Brought to you by the Liquid team to help you make sense of crypto.

Get started day trading cryptocurrency

Crypto trading can appear mysterious and complicated, but it’s not as tough as you may think. In fact, with a bit of work and some discipline you can get started day trading cryptocurrency in no time at all.

First, we’re not even going to talk about predicting what’s going to happen next in the markets. That's important, sure, but it’s second to something more vital in trading: discipline.

The basis of trading: understanding risk

Trading is a game of probabilities and risk. If you are interested in day trading cryptocurrency, the first thing you need to understand is risk management.

No trader wins with every trade. In fact, most highly profitable traders would tell you that their winning trade percentage is just above 50%. Profit in trading is accrued over time by respecting risk and using it to your advantage.

First and foremost, you must only enter a trade you are sure about. When you enter, you must know where you will take profit and at what price you will consider yourself wrong and stop your loss.

Secondly, control your position size. Don’t use too much leverage and don’t risk too much of your portfolio in one trade. The general rule is that if a trade is a loser, it should not lose more than 1-2% of your entire trading portfolio.

All in all, the crash course in risk management comes down to this:

  • Get a good trade entry price.
  • Place a suitable stop loss once the position is open.
  • Understand where you want to take profit.
  • Use a reasonable position size.

Emotion

Trading based on emotion normally leads to the biggest losses. If you’re angry about a loss, you are more likely to over trade. You’ll get bad entries with large positions and put yourself in a worse place than before.

Take your emotions out of trading. Stay disciplined. If a trade fits your criteria, take it. If it doesn’t, you should avoid it.

Don’t forget, fear of missing out (FOMO) is an emotion and can cause traders to go in too big. Every time you are placing a trade, ask yourself:

  • Why am I entering this trade?
  • Does it fit my strategy?
  • Is this trade too big?

Once you start questioning the validity of a trade before you place it, you will improve your trading substantially. With aspirations of day trading cryptocurrency, you’ve got to have complete harmony between your strategy and execution.

You won’t lose money if you miss out on a profitable trade. On the contrary, you will lose money if you chase trades because you don’t want to miss them.

Learn technical analysis

Technical analysis (TA) is a key skill if you want to start day trading cryptocurrency. Fundamental analysis is great, but it’s TA that will give you the shorter term outlook that you’ll need to day trade.

TA does work. It’s a study of human psychology and the probably reaction to a certain event, based on patterns, statistics and historical data. Technical traders use various setups to predict the reaction of the market.

What should you learn?

There are so many TA strategies and methods that it can be hard to cut through the noise and find the ones that are most valuable.

As a general rule, the basics are best. Here are some topics that you should learn before you start day trading cryptocurrency:

If you learn these, you’ll be in a great position. It’s the basis of the rest of technical analysis. Once you understand the basics, you can then dive deeper into nuanced techniques such as Wyckoff.

Trade in a safe environment

When you’re day trading cryptocurrency, you need to use an exchange you can trust that also has the features you need.

Liquid is a highly secure exchange that offers margin trading with up to 25x leverage and Bitcoin CFDs with up to 100x leverage. It’s all a crypto day trader could ask for.

Trade Crypto

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

WRITTEN BY

Liquid

Providing liquidity for the crypto economy.