Which is better: investing or trading

A good strategy can determine your profitability, so it is extremely important to choose the one that suits your trading style. Here are some of the most popular strategies and approaches for day trading:

Arbitration

Crypto arbitrage trading is a strategy in which traders speculate on the price difference in two or more different markets for the same asset or cryptocurrency. At any given time, different crypto exchanges offer different prices for the same investment, whether it's bitcoin, ethereum, ripple, or any other digital currency. The simplest form of arbitrage is to buy an asset in one market and sell it in another, where the price rises. Although this type of trading can generate significant profits, it is not suitable for novice traders, given the high deposit requirements and high volatility of cryptocurrencies.

Trading momentum

For novice traders, the best trading style is momentum trading, which is easy to use and very popular. The main rule of this strategy is to open long or short positions based on the strength of the existing trend. In other words, if bitcoin has been moving up for some time, the momentum trader will buy it based on the belief that if the current trend is gaining momentum, then there is a chance that it will continue for some time.

Scalping

Scalping is another popular day trading strategy, but it is more intended for intermediate and advanced traders. Scalpers try to take advantage of minimal price changes, which can last for seconds or minutes. Scalpers are not interested in every trade, but in the total profit at the end of each session. An experienced trader who relies on scalping can open and close several dozen trades per session.

Range trading

In range-based trading, traders identify overbought and oversold levels, highlighted by areas of resistance and support. The strategy is to buy an asset in the oversold zone and sell when it approaches the overbought zone. This style works well when the price is not trending.

How safe is day trading?

Day trading is just a method of speculating on the price of a cryptocurrency or any other asset. It all depends on you whether this style of trading becomes profitable or not. High risk in day trading is a well — known fact, but traders give it a chance to see if they can trade and manage their risks correctly.

Day Trading Risk Management

Implementing the right risk management practices can make a difference and turn your trading journey into a full-fledged career. There are many rules of risk management in trading, here are some of them:

* The one percent rule. There is a popular one percent rule that states that you should never risk more than 1% of your account on a single trade. This can help you protect your trading capital from significant losses.

* Maximum amount of losses. By using stop losses, you can reduce potential losses. Stop loss is one of the most important risk management techniques, and day traders use it regularly.

* Securing Profit – Another stop order that will help you secure a profitable trade by closing the position before a potential trend reversal.

Even if you have a good strategy, it doesn't mean that it will always meet your expectations. You should always prepare for the worst, even if you think your active positions are working perfectly.

Best time to spend your day Trading Cryptocurrencies

It is best to trade when the liquidity and trading volumes are higher. Unlike stock markets, which may have certain hours of open sessions, the crypto market is active 24/7. But research shows that around 4pm UTC is the most active and intense time of day for BTC trading.

On the contrary, the foreign exchange market is more active during the overlap of the American and European trading sessions, as well as when it is closed for weekends and major holidays. However, it would be wise to trade when volumes are higher, i.e. during the European and American sessions.

Output

After all, cryptocurrency day trading is truly profitable, but only if you are well versed in its concept and execution. What works for you may not apply to anyone else. The main thing is to practice and check which strategies best suit your trading style.