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Crypto Day Trading Strategy For 2021

day trading

December 10, 2020 | 

1965 Views | 

JOHN K MWANIKI | 

Get Into Cryptocurrency Trading Today

Cryptocurrencies are revolutionizing the financial world. The top of the sectors is trading. The access to crypto markets and exchanges and has made trading in digital currency so lucrative.

Still, there is always a concern for volatility. From the time Satoshi Nakamoto released Bitcoin, its value has never stabilized. It relies on market demands and other underlying factors. The other cryptos are also following suit.

These changes have made short term crypto trading the most preferred. The traders have better chances of profiting in the short run—this beat holding the coins when you don't know if they will crash and even disappear. Top of the short-term trading strategies to have come up is crypto day trading and arbitrage trading.

This article is looking into what day trading holds in 2021. It gives you the possible benefits, risks, and how to day trade in the next year.  

How to Day Trade Cryptos in 2021

Crypto day trading is not the easiest of the investment options. You have to understand all the risks that come with it. In the same way, you have to know the pros and cons, then develop the trading psychology. 

Day trading is not a get rich quick strategy. The possibility of losing is as much as that of winning. That is why you need a day trading strategy for 2021.

The investment option is such a dynamic venture. You don't want to invest emotionally. Instead, rely on logic and market data. Also, only invest the amount you are willing to lose. 

Top Tips to Day Trading in 2021

1.    Invest in crypto trading education 

Crypto education is the one thing that every trading enthusiast must look into. The crypto world is a new world that keeps on changing. 

You need as much knowledge as possible. You want to understand the crypto markets and every other impact. Only then can you day trade perfectly. 

There are several educational resources to rely on for crypto knowledge. You can use the different crypto blogs available. Social media sites like Twitter and Reddit have also become the crypto hubs. They have experts for analysis and other market trends information. 

The popularity of cryptos has also made it teachable in schools. Some traditional universities are offering courses on crypto. 

2.    Learn about blockchain technology

Digital currencies have revolutionized how the population perceives blockchain technology. Bitcoin has made transactions more secure and faster to establish itself as the ideal medium of exchange. Ethereum, Ripple, and other virtual currencies are also taking up the other space.  

If you are going to day trade in 2021, blockchain technology is a must to learn. Understand the population challenges it solves. Afterward, you also need to check on the issues it faces. Look at the currencies best placed to concur the issues. For example, Ripple does well to manage scalability and security. It operates a Ripple ledger protocol, which ensures faster and accurate transaction validation. 

Invest in top technology as it is likely to be on-demand.

3.    Find a reliable exchange

There is no need to invest in a crypto day trading strategy if you don't have any idea on exchange. The kind of exchange you choose determines the kind of resources you access for the trading experience.

A reliable crypto exchange provides for low transaction fees. You don't want to lose all your profits on Transactions and related costs. The crypto exchange should also provide for a wide variety of trading pairs. This helps in spreading risks and also having several trading options

Still, the crypto exchange must also have the needed liquidity. This allows you faster access to your earnings. The same goes for security as much as the ease of trade. The exchange should be your source of peace when trading.

4.    Learn advanced trading analysis 

Your cryptocurrency market analysis comes to test when it comes to day trading in 2021. You need as much expertise to analyze the market. 

Fundamental analysis involves looking into various market factors like trends, news, and crypto development. 

Technical analysis looks into the crypto market data. It looks into the market patterns and trends to determine future pricing. Having the cryptocurrency market movement knowledge helps in knowing the best asset to trade. You also understand the risks and possible returns.

Making informed day trading decisions is the sure way to better returns.

5.    Master trading psychology 

You need to top your crypto day trading strategy for 2021 by mastering trading psychology. You have to understand the thought process of how traders make investment decisions. Look into the possible fears and other attractions to market sentiment. 

With trading psychology, you get to master the market and the other traders. From then, you can minimize your losses.

Alternatives to Day Trading in 2021

1.    HOLD

Unlike crypto day trading, this is a long-term trading strategy. It involves buying a crypto asset then holding on to it for a long time. It is the most popular investment option due to its stress-free nature. 

You only need an excellent exchange to purchase the crypto and a wallet for storage. You can also consider different currencies for spreading risks.

2.    Swing trading

Swing trading is more like day trading. It is a short-term strategy that involves buying low and selling high. The only difference is that you get to hold the cryptos for an extended duration, most probably a few weeks. It is more like a mid-term trading strategy.

3.    ICOs

Cryptos have made it easier for fintech to raise funds through Initial Coin Offering (ICO). They don't have to go through the centralized Initial Public Offering (IPO) with several requirements.

Making money through ICO is quite easy. You only need to look for projects with chances of success. From which you can place your money then look for later returns.

Bottom Line

Daytrading is a popular crypto investment for a few traders. It is quite risky as it needs analysis and market knowledge. It still also offers maximum returns. You are better off learning and making a killing with less competition.

Use this guide to help you make a crypto day trading strategy for 2021.

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Total Market Cap The Total Market Capitalization (Market Cap) is an indicator that measures the size of all the cryptocurrencies.It’s the total market value of all the cryptocurrencies' circulating supply: so it’s the total value of all the coins that have been mined.

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