Day Trading is a process of speculating price movement of financial assets -essentially to profit from short-term price movement of any financial instrument , including cryptocurrency. To profit from such short-term price movements, day traders buy and sell financial assets and trade on hourly, sometimes less than hourly basis! The general rule of the thumb is: Day Traders hold time-bounded positions in the financial market, and each trading position does not exceed a 24 hours time-limit.
Many professional crypto traders follow day trading strategy as it provides them with greater flexibility in a volatile crypto market. However, this also has a potential trade-off as sometimes it could mean forgoing potential profit if a financial position were to run for longer-term.
Although seasoned Day Traders always conduct both technical and fundamental analysis before making any short-term investment that maximises their returns, here are some tips that newcomers beginning their Day Trading journey can follow!
Tip 1 : Day Trading is all about saving time and making money. There is no reason to get attached to any particular coin or token. There is also no room for anchoring bias. So, objectivity is what you need to develop. It always pays-off when you keep an eye out for potential profitability and lowering your risk!
Tip 2: Do not forget to time your exit. Making a profitable investment is half a story. Timing the market is the ultimate plot twister. Day traders do not carry forward their position to a new day. So, it is essential to lay out clear ground rules on how you are going to scale your position. Decide in advance about the profit you will claim and losses you can bear. Predetermining these criteria should always allow individuals to cut their losses and move on to new trade.
Tip 3: Follow the news and track the time zones.It has been established that cryptocurrency is highly sensitive to market news. Stay on top of what’s happening in the market- because the market can react strongly to one inconvenient Tweet. Secondly, unlike traditional financial market cryptocurrency market operates 24*7. Being active when the majority of market participants are active can help day traders to react proactively to market sentiments. Most bigger market moves take place with the start of a new day in North America and Asia. Trading in these time slots can allow participants to capture and react to market’s sentiments more accurately.
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