Skip to content

Losing Money Day Trading Cryptocurrency

The single biggest reason traders lose money when trading highly volatile assets (such as cryptocurrency) is because they fail to practice proper risk management. The first thing you need to learn is that trading is a zero sum game. Its important. The risk of losing money in a day is real. Therefore, it’s important not to place all your cash in one basket. Ensure that you diversify your investments and only use a section of it to day trade. This minimizes the risk of losing all your hard-earned cash. Cryptocurrency Day Trading Tips. Day trading cryptocurrency has boomed in recent months. High volatility and trading volume in cryptocurrencies suit day trading very well. Here we provide some tips for day trading crypto, including information on strategy, software and trading bots – as well as specific things new traders need to know, such as taxes or rules in certain markets. Apr 05,  · Even missing one day of the action in the cryptocurrency arena can mean losing out on price spikes. To make money trading cryptocurrency, you have to stay in the game every day. If that’s around the clock, so much the better. Cryptocurrencies never sleep. Clearly you’re only human and sleep will be vital to your state of liethemdenixi.gq: Christina Comben.

Forget the Wolf of Wall Street , this is a valid possibility in the crypto world for anyone with skill, patience and discipline.

Day trading cryptocurrency could be an unbelievably profitable venture for those who put in the work and remember the golden rules of trading. Think trading stocks, but better. This article walks you through a step-by-step guide to getting started with day trading cryptocurrency. But first…. There are a number of ways to profit from cryptocurrency, but day trading is most likely the fastest.

  • Opportunities and threats of cryptocurrencies
  • Day trading involving speculating on the price of currencies, and then buying and selling them within the course of a day to make a profit. Yes, you can make a fortune day trading crypto, with many traders turning three figures into five , six or seven in a matter of months.

    Post navigation

    The market is outrageously volatile, and that means two things:. You might be dreaming of the feel of the steering wheel of your first Ferrari right now but before getting started on your first trade, you should come to terms with the proven risks associated with day trading:. Almost all day traders suffer BIG losses when starting out, and few actually move on to start making profits.

    Because they lack the education, experience, insight and have no risk management systems. Trading can be enthralling, exciting, and simply make you feel alive. Not only can this erase your bank balance and put you into debt, it can erode the fabric of your life as you damage and destroy relationships with friends and family.

    Stress will be a reality and unless you pay constant attention to price movements, you risk losing your money. The cryptocurrency market is outrageously speculative right now and just about everyone has an opinion on how prices will move, or the value of a coin.

    Trades made on the basis of false information can lead to big losses, and this is something every new trader will be exposed to. You will see all sorts of conflicting information when trawling through Reddit, Steemit and Twitter.

    Take everything with a grain of salt; find trustworthy sources and connect people with experience successfully trading the markets.

    Ensuring you have enough money to live will increase your confidence, relaxing in the knowledge you have your bases covered if you blow your whole account balance. Trading is a skill that must be acquired, crafted, and honed through training and education.

    Before making your first trades, immerse yourself in reputable sources of information and consider connecting with a mentor such as someone with a proven track record of success. Once you have some basic theoretical knowledge, you are ready to start putting theory into practice, without risk.

    Signing up to a demo brokerage account allows you to make trades in real-time, but with fake cryptocurrency. Sure, you might as well be trading Monopoly money, but this is a risk-free way of gaining valuable experience as a day trader. You will quickly develop strategies; seeing what wins and loses will prepare you to start winning on the real market. To hold on to your wins and minimize your losses, you will need to put in place systems that guarantee this see the Stop Losses and Take Profits section below.

    Cryptocurrency Day Trading 2019 in the Netherlands – Tutorial and Brokers

    Yawn, I know. Few people in the world claim to fully understand cryptocurrencies right now, and even fewer can wrap their heads around the finer details of blockchain technology.

    Do your homework on blockchain. This will give you a leg-up, helping you identify profitable trades and promising investments faster and more accurately.

  • Law enforcement battles cryptocurrencies
  • Related: What is Blockchain Technology? As you dip your toes in the water, the safest coins to trade are the top by market cap.

    How to Day Trade Cryptocurrency

    Smaller altcoins can be incredibly profitable in the short-term, but the risks associated are much higher. Remember, values can plummet just as fast as they have risen. While Bitcoin and Ethereum are relatively safe commitments for new traders, the risks when dealing with less-known coins can be significant.

    While some coins are undervalued, some are simply pump-and-dump or even Ponzi schemes that rely on speculation and hype to artificially boost their prices. When fraudulent or poor quality coins crash, your funds will go up in smoke — and this can be easily avoided by a little dash of due diligence.

    Picking a quality coin is a lengthy process; yet time worth spent. Related: Top 50 Cryptocurrencies. With millions being stolen during hacks , the importance of choosing a trustworthy exchange cannot be understated. Looking for a reputable place to buy? You will do well to consider the following factors when selecting an exchange for trading:. Popular picks for altcoin trading include Bittrex , Poloniex , Binance and Bitmex.

    Just like Forex, all cryptocurrencies are traded in currency pairs. Since the prices of all cryptocurrencies are constantly changing, you can leverage these fluctuations to earn more ETH or BTC through your crafty trading skills. Example trade:. At A few hours later, you sell at 0. You just made yourself 0. To effectively manage the risks of day trading, you will need to use your Stop and Limit Order functions. Humans have a tendency to get emotional, and usually this is when losses happen.

    This is the simplest trade to perform: immediately buying or selling your coin at the market price, plus extra fees. When buying or selling with a limit order, you are setting the specific price that you want to buy or sell at. When the limit it reached, your crypto will be automatically traded at this price.

    The beauty of a limit order is that you will either get a better price, or the one you asked for. If the price of your chosen pair drops, your coin will be sold at a specific price to limit your loss. This reduces the risk of unnecessary losses, and guarantees your profit from a successful price movement. Set your sell stop at the lowest price loss you can tolerate. That is the million dollar question, and this takes expertise. This method uses exterior events to read into the future movement of a currency.

    For example, say a newly published report states that X is a huge problem in — is there a new cryptocurrency that can solve this issue? If so, it is probably undervalued, and is likely to rise in price.

    This is a complex beast, but it comes down to the basic laws of supply and demand. It is a statistical approach that uses price, volume, and the assumption that everything moves in trends. It takes years of experience and the ability to deal with complex statistical patterns and economic trends, so this method is the least user-friendly for rookies. Of all the ways to predict price movements, this is the easiest to wrap your head around. Sentiment Analysis is all about psychology of the market: how are people feeling about a currency?

    Compared to fiat currency, the volume of crypto traders is nothing, and this means how the coin is viewed can dramatically alter its value. Given that the cryptocurrency market is still a pipsqueak in size compared to stocks or forex, price movements are highly influenced by news. Coins can erupt in value when new developments or partnerships are announced, creating a momentary explosion in value.

    On the other hand, announcements of regulation, legitimacy, security breaches or technical issues can send prices plummeting to the ground. If you are able to stay one step ahead of the beat, this can be a very effective means of momentum analysis. This is helpful even for a more long-term strategy: imagine uncovering early information on an upcoming partnership.

    Discovering news before the majority of investors will help you get in or out of a coin much faster, giving you the upper hand. That said, be wary of the speculative and unregulated nature of cryptocurrency news. Between Reddit, Steemit, Twitter , Telegram and mainstream media outlets, there are vast discrepancies in the quality of information and plenty of outright falsehoods.

    In time, you will develop your own understanding of what is credible; and what to take with a grain of salt. The explosion of cryptocurrencies has seen a tsunami of investment, with many reportedly taking out loans and mortgages to invest in cryptocurrency.

    For prospective day traders, look at these people as the prime example of what NOT to do. Yes, these loaned investments may indeed flourish, but the potential to lose it all is a mind-boggling risk when considering the unknown future of the cryptocurrency market.

    Crypto Brokers in the Netherlands

    When coins fail, you do not want to be losing money you cannot afford to lose. Consider the maximum amount of money from your paycheck that you are willing to dedicate to cryptocurrency, and then stay within your limit. Follow this rule, and you will make your career as a day trader a long and hopefully lucrative one. Ignore it, and you could face losses and debts when you end up being another crypto sob story.

    How to Day Trade Cryptocurrency: Best Strategy for Beginners

    Exiting your trade will ultimately determine how much you make or lose, so your exit strategy is absolutely crucial to your success. Creating an exit strategy with a stop loss and profit target is safe, sensible, successful trading. To determine your exit strategy, you will need to ask yourself two questions:. Since you are day trading, you will be using a short-term strategy when determining your exit point.

    There are a number of methods to calculate your price exit point, and we will briefly touch on the main ones:. You may anticipate the price of your coin to rise but in the eventuality it moves against your prediction, you need a stop-loss in place to minimize your losses.

    Market Rates

    For less risky trades, set a tighter stop-loss near your entry point. NOTE: take volatility into consideration. The beta indicator will help you to decide an appropriate stop-loss. This saves you from absorbing a loss when anticipated fluctuations in price occur before the upward price movement you anticipated. A long-term strategy involving buying a cryptocurrency and holding it -w aiting for its price to rise over weeks, months, or years.

    Of all types of cryptocurrency investments, this is the most common type. With many coins increasing thousands of percent in value over months, this is a valid and profitable strategy.

    When buying to HODL, it always pays to do your due diligence ; you should know your chosen coin inside and out if you are to make a safe and profitable long-term investment.