If you are new the cryptocurrency trading and wish to learn day trading cryptocurrency and makeup to $500 per day with consistency, then go ahead and read the article.
In this lesson, we are going to demonstrate how to day trade cryptocurrency using free crypto analysis tools.
Our team at NewsCrypto has a vast experience of traditional and crypto trading, and today we are going to share our knowledge with you on what it takes to day trade for a living.
First of all, when day trading, it is essential to have a very structured and progressive approach with a rule-based strategy. This is quite similar to that of swing trading where you don't need to trade every day, but you are going to make money most of the time.
The cryptocurrency market has a high volatility nature due to which some think it as a roller-coaster ride to make day trade. But this is one the best environments for performing best day trading because, due to high volatility, there will be enough ups and down to make decent profits.
Crypto Day Trading Strategy
Step 1: One which has High Volatility and Liquidity is the right coin to pick
To get started, all you have to do is choose a coin with high volatility and liquidity.
If you are not that confident in doing day trading with Bitcoin, which has the maximum the most liquid than that of any of the other coins, then you can choose from other altcoins that have decent liquidity and good volatility.
“According to CoinMarketCap, there are more than 2000 coins in the market and growing.”
Step 2: Apply the MFI Indicator on the 5-Minute Chart using TradingView
In this specific day trading strategy, we are using a simple technical indicator, i.e., Money Flow Index (MFI), which indicates the activity of the smart money and proven to be a perfect instrument to determine when institutions are buying and selling.
The most preferred settings will be the MFI are three periods with a default buying and selling levels from 80-100 and 20-0, respectively.
Step 4: If MFI = 100, then Buy if the subsequent candle is predicting bullish.
Now, once you have two readings, you have to wait for 3rd MFI reading to touch 100. Although it need not be 100% MFI=100, something close will also work.
Next, we also need to keep a close watch on the candlestick when you got the MFI=100 reading to be the bullish candle. Remember, the close of these candles should be near the upper end.
Step 5: Book your Profit during the first 60 minutes and put a Stop-loss on the days low.
It is essential to book your profit and protect your funds with a stop loss. The ideal setting will be booking your profit in the first 60 minutes when you open trade while putting a stop loss on the days low to safe lock your funds.
You need to be very flexible when it comes to exit strategy. However, the 60-minute profits and day low stop loss can make a decent profit, whereas holding a trade longer than an hour will result in lower success rates.
Verdict
Day trading in crypto can be the best way to build your crypto portfolio; however, just with one MFI indicator performing, this may require practice and lots of patience.
You can also choose some reputed crypto trading signal services either free initially and paid once you are mature enough. Also, you can join the NewsCrypto traders community to see what other traders are playing in the current market.