How to Day Trade Bitcoin

Trading Cryptocurrency
By 
Coin Cloud Team
, published on 
October 1, 2020
How to Day Trade Bitcoin

If you’ve ever wondered how to day trade bitcoin and make a living at it, you should first know that day trading in general — and crypto specifically — is pretty difficult, and even the best traders often lose more than they make.

Some estimates say that over 95% of ALL day traders lose money, and cryptocurrency is arguably even trickier than traditional day trading.

Wow … the odds are better (much better — Blackjack, craps and roulette only give the house about a 1-6% edge) at a Las Vegas casino, which is a pretty scary thought! Coin Cloud is based in Las Vegas, so we know what we’re talking about … and this town was built on the proceeds from house advantage.

Sage advice: Do your homework, ask an expert, use a service if you’re unsure, and be prepared to lose whatever you put in. That way, if you do profit, you’ll have something to celebrate.

Having said all that, if you want to know how to day trade bitcoin, there are best practices you can follow. And the volatile nature of crypto COULD pay off (or just as easily not), depending how you play it.

Of course, “day trading” is a bit of a misnomer when it comes to trading cryptocurrency. Unlike forex or stock market trading, you can buy and sell crypto 24/7.

What is Day Trading?

The basics of day trading are the age-old advice to buy low and sell high. But it’s done on a short-term basis, as assets change price from day to day, hour to hour or even minute to minute. Which means you really, really need to be paying attention! Or else, leverage an expert or a bot to do that for you.

Some people just buy and sell one cryptocurrency, while others choose to trade with another … for example, sell off your Bitcoin and buy Litecoin or XRP instead, because you think that price is increasing as BTC is going down.

Crypto Trading Models

There are three ways to trade with crypto: 1. Buy and sell it, using some type of cryptocurrency exchange 2. Speculate on price moves, using some kind of crypto-friendly broker 3. Use an automated crypto trading bot

No matter which method you choose, don’t try to rush the process. It’s pretty challenging to get a good system down.

Crypto Volatility

With cryptocurrency, day trading takes advantage of one of its most famous qualities: volatility. The fact that the price of bitcoin can be $9,000 one week and $12,000 the next means there’s an opportunity to profit, if you know what you’re doing and the timing is right. On the flipside, there’s an equal opportunity to lose … and huge!

To take advantage of volatility during day trading, you buy when the price is low and sell it off quickly as soon as you think it has peaked, or it passes your chosen threshold. That could be a price increase of 5%, 10%, or whatever number makes sense to you. Just keep in mind that you may never hit that threshold, and instead could lose money.

Here are two rules you can program into certain trading platforms (or conduct manually):

A take-profit order is an automatic sell when you reach your desired profit threshold or price level. You bought bitcoin at $9,990? You could decide in advance that you want to sell if it reaches $10,200, and either program that number in, or do a manual trade.

A stop-loss order is the opposite — you sell (and sell fast!) if the price reaches a certain low point, so you don’t lose any more money than you already have.

Pay Attention

If you decide to go it alone, you need to study industry news and pay close attention to everything happening that could affect the price of a given virtual currency. Jumping from one to another might not be the best idea if the whole market is going down, and depending on the platform you’re using, you might not be able to make lightning-fast sell orders.

Did You Say Automatic?

While automatic trading bots might seem like an easy way to drop some funds and rake in the profit, they’re not a guarantee. You could just as easily lose money with the wrong system, wrong programming, wrong commands … and some have been known to be scams. Of course, you won’t see any of that on the sales page. So, look for people you know who have actually successfully used a specific bot software for a long time before jumping on board (or be prepared for the gamble — you might lose everything).

Day Trading vs HODLing

OK, we have to put this out there … sometimes day trading cryptocurrencies might seem like the worst investment model you can choose. After all, if you decide to sell because the value just spiked 10% – but then, the price keeps going up — you may have profited, but not as much as someone with a long-term strategy.

Here’s the thing: Bitcoin and other cryptocurrencies are admittedly very volatile in the short term, but they might go up with a slow and steady pace in the long run. In fact, historically, that’s what has happened with bitcoin (not saying it will continue to do so, because past performance doesn’t dictate future performance, but it’s something to consider).

Hodling (a little joke in the crypto world that just refers to holding on to a digital currency) might be better than trying to navigate the daily roller coaster. But it’s up to you. It’s kind of like downhill skiing (wheee! Don’t break your neck!) versus cross-country skiing (yes, it’s a thing … bring your binoculars and enjoy birdwatching as you pass the lovely scenery). Or, if snow sports aren’t your thing, it’s like the difference between sprinting and running a marathon.

If you decide to just buy and hodl, consider using a Bitcoin ATM, like a Coin Cloud machine. You can buy your cryptocurrency quickly and easily using cash, and sell it just as easily when you want to.

Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.

What is Coin Cloud?

Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.

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