Tips and Strategies for Trading Cryptocurrency

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Day trading cryptocurrency has boomed in recent months. High volatility and trading volume in cryptocurrencies suit day trading very well. Here we provide some trading tips for day trading cryptocurrency, including information on strategy, software day trading strategies cryptocurrency trading bots — as well as specific things new traders need to know, such as taxes or rules in certain markets.

Day traders need to be constantly tuned in, as reacting just a few seconds late to big news events could make the difference between profit and loss.

The cryptocurrency trading platform you sign up for will be where you spend a considerable amount of time each day, so look for one that suits your trading style and needs. Always check reviews to make sure the cryptocurrency exchange is secure. Day trading strategies cryptocurrency whilst secure and complex credentials are half the battle, day trading strategies cryptocurrency other half will be fought by the trading software.

Each exchange offers different commission rates and fee structures. As a day trader making a high volume of trades, just a marginal difference in rates can seriously cut into profits. There are three main fees to compare:.

Do the maths, read reviews and trial the exchange and software first. Coinbase is widely regarded as one of the most trusted exchanges, but trading cryptocurrency on Bittrex is also a sensible choice. IO, Coinmama, Kraken and Bitstamp are other popular options. Before you choose a broker and trial different platforms, there are a few straightforward things to get your head around first. Understanding and accepting these three things will give you the best chance of succeeding when you step into the trading arena.

Below is an example of a straightforward cryptocurrency strategy. This straightforward strategy simply requires vigilance. A correction is simply when candles or price bars overlap. You should see lots of overlap. This tells you there is a substantial chance the price is going to continue into the day trading strategies cryptocurrency. You should then sell when the first candle moved below the contracting range of the previous several candles, and you could place a stop at the most recent minor swing high.

Even with the right broker, software, capital and strategy, there are a number of general tips that can help increase your profit margin and minimise losses.

Below are some useful cryptocurrency tips to bear in mind. Short-term cryptocurrencies are extremely sensitive to relevant news. When news such as government regulations or the hacking of a cryptocurrency exchange comes through, prices tend to plummet.

Analyse historical price charts to identify telling patterns. History has a habit of repeating itself, so if you can hone in on a pattern you may be able to predict future price movements, giving you the edge you need to turn an intraday profit. For more details day trading strategies cryptocurrency identifying and using patterns, see here. This is one of the most important cryptocurrency tips.

By looking at the number of wallets vs the number of active wallets and the current trading volume, you can attempt to give a specific currency a current day trading strategies cryptocurrency. The more accurate your predictions, the greater your chances for profit. If you anticipate day trading strategies cryptocurrency particular price shift, trading on margin will enable you to borrow money to increase your potential profit if your prediction materialises. Exchanges have different margin requirements and offer varying rates, so doing your homework first is advisable.

Bitfinex and Huobi are two of the more popular margin platforms. The digital market is relatively new, so countries and governments are scrambling to bring in cryptocurrency taxes and rules to regulate these new currencies.

Many governments are unsure of what to class cryptocurrencies as, currency or property. S in introduced cryptocurrency trading rules that mean digital currencies will fall under the umbrella of property.

Traders will then be classed as investors and will have to conform to complex reporting requirements. Details of which can be found by heading to the IRS notice On top day trading strategies cryptocurrency the possibility of complicated reporting procedures, new regulations can also impact your tax obligations. Each countries cryptocurrency tax requirements are different, and many will change as they adapt to the evolving market.

There are two benefits to this. Firstly, it will save you serious time. Trade execution speeds should also be enhanced as no manual inputting will be needed. Secondly, automated software allows you to trade across multiple currencies and assets at a time. That means greater potential profit and all without you having to do any heavy lifting. If you want to avoid losing your profits to computer crashes and unexpected market events then you will still need to monitor your bot to an extent.

They can also be expensive. Whilst there are many options like BTC Robot that offer free 60 day trials, you will usually be charged a monthly subscription fee that will eat into your profit. They can also be expensive to set up if you have to pay someone to programme your bot.

So, whilst bots can help increase your end of day cryptocurrency profit, there are no free rides in life and you need to be aware of the risks. Perhaps then, they are the best asset when you already have an established and effective strategy, that can simply be automated. The most useful cryptocurrency trading tutorial you can go on is the one you can give yourself, with a demo account.

Firstly, you day trading strategies cryptocurrency you get the opportunity to trial day trading strategies cryptocurrency potential brokerage and platform before you buy. Secondly, they are the perfect place to correct mistakes and develop your craft. Online you can also find a range of cryptocurrency intraday trading courses, plus an array of books and ebooks.

When choosing your broker and platform, consider ease of use, security and their fee structure. There are a number of strategies you can use for trading cryptocurrency in Whichever one you opt for, make sure technical analysis and the news play important roles. Brokers Reviews 24Option Avatrade Binary.

Reviews 24Option Avatrade Binary. Crypto Brokers in Germany. Trade Forex on 0. Day trading strategies cryptocurrency in Forex but also offering stocks and tight spreads on CFDs and Spread betting across a huge range of markets.

Established spread betting, forex and CFD broker with over 30 years in the business. Regulated around the globe.

Leverage and spreads improve with each account level - Bronze, Silver or Gold. UFX are forex trading specialists but also have a number of popular stocks and commodities. Offering tight spreads and one of the best ranges of major and minor pairs on offer, they are a great option for forex traders. Based in Australia, HighLow offer a superior binary options experience. Regulated by ASIC, the firm run an honest and transparent service with a great platform.

Avatrade are particularly strong in integration, including MT4. Zulutrade provide multiple automation and day trading strategies cryptocurrency trading options across forex, indices, stocks and commodities markets. Deposit and trade with a Bitcoin funded account! New Forex broker Videforex can accept US clients and accounts can be funded in a range of cryptocurrencies.

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The day I first heard about Bitcoin on Reddit, a friend had also called me to tell me about it. Being 22 years old in New York City is a financial struggle. I sold it all and ditched my plans for a mining rig. My financial situation needed to be stabilized before I could invest in assets based on my philosophical beliefs. Bitcoin stayed in the news over the years.

The price went up and down, silk road happened, the legality of it was called into question, exchanges were hacked, and people gained and lost millions of dollars. Ethereum hit the scene with the promise of using the blockchain for more than just currencies.

You could build decentralized apps on top of Ethereum and even new currencies. I wondered if I could take advantage of those swings by buying when the price was low, selling when it was high, and buying back in when the price dipped again.

In the same period I shut down my company, Bitfountain , after running it for 5 years. Bootstrapping my own company gave me an unprecedented amount of freedom.

I lived in 4 countries, traveled to many more, and only worked a few hours per day. However, since the company had run its course, I needed a new source of income. I applied for only one job as a software engineer. It was the kind of job people love - high salary, all the Silicon Valley benefits, friendly team, well funded company, challenging engineering problems. After three rounds of interview they decided not to move forward with me. I did want it. But I also feared losing my freedom.

Gone would be the days where I could spontaneously book a flight to India with no return date. Going through the interview process made the possibility of losing my freedom real.

I went into panic mode searching for a way I could make money on my own. At this point I still owned Ethereum and the price was still swinging back and forth.

I signed up for two exchanges: I needed Poloniex as well because there were many cryptocurrencies being traded there Altcoins - cryptocurrerncies that are not BTC. Those are the first two exchanges that I used. Now I use others since each exchange has pros and cons. A live crypto exchange is intimidating at first glance. There are charts and numbers changing at the speed of sight. I felt overwhelmed but sat through the confusion to try and make sense of what I was looking at.

Soon I could see where to place orders to buy and sell, and the charts started to make sense too. As the month went on I spent hours trading. I made enough to pay my rent, so the possibility of making a living from this was validated. I wanted to formalize my trading knowledge so I could do more than buy low and sell high.

There had to be a real strategy to this stuff. I read as many books as I could on trading stocks and foreign exchange markets. I made a lot of mistakes. But eventually I found my rhythm and strategies. For myself, and most crypto traders, the goal is to increase the amount of Bitcoin we own. For example, right now the price of 1 ETH Ethereum is 0.

Another thing I need to make clear is the type of trading I do - day trading. All of my profits are converted back into BTC at the end of each trading day. Again, even though I buy and sell several Altcoins, at the end of the day my net worth is in Bitcoin.

There are three reasons for this:. I earn more USD when the price of Bitcoin goes up against the dollar. Why was it important to clear this up? Several things were on my mind the first time I had to do this. What if I sell my BTC now and the price shoots up tomorrow? Yes, but your bills will be paid. Sell now so you can pay your rent. You can always hold out for more, but at the same time you are risking a loss.

After a few months I got better at trading. I was earning more Bitcoin than I needed to cover my monthly expenses. At the end of the month I sold only what I needed, and kept the rest of my net worth in Bitcoin. Around this time in my trading career it was getting to the point where I could have bought a Tesla or put a down payment on a house by selling my Bitcoin. Do you sell your Bitcoin to realize your profit in USD?

I can live a nice middle class lifestyle in Los Angeles. Or I can drive a flashy car while I rent a crappy apartment in Los Angeles. It all comes down to your values. In fact, if i see a chart like this I almost always ignore it:. The wild bull runs are hard to find, hard to time properly, and easy to go in the opposite direction where you lose a lot.

Those gains are only exciting if you understand how far they can get you. Of course the numbers above assume you trade days per year. Not many people are willing to forego vacation and weekends to work as a full time crypto trader, even with numbers like that. Not only that but I also let my emotions control my trades. For example, I once purchased Stratis after the price dropped massively.

My assumption was that on such a sharp decrease in price, it had to rebound eventually. The price kept diving. I was constantly tuned into that chart waiting for an opportunity to sell back to Bitcoin. Now I have my strategy that I stick to without letting my emotions interfere. I have a set of coins that I like trading so I only look at those charts. I have patterns and indicators that I look for on those charts so I can quickly flip through them.

Within minutes I can set my orders, set alerts on my desired entry and exit prices, and walk away from the computer. As the market cap of crypto increases, be sure that the IRS is going to find out how to get their slice.

And they will look into the past. I am not a tax advisor. This is a simple overview of what I keep in mind as I trade. My accountant handles my taxes, and I advise you to get an accountant to do the same.

Keep in mind that this is US-centric. You need to double check if this is the case in your country. The taxable event is when you sell your cryptocurrency for fiat. How much tax you pay depends on how long you were holding the cryptocurrency. Buy crypto with fiat - no tax.

Sell crypto for fiat - pay ordinary income tax. Buy crypto with crypto - unclear, but does not seem to be a taxable event. This is where things get foggy. Consult your advisor, but as far as I know this is a like-kind exchange which is not taxable but must be reported to the IRS.

The exchange you use will output all of these transactions so you can hand them to your accountant. The IRS has clarified that a crypto to crypto exchange is not a like-kind exchange. The profit made from each transaction is taxed. If you are holding a currency for more than a year it is classified as long term capital gains.

This is another reason why I like keeping my net worth in Bitcoin. At least not right now. Passive income is great. After you make an initial investment, you mostly sit back and watch the money roll in. Most cryptocurrencies are mined. You invest in a very strong computer and the electricity to run it, and you are rewarded with crypto for contributing to the network as a node that confirms blockchain transactions.

This is an alternative to mining that does not require vast amounts of electricity. The idea is that you stake the cryptocurrency that you own over a wifi connection. That crypto that you stake is used to validate transactions on the blockchain, and you are rewarded more cryptocurrency for putting the currency you own in the pool.