Can you really make a lot of money with crypto day trading? You see it in the news and even in social media, there are many people earning from trading crypto but this might not be for everyone. So, you have to know whether it’s the right investment for you and if you’re willing to learn and take that dive.
What is Crypto Day Trading?
Day trading is a term used to describe the practice of buying and selling instruments like cryptocurrencies in time intervals that are shorter than a day.
Day traders use a combination of strategies and analysis to predict the market’s movements and make profits over periods of several hours, minutes, or even seconds by looking to exploit arbitrage opportunities, price discrepancies, and news-based volatility.
Intra-day trading has been a fixture of traditional stock and commodities markets since time immemorial. But while these instruments have fixed trading hours, cryptocurrency exchanges are always open, which makes them uniquely lucrative for talented day traders.
How Can I Make Money With Crypto Day Trading?
It’s no coincidence that 95% of intra-day traders never make it. After all, if it were that easy, everyone would be doing it. And while there’s no sure-fire recipe for success, there are a few principles that can help you avoid falling victim to many of the pitfalls that plague would-be day traders.
Set Clear Goals for Every Trade
As a day trader, you want to be in and out. You can’t let greed or fear hold you back from closing a position. When the time limit you set for yourself expires, take whatever profit or loss you have and don’t look back. It’s incredible how much money people lose trying to chase their losses or maximize returns.
Use Stop-Loss Orders
These are an excellent way to take the emotion out of day trading. Set a Stop Loss level when you open your position to ensure you don’t lose more money than you can afford. That way, the app will automatically liquidate your position when this limit is reached, removing the risk of you feeling compelled to hold on for a reversal that may never come.
Use Take Profit/Limit Orders
Like Stop Losses, these help you maintain a healthy level of stoicism. If you set a Take Profit order to sell your coins as soon as your target return (1-2%) is realized, it will prevent you from holding on in the hope of bigger gains. More often than not, the trend reverses before you can react and you go from a nice 2% return to a -1% loss in the blink of an eye.
How Much Can I Make From Crypto Day Trading?
When it comes to your potential earnings from day trading, the sky’s the limit. That said, your income will largely depend on how much capital you start with. For this reason, it’s best to look at it from a percentage return perspective.
Assuming you’re using a Steady Incremental Profit Strategy, you can quite feasibly make a return of between 100-200% per month. Of course, this is rather ambitious for a beginner, but with time, it’s certainly achievable. Just be sure to avoid risking more than 1% of your total bankroll on any one trade.
How to be a Successful Crypto Day Trader
The idea behind crypto day trading is to look for trading opportunities that offer you the potential to make a quick profit. The intra-day game is all about leveraging solid strategies for rapid, short-term gains. So, here are a couple of strategies you can try today:
Steady Incremental Profit Accumulation Strategy (SIPAS)
As a day trading newcomer, it’s advisable to try to minimize the chance of market swings and fluctuations. That can be tough when dealing with volatile instruments like crypto, but there are some measures you can take. This is where a good conservative strategy like SIPAS comes in.
Use USDT as Your Base Currency
It’s hard enough to allow intense fluctuations on one side of a crypto pair, never mind both. As a stablecoin, Tether is immune to the wild swings commonly seen on the crypto market, which means you can focus all your attention on the coin you’re hoping to make a profit on.
Set a Realistic Profit Target
Aim for a 1-2% return from several different altcoins that have demonstrated relative stability over the past 2–3 days. You should be shooting for a 7–12% profit per 12-hour trading shift. This translates to a weekly profit of more than 50%.
Avoid More Volatile Altcoins
While you can make a lot of money on a single trade with a more volatile asset, you can lose just as much, too. You can certainly make money trading massive swings, but this is an entirely different strategy and not one for absolute beginners. With SIPAS, you ought to limit yourself to 1-2% returns over multiple trades to avoid significant losses.
An Eye For Opportunity!
The secret to becoming a successful crypto day trader is developing an eye for quick profit opportunities. It’s not like in traditional investing, where you look at fundamentals and try to pick assets with long-term growth prospects. You have to learn the books and even find a mentor that you can work with and show you the way. A good trader knows how to treat his investment tools wisely, open to learning from an expert, and also believes in his gut feel and knowledge more than anything else.