Crypto day trading is nothing but capitalizing on the movement in price of any crypto over a single day. But, before we jump to ‘making profits in the crypto world’, it is important to know a few basics.
Is making money in cryptos easy?
First, the ‘get-rich-quick’ thing can often be deceptive. Making quick money in a single day is no mean feat, let alone a piece of cake. Seasoned investors rely on news, fundamentals, events like a multi-lateral meet on key subjects like climate change to undertake day trading and capitalize on even minor price movements. The COP26 acted as a trigger for a limited bull run in Tesla shares. Online brokerages may have made trading easier, but they don’t always make it profitable for the investor.
Also read: Cryptocurrencies vs. stock market: What can be the best pick for 2022?
Second, cryptocurrencies are a hyper-volatile asset class. This means that intra-day profit can dwarf a medium-to-long term bet on even an S&P 500 stock. Likewise, losses too can be deep. In such a market, being cautious is the key. Not placing all the eggs in a single basket is likely a better idea.
The best crypto day trading strategy
Consider this. In July, Bitcoin was extending its losses, but a lesser-known altcoin, Axie Infinity, which returned more than almost any other crypto in 2021, was raking in profits for its backers.
Data provided by CoinMarketCap.com
What makes crypto day trading a little complex is that the news headlines usually cover events related to Bitcoin or a few other major altcoins like Ether. But the market has a lot of options for investors to consider. Intra-day price movement in Bitcoin is often negligible as compared to movement in altcoins. Lately, Facebook’s metaverse move immediately lifted the prices of blockchain gaming cryptos. An eye on rapidly shifting market sentiments is the key.
Also read: Top cryptos by market cap that ruled in 2021
It may be good to diversify and look at a wide range of cryptos, including DeFi, NFTs and gaming. But, as 2021 taught us, cryptos are very volatile, including even the largest market cap crypto, Bitcoin.
Choosing the best crypto investment strategy is a matter of individual choice. One may like to hold on to a crypto asset for very long, while some other investors may want to quickly book profits. Day trading has its own sets of opportunities and risks.