Would you like to learn day trading cryptocurrency and make a consistent $500 per day? We often hear about all the money you can make by day trading stocks. But what about crypto day trading? In today’s lesson, you’ll learn how to day trade cryptocurrency using our favorite crypto analysis tools.
Our team at Trading Strategy Guides is lucky to have over 50 years of combined day trading experience. We’re going to share with you what it takes to day trade for a living, and hopefully, by the end of this trading guide, you’ll know if you have what it takes to succeed in this business.
First and foremost, when day trading, it’s essential to have a structured approach and a rule-based strategy. The same as swing trading or positional trading you are not going to trade every day, and you’re not going to make money every day. So, you need a day trading cryptocurrency strategy to protect your balance.
The high volatility nature of Bitcoin and other cryptocurrencies has made the crypto market like a roller-coaster. This is the perfect environment for day trading because during the day you’ll have enough up and down swings to make a decent profit.
Moving forward, we’re going to teach you what you need to learn how to day trade cryptocurrency and we’re going to share some out-of-the-box rule-based day trading strategies.
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How to Day Trade Cryptocurrency
The crypto market’s unique characteristics require you to have a firm understanding of how it works. Otherwise, your experience can be like skydiving without a parachute.
The good news is that we’re going to provide you with everything you need to survive crypto day trading.
Day trading the cryptocurrency market can be a very lucrative business because of the high volatility. Since the crypto market is a relatively new asset class, it has led to significant price swings.
Before day trading Bitcoin or any other altcoins, it’s prudent to wait until we have a high reading of volatility. The good news is that even when we have a low reading of volatility relative to other asset classes, this volatility is still high enough that you can generate a modest profit on your trades.
Crypto day trading also requires the right timing and good liquidity to make precise entries.
A lot of the cryptocurrencies and crypto exchanges are very illiquid and don’t have the liquidity to offer instant execution that you might find when trading Forex currencies
Before day trading Bitcoin or any other alt coins, it’s also important to check how liquid the cryptocurrency you wish to trade is. You can do so by simply verifying the 24-hour volume of the crypto trade.
CoinMarketCap is a good free resource to read and gauge the market volume of any particular coin.
Note* Always remember that not having enough liquidity could lead to substantial slippage and subsequent to bigger losses.
As previously stated, crypto day trading doesn’t require trading every single day. We only like day trading cryptocurrencies when all the conditions align in our favor. In this case, avoid trading on weekends and limit trading only on the highest-volume days.
Put your seatbelt on because next, we’re going to reveal how professional traders are day trading cryptocurrencies.
Crypto Day Trading Strategy
The idea behind crypto day trading is to look for trading opportunities that offer you the potential to make a quick profit. If day trading suits your own personality, let’s dive in and get through a step-by-step guide on how to day trade cryptocurrency.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of this scalping strategy.
In this article, we’re going to look at the ‘buy’ side.
Step #1: Pick up Coins with High Volatility and High Liquidity
As previously discussed, the number one choice you need to make is to pick coins that have high volatility and high liquidity. If you’re not day trading Bitcoin, which is the most liquid coin out there, and you like the altcoins, try to pick those coins that have good liquidity and volatility.
There are more than 1600 coins on the market and growing. By following only the top cryptocurrencies, you’ll reduce your area of selection.
Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks. Remember, crypto prices can crash just as fast as they have risen.
Moving forward, you’re going to learn how you can make money crypto day trading.
Step #2: Apply the Money Flow Index Indicator on the 5-Minute Chart
This specific day trading strategy uses one simple technical indicator, namely the Money Flow Index. We use this indicator to track the activity of the smart money and to gauge when the institutions are buying and selling cryptocurrencies.
The preferred settings for the MFI indicator are 3 periods.
We’re also going to alter the default buying and selling levels from 80 to 100 and respectively from 20 to 0.
How to use the IMF indicator will be outlined during the next step.
Step #3: Wait for the Money Flow Index to reach the 100 level
An MFI reading of 100 shows the presence of the big sharks stepping into the markets. When buying, smart money can’t hide their footsteps. They inevitably leave tracks of their activity in the market and we can read that activity through the MFI indicator.
Technical indicators aren’t always right, so in order to fine-tune our day trading strategy, we’ve added a few more conditions. Namely, during the current day, we need to skip the first two MFI readings of 100 and study the crypto price reaction.
The price needs to hold up during the first and second 100 MFI reading.
If the price drops after the first two MFI 100 readings, then this suggests that most likely we’re going to have a down day.
Let’s now determine the appropriate place to go buy Bitcoin and what are the technical conditions that need to be satisfied.
Step #4: Buy if MFI = 100 and if the subsequent candle is bullish
We can now wait for the third MFI reading above 100. It doesn’t necessarily have to be the third MFI = 100 reading, you can take every other MFI = 100 readings. If your time doesn’t allow you to catch the third 100 reading on the MFI indicator, you can simply pick the next one as long as all the other technical conditions are satisfied.
Next, we also need the candlestick when we got the MFI = 100 reading to be a bullish candle. The close of this candle needs to be near the upper end, giving us a candle with very small wicks.
This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits.
Step #5: Hide your protective Stop Loss below the low of the day. Take Profit during the first 60 minutes after you opened the trade.
The obvious place to hide your protective stop loss is below the low of the day. A break below it will signal a shift in the market sentiment, and it’s best to get out of the trade. This can also signal a reversal day.
We’re more flexible when it comes to our exit strategy. However, the only rule you need to abide by is to take profits during the first 60 minutes or the first hour after your trade got triggered. Holding the trade longer than one hour will result in a lower success rate. At least that’s what our backtested results showed us.
Conclusion – Crypto Day Trading
If you took the time to read the whole day trading crypto guide, then you should be able to buy and sell Bitcoin and alts and make some daily profits. If you are interested in learning how to day trade cryptocurrency, be sure to equip yourself with enough information before diving into the market.
Crypto day trading can be a great way to grow your crypto portfolio and it’s a very lucrative alternative to the holding mentality that it’s crippling the crypto community.
Making a living day trading cryptocurrency can be a lot easier due to the high volatility nature of the crypto market. High volatility suits day trading very well, so you have the right environment to succeed. You may also be interested in reading our guide on the Best Cryptocurrencies Investments for 2019.
Thank you for reading!
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With over 50+ years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivations. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
Looking for automated crypto trading strategies? You can use Pionex to trade crypto with a trading bot!
In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win. You’ll find the nerves of steel and intuitive trading platform through research, research and more research. Let’s take a look at the X-factor in this gumbo, that is, the trading strategies you’ll use.
There are plenty of trading strategies out there and several platforms that some of the most popular day trading strategies are range trading, scalping, and arbitrage. If you want to save time, you can instantly copy professional traders plays with eToro, and learn as you go.
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In many cases, a cryptocurrency will trade for a long time inside a certain range. Bitcoin, for instance, traded between $8,601.40 and $10,210 for a 30-day period. This ±9.4% range seems volatile until you realize that Bitcoin can realize a ±42% change in 24 hours.
Cryptomarket caps are small enough that they can be manipulated by a single big mover. In some cases, those big movers will systematically manipulate the price of a coin up and down to profit from a range. If you notice these patterns, you can take advantage of them as well.
If you are range trading, you want to pay attention to overbought and oversold zones. Overbought means that buyers have saturated their need, and the stock will probably sell off; oversold means the opposite. Chart indicators, included in any reputable stock chart program, can help you find these zones. Common indicators used for this purpose include the Stochastic Oscillator and relative strength index (RSI).
- BEST FORHigh-volume InvestorsOVERALL RATING
- Read ReviewGET STARTEDsecurely through Pionex Crypto Strategy’s website
Pionex is a platform that allows you to use customized trading bots to automate your crypto investments. You can trade manually if you wish, but there are 18 bots to choose from that can do everything for you.
The trading bot selection includes:
- Grid Trading Bot allows users to buy low and sell high in a specific price range.
- Leveraged Grid Bot provides up to 5x leverage.
- Spot-Futures Arbitrage bot helps retail investors to make passive income with low risk. The estimated return for this strategy is 15~50% APR.
- Martingale bot performs DCA buy, one-time sell to capture fluctuation profit.
- Rebalancing bot helps you to hodl the coins.
- Dollar-Cost Averaging (DCA) Bot Sets repeated purchasing at regular intervals to offset the effects of volatility.
Plus, the Smart Trade terminal allows traders to set up stop-loss, take profit, and trailing in one trade.
With low fees of 0.05% for makers and takers and low risk, you can enter the crypto market much more easily than if you started buying on your own. Plus, you can sign up for free.
Try the Pionex mobile app to get the same experience you have on the website, live chat with the staff or email with any questions. Remember, you only pay maker and taker fees. Plus, you can save time that you would’ve spent scouring market data and investing doing something else.
High volume investors are also welcome to join the Market Maker program, which requires entrants to deposit $300,000 or more or hold $300,000 of crypto assets like Bitcoin, Chainlink, etc. Additionally, the market maker program charges no maker fees.
- More DetailsACCOUNT MINIMUMMicro Accounts: $1
Standard Accounts: $1,000PAIRS OFFERED49GET STARTEDsecurely through IFC Markets’s website
IFC Markets offers a range of investment options, providing you with the variety you need to build your portfolio. Specifically, you can trade CFDs on the site in several styles, including:
- More than 600 financial instruments
- Low spreads
- No hidden commissions
- Instant order execution
You have the freedom to build your own financial instruments, and you can create a strategy that makes the most sense for you, your family or your business. Crypto CFDs have rolled out for BTC and ETH, and more will be on the way. You can also take advantage of 1:8 leverage and low minimum volume requirements as you build an appropriate trading strategy for your portfolio. Unfortunately, however, IFC markets is not yet allowed in the U.S.
Scalpers take advantage of increased trading volume to profit. Scalpers may exit a trade seconds after entering, and many use automated bots to increase the frequency of their trading cycles. Ideally, scalpers want to exit a trade before any news item or short-term fluctuation has a chance to change the market’s sentiment on a coin.
It is best to have a large bankroll to take advantage of this extremely short-term day trading crypto strategy. Although the ROI of each trade is very small, staking a large amount means the scalp comes back with a substantial amount of money (0.5% of $100,000 is $500, enough for a luxury car payment). Trading frequently — sometimes making 10-20 trades per minute — also means those small gains add up.
Playing Bitcoin Volatility
The Chicago Mercantile Exchange (CME) offers options on Bitcoin futures, opening up a wealth of volatility strategies for traders. Crypto has 5X the volatility of traditional asset classes. Volatility trades are ideally directionless, meaning there is a possibility of making money whether Bitcoin goes up or down.
The long straddle is one directionless volatility strategy using Bitcoin options. To initiate, you buy a call and put option at the same time for the same strike price and expiration date. The Bitcoin straddle is profitable when Bitcoin falls or rises away from the strike price by more than your premium. To exit the trade, you sell the call and put at the same time.
In simple language, a big move up or down is in your favor.
Arbitrage involves buying cryptocurrency in 1 market and selling it in another market at a higher price. The difference in the buy and sell price of an asset is known as the “spread.” As a generally unregulated market, crypto allows anyone to create an exchange. This can lead to major differences in the spread because of the differences in asset liquidity and trading volume.
In the crypto market, traders usually hold a portfolio on an exchange they are trading. To start an arbitrage opportunity, open accounts on exchanges you believe will show significantly different prices for the same asset.
At one point, Bitcoin traded at a 40% higher price in South Korea than in the U.S. This was known as the “kimchi premium,” and it showed up more than once. Traders profited by simply purchasing Bitcoin on U.S. exchanges and immediately selling it on South Korean exchanges. Although the discrepancy will not usually be this large, the low barrier to entry for new exchanges brings new arbitrage opportunities more often than in traditional asset markets.
Traders should also take trading fees into account when attempting arbitrage. The fees to make a trade on an exchange may wipe out the gains from the trading spread.
Looking for more trading strategies? Head over to Coin Market Manager.
Best Online Cryptocurrency Trading Platforms
There are several cryptocurrency exchanges and brokerages to choose from, and some may be a better fit for you than others. if you’re a day trader, you’ll want to use an exchange with low or zero trading fees. Some exchanges that are good for day trading are Voyager, Crypto.com, and eToro. If you’re a long-term investor and care more about user-interface and unique features, then Coinbase or Voyager may be for you.
- More DetailsBEST FORCopy TradingOVERALL RATINGRead ReviewGET STARTEDsecurely through eToro’s websiteThis ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) and USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries, no EU protections and not supervised by the EU regulatory framework. Investments are subject to market risk, including the loss of principal.
- More DetailsBEST FORLow Deposit RequirementOVERALL RATINGRead ReviewGET STARTEDsecurely through Tickmill’s website
- More DetailsACCOUNT MINIMUMMicro Accounts: $1
Standard Accounts: $1,000PAIRS OFFERED49GET STARTEDsecurely through IFC Markets’s website
- More DetailsBEST FORNew InvestorsOVERALL RATINGRead ReviewGET STARTEDsecurely through Gemini Crypto’s website
Tip From a Pro
We’ve got top forex & crypto trader Ezekiel Chew, who makes 6 figures a trade and trains the bank traders behind the scenes, to share with us about crypto day trading strategies and what exactly it takes to be successful in crypto trading.
Ezekiel believes there are three key aspects to successful crypto day trading:
1. You’ve first got to learn how to read the charts. And one of the best ways to learn this is through price action; the technique that the majority of professional traders use. Once you have learned how to read the charts, you will know why the market is going up, down or sideways and then will you recognize which strategy to put into play in that direction.
2. Trade with a proven trading strategy or a combination of strategies. A proven strategy is one that is comprehensively back-tested and has been shown to work consistently. It is only in this way that you will have the confidence to stick with it during the lull periods.
3. Have a solid trading system. One that is defined not only by the technical aspects but also the business behind trading; a proper structured trade that is in line with the overall trading plan that has been proven to work. In contrast to what most new traders think, trading is not just about strategies, but the system itself also contributes greatly to becoming a successful trader.
Most of all, Ezekiel has a famous trading mantra – “Win big, lose small” that he and his students abide by.
“Trading is all about having an edge in the game and knowing the mathematical probability behind each trade”. By winning big and losing small, a single win can potentially cover 3 or more losses. If you apply this methodology in the long run, you will be a winning trader.
To learn more about Ezekiel’s method of trading backed by mathematical probability, you can check out his one core program.
- BEST FORCrypto + Forex CoursesOVERALL RATINGGET STARTEDsecurely through Asia Forex Mentor’s website
Pro Tip: Protect Your Privacy With a High-Speed VPN
- More DetailsBEST FORSmart TVs, Playstation, XboxOVERALL RATINGGET STARTEDsecurely through ExpressVPN’s website
A VPN lets you securely access the internet in an untraceable way. If you’re a cryptocurrency trader, you may want to remain anonymous or mask your IP address to another location. For trading in particular, ExpressVPN is the best option on the market. Not only can it automatically connect before you access the internet, it also offers lightning-fast speeds — something that’s needed to trade in the volatile cryptocurrency markets. Try ExpressVPN today through Benzinga and get 3 months for free!
Trading Crypto Doesn’t Have to be Cryptic
Regardless of the strategy you choose, you must be willing to accept losses in a volatile market like cryptocurrency. Have your exit plan ready before you enter any trade. Don’t follow the hot tips crowd; invest only in coins that you actually believe in — even for just the day.
Also, keep in mind that the market provides endless opportunity. So don’t bite your head off if you’re playing cautious and miss one, and don’t chase the gazelles that have already run off of the farm. Trading is more than anything an emotional journey — you must keep a clear head and stick to your chosen strategy through thick and thin.
Disclosure: Crypto trading on Webull platforms is served by Webull Pay LLC and offered through APEX Crypto. Cryptocurrency execution and custody services are provided by Apex Crypto LLC (NMLS ID 1828849) through a software licensing agreement between Apex Crypto LLC and Webull Pay LLC. The trading of cryptocurrencies can result in substantial losses. Investors must evaluate particular financial circumstances to determine whether or not trading cryptocurrencies is appropriate for them. *This promotion offer is open only to eligible customers. Please refer to the Terms and Conditions for eligibility.Show More
Frequently Asked Questions
Questions & Answers
Which crypto coins are the best for day trading?
Day traders look for volatility. Volatility is most prevalent in micro coins, or coins with small market caps compared to other cryptos. Right now, any coin with a market cap lower than $1 billion is considered small cap. Some small-cap coins with good trading volume include SiaCoin (SIA), Basic Attention Token (BAT) and Fusion (FSN).
How much can you make day trading crypto?
High volatility microcoins can gain price multiples in 1 day, providing exponential returns to lucky investors. High volatility also means those coins can move in the wrong direction just as quickly. As the potential reward goes up, so does risk.
Are there any restrictions for day trading cryptocurrencies?
There are no restrictions on cryptocurrency day trading.
Can I day trade cryptocurrencies with $200?
You can open an account at a cryptocurrency exchange using $200 and start day trading.
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Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.
This content should not be interpreted as investment advice. Cryptocurrency is a volatile market, do your independent research and only invest what you can afford to lose.