Best Crypto Day Trading Strategies

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Contributor, Benzinga
Updated: June 15, 2022

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.

Range Trading

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).

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Pionex

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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.

IFC Markets

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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.

Scalping

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.

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Attribution: Quora

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

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.

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    eToro USA LLC; Investments are subject to market risk, including the possible loss of principal. Virtual currencies are highly volatile. Your capital is at risk.

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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.

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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.

Frequently Asked Questions

Q
Which crypto coins are the best for day trading?
A

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).

Q
How much can you make day trading crypto?
A

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.

Q
Are there any restrictions for day trading cryptocurrencies?
A

There are no restrictions on cryptocurrency day trading.

Q
Can I day trade cryptocurrencies with $200?
A

You can open an account at a cryptocurrency exchange using $200 and start day trading. 

 

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