A Beginner’s Guide to Day Trading Cryptocurrency

  • Crypto day trading is a popular strategy among investors
  • It envisages opening and closing positions within the same day
  • There are several day trading strategies available in the crypto market
  • Understanding the pros and cons of day trading are very important

What Does Day Trading Crypto Mean?

Crypto day trading explained: When day trading, you are opening and closing positions within 24 hours

how crypto day trading worksAmong many crypto trading strategies, one that is used very frequently is day trading. The main idea behind day trading cryptocurrency is to buy and sell crypto during the same day. This strategy is a short-term trading strategy and is used by traders who want quick returns in the market.

The general idea behind day trading is that you are opening and closing your trades during the same trading day. However, as you might already know, there is no “trading day” in the crypto market, as it can be traded at any time.

Because of this, crypto day trading refers to the activities that are done within 24 hours. In terms of its technical side, it is pretty much comparable to day trading any other assets.

In the financial markets, day trading is among the most used trading strategies. These types of traders are active in many different financial markets, including cryptocurrencies, Forex, stocks, and many others. Although very popular, the question remains – Is it a good idea to day trade cryptocurrencies? And if so, how much profits will you be making?

Having one single answer to this question is impossible. There are many sides that crypto day trading has, and as much as it can be rewarding, it can also be quite risky. There are many things that you have to keep in mind when day trading crypto, which can be quite overwhelming for beginners. That said, it is not impossible to become a successful day trader.

In this guide to crypto trading, we are going to discover all the sides that traders should know. So, follow our comprehensive guide to cryptocurrency day trading as we discuss all the advantages and disadvantages of this activity.

Crypto Day Trading – Why Is It A Good Idea?

To better understand if day trading is a good fit for you, it is very important to understand both, negative and positive sides of crypto trading with a day trading strategy. There are numerous advantages as well as disadvantages that this strategy has.

The biggest advantages of crypto day trading are the massive volatility that it comes with and near unlimited variety. Another huge advantage of this strategy is that you see your profits right away, without having to wait for weeks, or even months and years to see your rewards.

Below, we will discuss the two of the biggest advantages of trading cryptocurrencies using a day trading strategy, which can make it a great fit for traders of all backgrounds.

Massive Volatility

how to day trade cryptocurrencyWhen it comes to day trading cryptocurrency strategy, one of the most important things that traders have to know is the high volatility of the crypto trading market. Because the prices are moving so fast in the market, it creates a lot of opportunities to earn high turnovers in even just a day.

This happens because the price of cryptocurrencies can increase drastically in just a day. Single news can send the price of crypto very high, which makes it a perfect match for day trading strategy.

Price changes in the market can be utilized by traders to make fortunes during the day. For example, the price of a cryptocurrency can increase above 5-10 percent a day if there is important news or positive development in the market.

Volatility is one of the most attractive factors of cryptocurrencies. Because of high volatility, the opportunities for traders are increasing a lot. When you are day trading cryptocurrencies, you are opening a position during the day, and closing it within the next 24 hours. Because of high volatility, if your position is successful, you can make a fortune.

But the risks should not be disregarded either, as much as cryptocurrency prices can increase during the day, they can also fall, but more about that later.

Almost Unlimited Variety

Among the biggest advantages of day trading cryptocurrency is the almost unlimited variety that this market comes with. While it is true that the majority of the cryptocurrencies in the market are growing and shrinking alongside Bitcoin, many others have their performance in the trading market.

The so-called altcoins in the market, which were created after Bitcoin, have developed and transformed a lot in recent years. The best thing about them is that many of them have managed to gather their following, which can be quite an important factor for traders.

While there are some that are resembling the performance of Bitcoin, there also are many others that have their own performance in the market. Because of this, it can be quite helpful to use different types of cryptocurrencies when you are trading.

The main idea of such diversification is that you can always find a cryptocurrency that is performing well. So, if the cryptocurrency that you have been trading is down, you can always find another one that has positive momentum and you can trade.

Diversification is a very important factor in becoming a successful trader not only in the cryptocurrency trading market but in other financial markets as well. Different types of news releases and ongoing events around the world have different impacts on different assets. While one asset might impact positively by some release, another one can be sent higher.

Crypto Day Trading – Why Is It A Bad Idea?

crypto day trading strategiesWe have already discussed the most important positive sides of trading cryptocurrencies, but there are some disadvantages that traders should also be aware of. Much like anything else in the financial world, day trading cryptocurrencies also comes with some cons.

By keeping these disadvantages in mind, you can better plan your trading and make sure that you are doing the right thing. As much as it can be rewarding to day trade cryptos, it still is quite a risky market.

The biggest disadvantage of crypto trading is that while the prices can change drastically and positively, they can also change negatively.

Massive Volatility

As we have already mentioned above, volatility can be used by traders for their own advantage. But you should also keep in mind that high volatility can be quite dangerous as it increases the risks of trading.

It is true that the price of cryptocurrencies can increase several times during the day, but they can also fall drastically. These changes are not miner, they can happen suddenly and it can negatively impact your trading positions.

One thing you can do to avoid such risks is to make sure that you always stay alert and informed about the things that are happening in the market. If you see that there is a negative trend, it might be better to avoid trading and wait for the momentum to end.

Massive volatility can be both advantage and disadvantage of the crypto trading market. While you can get as much as 100 percent return in just an hour, you can also see your profits melt away in less than a minute if the market is being manipulated or if it is extremely unstable.

However, it is very important to always make sure that you know exactly what you are doing and make sure that you do not panic when something significant happens in the market. You can always simply sit back and wait for the tough times to go, and wait for positive events in the market.

Prerequisite Capital

While thinking of day trading altcoins, it is very important to understand all the cons that it might have. One of the biggest disadvantages of day trading cryptocurrencies is that making huge profits with a little initial deposit is very hard.

Although the market can move drastically over the day, even the high changes won’t be enough to make high profits if you do not deposit enough funds. Because of this, to be a successful day trader, you will have to start trading with large capital.

For example, if you start trading with $10, even 100 percent profit a day won’t be enough to make a fortune. On the other hand, if you started with $1000, you would have a significant profit at the end of the day.

However, it should also be noted that every trader is different. For some, starting out with a little deposit works better. But, it is a fact that if you plan to make huge profits in the market, starting out with a little deposit won’t work whatsoever.

Starting out with a good amount of initial deposit is specifically important when you are trading using a day trading strategy. The more you invest in the beginning, the more chance of making profits you have.

Is There A Good Day Trading Cryptocurrency Strategy?

bitcoin day tradingYes, there are a bunch of day trading strategies for crypto traders. You might be wondering if can you day trade Bitcoin successfully using day trading strategies or not, and the simplest answer to this question is that yes, you can.

There are many day trading strategies available in the market. For example, you can simply buy a cryptocurrency at the beginning of the day, and sell it within 24 hours. On the other hand, there also are others who buy and sell cryptocurrencies several times during the day, making profits even from the smallest changes in the market.

Let’s discuss the most popular day trading strategies in the cryptocurrency market below.


Among the most used day trading strategies when it comes to cryptos is crypto arbitrage. It allows traders to use the inefficiencies in the market and generate incomes that way. The best thing about arbitrage in crypto trading is that it is a very simple concept that lets beginners easily generate profits from the crypto trading market.

It uses the volatility, liquidity, as well as decentralization of cryptocurrencies. In this strategy, users are taking advantage of price differences in the market.

Those using crypto arbitrage strategies are carefully looking at the rates offered by different exchanges to find ways to make a profit by quickly trading in a loop. There are several different types of arbitrages in the market, they are spatial crypto arbitrage, triangular arbitrage, flash loan arbitrage, and many others.

Swing Trading

When talking about how to day trade crypto, one of the best options that traders have is swing trading. It is used by a lot of traders every day, and the main idea behind it is to take advantage of the volatility in the market.

These traders are using short to medium time frames to generate profits. The main idea behind it is to catch any changes in the market, also referred to as swings, that occur over the day.

However, swing trading can also be used as a long-term investment strategy. The main idea when it comes to swing trading is to take advantage of changes in the market, this can be done using any of the timeframes.

You can open and close several positions a day while using this strategy, or do so over longer time periods.

What Did We Learn From This Crypto Day Trading Guide?

Crypto day trading is a very popular strategy in the market and is used by a lot of traders every day.

The main idea behind the day trading strategy in crypto trading is to take advantage of the price movements in the market during the day.

There are many advantages and disadvantages associated with day trading. While high volatility can help traders generate higher incomes, it can also be very risky.

There are several types of day trading strategies available in the market, this includes arbitrage, swing trading, etc.

Common Questions On Day Trading Crypto

How Much Money Do You Need To Day Trade Crypto?

The answer to this question varies largely. However, when you are day trading cryptocurrencies, you might be required to have a higher initial deposit. The number of profits you generate will be very different when you start trading with $10, or $1000.

To make higher profits while day trading crypto, you will be required to start trading using a higher initial deposit.

How Do I Learn Day Trading Cryptocurrency?

There are numerous ways you can learn more about day trading. One thing to do is to use a demo account, which will give you the ability to practice trading without having to risk any of your real-life funds.

There are numerous strategies available in the market for day trading. This includes strategies like arbitrage, swing trading strategy, and many others.

What Is The Best Crypto To Day Trade?

The best cryptocurrency to use a day trading strategy for is the one that is changing the most. The more volatile cryptocurrency is, the higher your chances are to increase the returns. However, it should also be noted that high volatility can also be quite risky for traders.

That said, you can trade almost every single cryptocurrency using day trading strategies, including Bitcoin, ether, and many others.

Are There Day Trading Rules For Crypto?

There are little to no restrictions when it comes to trading cryptocurrencies using day trading strategies. That said, there are some rules that you should follow to make sure you are trading safely.

One of the best pieces of advice that anyone can give you is to not invest more money in the market than you can afford to lose. Because the market is so risky, there is a chance for you to lose a part of your deposits due to the high volatility of the market.