
Because the data is decentralized and stored on multiple devices across many computers, there’s no single point of failure. If one system goes down, others can continue running normally.
Register on a Crypto Exchange
Make sure that the exchange is regulated. There are many regulations in different countries. Some laws may restrict certain types of transactions, so be sure to check the rules before you trade.
Regulated platforms might also require additional information when signing up, such as proof of identity or proof of residence. Have photos of these items ready so the platform can verify your account as soon as possible.
Confirm the security features of the exchange as well. Check to see if the service offers automatic alerts for when someone else accesses your account. This will help you avoid fraud and theft of your sensitive data and coins.
Look for reviews that cover the security of the exchange, as well as its user interface and customer support team. You can also see what other traders have to say about a particular service by checking out forums and Reddit threads dedicated to cryptocurrencies.
Set Up Your Wallet
A cryptocurrency wallet is what you’ll use to store, send, and invest in crypto like Bitcoin (BTC) or Ethereum (ETH). It’s like a bank account where you store your money. In this case, it’s digital currency instead of fiat cash.
There are three main types of crypto wallets: online wallets, cold wallets, and hot wallets.
Online Wallet
An online wallet is a digital wallet that exists in the cloud. You can access and transfer your money using an internet browser such as Google Chrome. The downside is that if someone hacks into your account, they can access your money and run off with it.
Hot Wallet
Hot wallets are applications you download to your computer or phone. They’re similar to online wallets, but they don’t exist in the cloud.
Cold Wallet
A cold wallet is a physical device that stores your private key. You can plug it into any computer and access your funds without an internet connection.
Choose What You Want to Day Trade
Do you want to start earning more Bitcoins, or do you want to get into the altcoin market? Some of the more popular altcoins include Dogecoin, Litecoin, and Dash.
When deciding which cryptocurrency to day trade, consider the utilities of the coin. If the coin has a practical, real-world use, it’s more likely to be valuable.
Some tokens are for gaming, others are for file storage, and others are used to access certain websites. There are also coins that are solely for trading. If you want to day trade, you need to make sure that the coins you invest in have a purpose.
Another thing to keep in mind is how much supply of the coin there is. The more available a coin is, the less valuable it’s likely to be.
Look at Bitcoin, for example. Its 21 million coins supply is very low compared to other cryptocurrencies. As a result, it’s one of the most valuable coins available.
Get Started with a Demo Account
A demo account is a good way to test the waters and get a feel for day trading before taking the plunge. You can learn the ropes, try out different strategies, and get a feel for what works and what doesn’t. Demo accounts are also an excellent way to test out new trading tools before using them on real money.
The amount of money available to you on a practice account varies by broker. Choose an amount that reflects what you’ll be trading in the live market. You can gauge the risks and rewards better so that when you switch to live trading, it’s not such a shock.
Remember that the quotes in a demo account are only estimates of real-world prices. They aren’t exact, and there is no guarantee that the crypto market will behave exactly as it does in the demo.
Also, demo accounts fill orders instantly. It takes time to execute orders when you’re live trading.
Fund Your Account
Fund your account using a debit card. Although credit cards are allowed, the interest fees are so high that it’s not worth it.
You can also use ACH transfers to fund your account. The fees are much lower compared to credit cards, and there is no need for you to worry about interest charges.
Start your trading account with the minimum amount allowed by the broker. You can always add more money later on, but don’t risk too much at first.
Choose the Right Time
Cryptocurrencies are generally traded during the workday in their local time zones. It’s best to study the market movements and find out when people are buying and selling. You should also check the news, as this could affect the price of your crypto assets.
Day traders often rely on 15-minute or hourly charts. The 4-hour chart is the most popular, but you may be able to detect trends sooner in a smaller time frame.
Start Day Trading Crypto
Cryptocurrencies are volatile. You’ll need to have your trading platform open all day so you don’t miss out on profits.
You also need to make sure that your trading platform is reliable and secure. Cryptocurrency exchanges have been hacked in the past, so it’s best to use a trustworthy one that has good security measures in place.
Although day trading crypto is one way to make money, there are other ways as well. Check out our finance section for more information on how you can earn a living.
