Day Trading Bitcoin and Cryptocurrency Basics

When learning how to day trade cryptocurrency and bitcoin it’s important to have some kind of guide or mentor to keep you on the right track. You are bound to make a lot of mistakes along the way but if you can keep your losses at a minimum and keep improving, you have a good chance of becoming a sucessfull cryptocurrency day trader.

In this guide, I will give you a full beginner’s tutorial on how to start day trading crypto and bitcoin. I will cover all the steps you need to know to actually start to make some profits on your own. This cryptocurrency day trading guide will give you a very good basic knowledge of how real traders actually make money in the crypto markets.

One of the key aspects of becoming a successful day trader is controlling your risk, which is best done on a crypto exchange with stop loss. The other side of the coin is of course the potential of profit. Your goal should always be to maximize your gains by using a strict trading plan and follow your pre-set rules of entry and exit.

All these techniques will be explained below and depending on your personality some of them will resonate with you better. The more you practice the easier it will be to find new setups and strategies to win in the markets. Take your time and read through this guide with an open mindset.

How to day trade cryptocurrency and bitcoin – step by step

Below follows a step-by-step tutorial on how to day trade cryptocurrencies. This tutorial is for all traders of all levels and I recommend that you go through the guide step by step if you are a beginner trader. If you have some experience you can skip some parts and jump to the section you want to learn more about.

We will take a closer look at these topics:

If you click each item in this list it will take you straight to that part of this article so if you want to skip some parts simply click the text and it will take you to your chosen section. If you are an intermediate trader already you can skip some parts that you are already familiar with.

Before we go into the meat of this topic I would like to point out some pros and cons with day trading in general.

Pros

  • Can be very profitable
  • Very rewarding
  • Work from home
  • Does not require a lot of money

Cons

  • Long learning curve
  • Can be very stressful
  • Risk of losing money
  • Most people have the wrong expectations

This might be very different for each person but this is my personal list of pros and cons.

You might add to this list something good or bad that you might experience while starting to day trade bitcoin and cryptocurrencies.

Or, if you are an experienced day trader already you might have experienced something outside of this list.

This is only to give you an overview of what to expect.

Now that we’ve mentioned some of the good and bad parts of being a day trader let’s start by going over the absolute basics of what day trading is.

Below follows the complete guide on how to day trade cryptocurrencies for both beginners and experienced traders. Take your time and read each segment carefully. This guide is meant to be a practical guide and you will be able to apply all of these tips in your own day trading for cryptocurrencies.

After reading this you should have a good understanding of the basics of how to find a coin, select a good exchange, use the best order types, enter, exit, and have the right mindset for the job.

What is cryptocurrency and bitcoin day trading

The term day trading comes from the time frame used by day traders.

Day traders start the day with zero open positions and end the day with zero open positions.

During the day there are no limits to how many trades you can or cannot open.

Depending on your skill level and your own style the amount of trades varies from trader to trader.

Generally speaking, a day trader opens between one to several thousand positions in one single session.

The positions are based on pre-set criteria based on a strict plan that was developed over time.

Different day traders have different approaches to the markets and how they operate. Some prefer to trade in the morning when the volatility increases and the volume spikes.

Others prefer to trade during the calm mid-day period when most of the traders are taking a break from the screens.

What keeps all-day traders together is the fight for profits and this comes from strict planning and perfect execution.

The bigger the size is the more you stand to make. New traders are recommended to start with a smaller account when learning.

Experienced crypto day traders stand to make tens of thousands of dollars in a single day when putting on the right trades.

On the other side of profit is losses and this is the other side of the coin that all-day traders will learn sooner or later.

What all traders strive for is to protect their downside risk with a tool called stop loss.

Never leave your downside risk to chance, this can be a very costly experience for you.

To wrap up, cryptocurrency and bitcoin day trading is the act of entering and exiting the market daily to make a profit from small and large market moves.

Best bitcoin and cryptocurrency day trading platforms

When are ready to start trading you need to find a cryptocurrency and bitcoin exchange for day traders. I have listed the top 10 exchanges that I personally have used and I would recommend that beginners try.

There are many different platforms out there for day traders and you must find an exchange that you can trust, have the technology you need, and can handle fast order execution.

We highly recommend that you trade on a regulated exchange for safety reasons, or on a very famous platform with a long track record of being safe.

Out of all our reviewed cryptocurrency exchanges, we have gathered a list of the best day trading exchange platforms that really have what it takes regarding speed, safety, usability, technology, and day trading tools for cryptocurrencies.

  • PrimeXBT – For fast crypto day traders
  • Beaxy – Best for trading signals
  • EXMO – Best cashback rewards
  • Binance – Best for altcoin traders
  • StormGain – Best free demo account
  • ByBit – Best stop loss & take profit orders
  • Gate.io – Most products available
  • Phemex – Great features and tools

They are all very easy to use and have several payment methods to serve a large audience. Take your time and browse the reviews to see which exchange fits you best. Some of these exchanges are regulated and some are not, however, all of these platforms have a great track record of being safe

Crypto and bitcoin day trading basics

I’m now going to give you 5 basic pillars of how to start day trading bitcoin and cryptocurrencies on your own.

These are 5 necessary topics to quickly improve your result as a day trader.

Without this knowledge, you stand to make a lot of mistakes and perhaps lose a lot of money along the way.

In no specific order, these are the topics:

  • Candlestick patterns
  • Technical indicators
  • Trading strategies
  • Trading psychology
  • Order types
  • Short selling

I recommend that you read through all of these topics as they are the very basics of bitcoin and cryptocurrency day trading you need to know before you even open an account.

Keep in mind that this is not the advanced level, we will get to that later.

Candlestick patterns

What are these famous candlestick patterns?

The best way to show you is with an image.

Here is a screenshot of the bitcoin chart from today:

cryptocurrency candlesticks

All of these red and green lines are called candlesticks because they kind of look like a candle.

They represent the time and price for a certain market or in this case a cryptocurrency.

Candlesticks are used to analyze price patterns and also price behavior.

You will only be able to see what has happened in the past since they only record the past action of a market.

You can choose what time frame you want to use for each candlestick and that makes it very adaptable depending on what kind of trader you are.

I’m going to show you one more image of candlesticks and this time I will zoom in a little bit to give you a better understanding:

bitcoin candlesticks

Here you can clearly see how the bitcoin market moves up and down creating long and short candles that tell you where the price has been.

It’s your job as a crypto day trader to analyze these price patterns and then make the call to either buy or sell.

This takes some time to learn but when you learn how to do it you will be able to make money trading cryptocurrencies.

How to read the candlesticks

The candlestick consists of 4 parts:

  • Open
  • High
  • Low
  • Close

This combined with the timeframe and price will tell you everything you need to know.

I’m now going to zoom in further on one single candlestick and give you a close-up look exactly how to read them:

What you see in the middle is the body, the smaller parts on the top and at the bottom are the wicks or the shadows.

  • The top part of the top wick is the highest price recorded and the lowest part of the lower wick is the lowest part recorded
  • This candlestick is green which means that the price increased during the formation
  • If the candlestick is red, the price declined
  • The bottom part of the body is where the price started
  • The top part of the boy is where the price closed

Now you can have a look at your own chart and start analyzing all of them together to get a better picture of what’s going on in your cryptocurrency.

Technical indicators

Which technical indicator is best for day trading?

Cryptocurrency and bitcoin day trading is great for the use of technical indicators.

There are hundreds of popular ways to analyze your coin and build profitable setups using these technical tools.

Today we are going to look at the 4 basic indicators you need to know:

  • Volume
  • Moving average
  • RSI
  • Bollinger Band

When you learn how to use these indicators you will understand the basic concept of the rest.

You can also start day trading cryptocurrencies and bitcoin with either of these or use some of them together.

However, the more indicators you use the more difficult it is so I would recommend starting with only one.

Volume

The volume indicators will tell you the number of contracts that have been traded over a period of time.

Here you will combine volume with the candlesticks I showed you earlier.

Each candlestick will have a representation of volume underneath that tells you how many bitcoins for example was traded during that time period.

Have a look at this screenshot of the 5-minute bitcoin chart from today:

bitcoin volume indicator

Here you can clearly see at which price and at what time the volume increased for bitcoin.

This is very important information for you as a day trader because now you know where people are holding a lot of contracts for the day.

If the market starts declining you know that these traders are in trouble and will have to sell out quickly to not lose more money.

This might allow you to short sell bitcoin and profit on the way down.

Volume is also good for day trading bitcoin and cryptocurrency if nothing is going on with this price.

Then you can double-check with the volume indicator and make the call to not open any positions for a while.

This can save a lot of time and money in the long run.

Moving Average

What are moving averages, to begin with?

Moving average tells you the average price over a set period of time, that’s the quick answer.

Let’s discuss this a little further.

You will use moving averages when you need to smooth out the price activity to get a better picture of the current trend in the market.

The best way to use moving averages when analyzing bitcoin and cryptocurrencies for day traders is to start by using only one.

Let’s take a look at a screenshot of a moving average on the bitcoin 5-minute chart of today:

day trading bitcoin and cryptocurrency with moving average

Here you can see the blue line, which is the moving average with a setting of 14.

This means that it will calculate the price over 14 candlesticks and divide it to create this line.

The general rule of day trading with a moving average is this:

  • Price above moving average = positive trend
  • Price below moving average = negative trend

You can definitely use this as a way of testing the market to see if it’s in a positive or negative trend.

I’ve used this many times to make money while day trading bitcoin and other cryptocurrencies.

Also, you can use other settings of the moving average combined with different time periods that match your own style of trading.

RSI

RSI stands for Relative Strength Index and it’s an indicator that will show you the general strength or weakness in the market.

It can also show you overbought and oversold situations in the price.

It’s a great tool to see if the market is moving up or down, and also if it’s time to turn around and create a bottom or a top.

Let’s take a look at the 5-minute bitcoin chart from today with the RSI indicator:

day trading bitcoin and cryptocurrency with RSI indicator

There are two distinct areas in the price where the RSI would have been a very profitable tool to use.

To the left, the market clearly made some kind of a bottom with the RSI moving out of the oversold area and continue up.

Here you can easily profit from the upside move.

The second setup was a top formation that led to the price decline during lunchtime.

This was a great opportunity to short bitcoin using the RSI indicator and make a handsome profit.

There will of course be some readings that are not this clear but it’s up to you as a day trader to pick the best setups and stay away from the mediocre setups.

Bollinger Band

The Bollinger Band indicator is used primarily to pick tops and bottoms during the day.

Day trading bitcoin and cryptocurrencies have proven very profitable some days while using this indicator as you soon will see.

This indicator is used to predict when the market has moved too far in one direction and it’s great for day traders who are looking to profit from overextended moves.

Let’s take a look at the 5-minute bitcoin chart from today with the Bollinger Band added:

day trading bitcoin and cryptocurrency with bollinger bands

What you can see here is a couple of setups during the day that would have resulted in quick profits for the day trader who enjoys entering and exit the market very rapidly.

This strategy is called scalping.

Scalping Bitcoin and cryptocurrencies is a viable strategy if you know what you are doing.

As you can see here, the Bollinger Band is a very interesting technical tool that will signal when the market has gone too far too fast.

In other words, the market is ripe for a pullback.

This gives you a lot of opportunities to make quick trades several times a day and if you are good at it and you trade with some size you will be able to profit well from this indicator.

Many day traders like to trade bitcoin and cryptocurrencies with leverage while using the Bollinger bands.

Finally, if you want to learn more about technical indicators for cryptocurrencies I recommend that you read this article.

Day trading strategies for beginners

Which are the best strategies for beginner day traders?

When you first start you will have to go through a couple of bitcoin and cryptocurrency day trading strategies to find one that suits you.

And when I say that it suits you, I mean a strategy that suits your personality.

Different traders have different personalities and they should trade the equivalent of their personality, such as:

  • Aggressive
  • Passive
  • Large trades
  • Small trades
  • Frequent trading
  • Few trades

All this boils down to who you are and what will suit you.

Let’s dive deeper and take a look at some of the most popular trading strategies that day traders have been making money with for years now.

My top 5 list of day trading strategies for beginners are:

  • Breakout
  • Fakeout
  • Trend
  • Stop-hunting
  • News

Of course, there are a lot more strategies to implement in your trading, and as you learn you will be able to create your own strategies.

Let’s briefly look at all the different day trading strategies and see what they are all about.

Breakout

When you day trade this strategy it’s important to understand what a breakout is.

A breakout happens when the price has stayed in the same area for a while and moves either up or down to the next price area.

It is at this moment you as a scalper or day trader needs to pay attention to what is going on and get ready to click the buy or sell button.

This can be a very fast-paced trading style but it is one of the more reliable setups you can ever trade.

Before we jump into an example I first want to highlight the pros and cons of this day trading strategy.

ProsCons
Very high win rate Difficult to enter correctly
Fast confirmation if correct Requires patience
Easy to spot

Now, let’s take a look at a real example of a breakout in the bitcoin 5-minute chart:

bitcoin and cryptocurrency day trading breakout strategy

This setup was spotted a few days ago and was a very profitable trade for all the breakout traders who took it.

I have incorporated a trendline to make it easier to see the actual breakpoint.

The breakout often happens when many tops or bottoms are lined up and the explanation for this is very simple.

Behind these tops are a lot of short orders from traders who thought the market was going down.

When the market instead pushes higher these sell orders get stopped out and turns into buy orders.

This along with other momentum traders will push the market higher very rapidly initially.

The good thing about this strategy when you find a real breakout is that your entry price will not be threatened by the market and you can usually ride the trade for the remainder of the day.

Fakeout

This day trading strategy is the opposite of the breakout and it happens much more often than the breakout.

A fakeout happens when the market tries to break out from a certain price range but fails and gets pulled back into the range again.

Compared to the breakout strategy the fakeout strategy happens much more frequently but it lasts for a shorter period of time.

Let’s take a look at the pros and cons of this crypto day trading strategy:

ProsCons
Occurs very often Short duration
Great for scalpers Requires active trading
Shortstop loss level

So, this one suits you best if you are an active bitcoin or altcoin scalper and like to trade in and out of the market very often.

Here is a real example from the 5-minute chart of bitcoin:

fakeout bitcoin and cryptocurrency day trading strategy

As you can see this occurs much more frequently but the duration of the trade time is much shorter.

This boils down to what kind of trader you are and which style suits you best.

If you enjoy active trading and have access to more capital or leverage trading you can make good money trading this setup.

Trend

A trend is something that happens when the market is more or less one-sided.

This means that when most of the traders feel like buying the market, the market will keep increasing in price for some time.

And the opposite is true for the downside, if there is a consensus of declining prices, the market generally creates a negative trend.

The trend setup is a very common strategy used by many traders and it sort of feeds on itself because of its popularity.

The more traders spot a trend, the stronger it gets.

These are the pros and cons of the trend strategy:

ProsCons
Very profitable is spotted early Requires discipline to stay in the position
Option to add to the position Difficult to use for active traders
Not much trade management

This style of trading can be very profitable if the trend I spotted early.

The earlier you enter the better it is and sometimes you have to make a small prediction that the trend will last and enter the market on a hunch.

If you enter early and you see that the market is strong, or weak, you can add to this position further on to make it even more lucrative.

Here is a live example of trend trading in the 5-minute bitcoin chart:

bitcoin and cryptocurrency day trading trend

I’ve added a moving average of 100 to make it easier to see the slope of the market.

This trend lasted for more than a full day which made it very profitable for those who spotted it early.

The difficult part about trend trading is to be able to stay in the market.

Cryptocurrencies are even more difficult to follow due to the high volatility that might shake out the majority of day traders.

However, if you have the guts to stay in the position you can make a great trend trader.

Stop-hunting

For those of you who have only been trading for a while and get stopped out frequently on your day trades have probably been a victim of stop-hunting.

So, what is stop-hunting?

It’s exactly what it sounds like.

Larger players in the market with the capacity to move prices in their favor will very often knock out retail trader’s stop losses to find liquidity in the market.

It’s a secret trick used by big institutions to load up on contracts.

The way it works is simple whenever there is a trend line, bottom line, or a top trendline created there are usually a lot of stops clustered behind the levels.

If the price breaks these levels behind the line, many stop-loss orders will get triggered.

This will cause the market to move rapidly and when the orders have been cleared, the price usually retracts in a matter of time.

Stop-hunting can be used in two ways:

  1. Trade it
  2. Protect yourself

Here are the pros and cons of this strategy:

ProsCons
Happens frequently Difficult to trade
Happens in many time-frames Can be very fast-paced
Gives you information about market direction

As mentioned, this strategy occurs pretty often and in many different times-frames.

This gives you the option to day trade it or swings trade it depending on your style.

If you truly master this strategy and learn how it really works you stand to make small fortunes with this high probability setup.

Let’s take a look at an example in the BTC 5 minute chart:

stop hunting

The idea here is not to follow the market up through the stops.

The entry comes after you realize this is only a stop-hunt and the market is falling back inside the range again.

Here you have a very high probability setup to add your bitcoin and cryptocurrency day trading book.

News

This type of day trading strategy is very old and very well used throughout history.

You can use this as a long-term play or an intraday trade.

The news comes in all different shapes and sizes.

Here are the two types of news that will move the market:

  1. Surprising news
  2. Very surprising news

In my opinion, these are the pros and cons of trading the news strategy:

ProsCons
Very high probability trade Doesn’t occur that often
Usually high momentum Difficult to get the news on time
Fast trade confirmation

That’s right when you have a piece of news coming out that is more or less expected, the market usually doesn’t do much.

It might jump a little but there is no real trade setup for day traders or swing traders.

The power in news lays in the surprise effect.

When something happens that the market didn’t expect, that’s when the real price movement happens.

You see, if the market is expected X and has positioned themselves in the market for this outcome, and the news is telling us Y, most traders are wrong.

When people are wrong, only two things can happen:

  1. Panic
  2. Interest

The traders who are panicking are the traders who are wrong and they are probably losing or about to lose money.

They are likely to get out of their positions very fast at the smallest cost possible.

The interest comes from the other day traders who have heard about the latest news.

This is all about how fast you can get a hold of the story.

First come, first served is the rule.

Here are some of the most interesting news that will move a market:

  • Positive earnings surprise
  • Negative earnings surprise
  • Buy out
  • New management
  • New products

As you can see, you want to be looking out for news releases that will shock the market.

This is when you can ride the wave of both panic and interest at the same time.

Trading psychology

How do I improve my day trading psychology?

The psychological part of day trading is a problem for almost everyone.

If you truly want to learn the ins and outs of day trading psychology you need to trade for a long time to experience every possible situation.

You also need to experience the situations multiple times to figure out how to deal with them.

However, I’m going to give you a short cut how to improve fast and efficiently.

Here is my top 5 list of tips on how to improve your day trading psychology quickly:

  1. Overtrading
  2. Revenge trading
  3. Failing to pull the trigger
  4. Losing money
  5. Making money

Now I would like to give you some tips on how to deal with these problems.

Overtrading

Do you really see the trade or are you just bored?

In my early days I overtraded, A LOT!

I understand that trading is fun, but it can cost you a lot of money and headaches to overtrade.

How do you stop overtrading?

The first step is to admit that you are doing it.

The way you know if you are overtrading is to find out exactly what your setups are, how often they occur, and then calculate how often you should actually trade.

Also, how many times you will take a shot at an entry.

If you know that your setup happens once or twice per day and you will try it maybe two or three times before giving up, you know that you should be trading between 1-6 times per day.

If you are trading 10-20 or even more trades you are a victim of over-trading.

Here are my best ways for a solution to this problem:

  • Focus your trading only around your setup
  • Backtest to see how often it occurs
  • If you miss the setup, leave the computer and take the next shot
  • Give yourself a maximum amount of tries for each trade

If you keep overtrading because you are bored you need to get back to research and find a better trading setup that you can rely on.

Profitable trading doesn’t take more than one good setup.

If you can’t trust your setup you need to find a new one.

Revenge trading

Day trading bitcoin and cryptocurrency is the home of revenge trading.

Many new traders struggle with trying to make back lost money.

I’m not going to give you the drill about how much you need to make back if you lost a certain amount of money.

No, here is the real tip you will have to combat revenge trading.

Set your stop loss to a level you are comfortable with losing.

If you can’t stick to that rule, you might not be the right person to become a day trader.

As an active trader of any market, you need to be able to set and follow rules.

Why you may ask?

Rules are made to protect yourself from yourself.

If you are stuck in the revenge trade style, you need to change your habits to break out of it and it all starts with a healthy stop loss level.

If you can only afford to lose $5, put your stop loss at $5.

Follow this and you will be one step closer to achieving your goals as a trader.

Failing to pull the trigger

Many traders fail to either buy or sell when the opportunity comes.

Have this happened to you?

This happens mainly for two reasons:

  • Scared of losing money
  • Not enough confidence in the trade setup

If you are not entering the market due to fear of losing the money you should lower your position size.

You can’t make any money from the market if you do not enter it.

Also, you might be afraid of simply losing money.

Then you might not be a candidate to become a trader.

Whichever it is, face it and deal with it.

Now, if you don’t have enough confidence in your trade setup you need to break it down again and see if you have an edge.

Any trader with a real edge has confidence, that’s just the way it works.

And how do you know you have an edge?

You look at your setup and you see if there is anything you know that might predict the market’s movement.

If there is and if you have seen it happen before over and over, you have an edge.

However, if you can’t see this and if you haven’t experienced your edge, you need to go back to the drawing board and come up with a new trade idea.

Only then, when you have an edge will you be able to day trade bitcoin and cryptocurrencies with confidence.

Losing money

I’m not going to give you poor advice that will fool you about this one.

I’m just going to say the truth about any kind of trading or investing.

Losing money is a part of the business.

You need to learn that you can’t avoid losses to trade.

They come regularly.

The best traders on Wall Street have a 50% win ratio.

This means that in every other trade they should expect to lose money.

That’s how you should think like a trader as well, and get comfortable with that.

The trick is not to avoid losses, none can, but, you need to control them.

After you have internalized this feeling of losing money as a trader and still feel that it is not okay, you should think about leaving trading for others.

It’s a hard reality but that’s the way it is.

Making money

Making money can make any trader think he is a genius.

The earlier you make your first big win, the sooner you will face this problem.

It feels like you are invincible, but you are not.

If you are having problems with giving back the money you make you need to take a step back.

These are the actions to take if you are struggling with making money and then losing it again:

  1. Take a look at the past 6 or 12 months and see how many times you made a big win.
  2. From this information, realize how often you should make a big win, on average.

How will this help you?

Here is the thing.

When you make money you become emotional, you get feelings that cloud your judgment and will make you make poor decisions.

If you research how often on average you should be making big wins from trading, according to your past results, while using the same trade methods you should be able to tell how often a big win could occur.

Maybe it’s 1-3 times per month or 5-10 times per month depending on how active and how skilled you are.

However, let’s say that it’s between 1-3 times per month as an example.

If you start the month with a big win you should realize that you have, on average, only 2 big wins left this month and they usually don’t come after each other.

How will this help?

It will take you out of the emotional state of being invincible and take you back to the ground, humble.

This will stop most traders from giving back the money to the markets after making a lot of it.

Order types

You can enter the market in two ways.

  1. By taking liquidity
  2. By adding liquidity

These might be two new concepts for you but I will explain what they mean and how they are used.

Let’s take a closer look at some of the more common order types.

The first two order types you need to learn as a beginner day trader are:

  • Market order
  • Limit order
  • Stop loss

They work a little differently but what you achieve is the same, you can enter or exit the market.

The only difference is your time horizon on when you need to enter or exit the position.

Market order

A market order is mostly used when day trading bitcoin and cryptocurrency.

It is the easiest way of entering the market and all you need to do is to click Buy or Sell.

This is usually the first order type you learn as a trader and it’s the most basic one.

But what happens when you click Buy or Sell?

Let’s take a look at a real-world example for the order selection on the bitcoin and cryptocurrency day trading platform KuCoin:

market order for day trading bitcoin and cryptocurrency

As you can see I’ve drawn two arrows two describe what happens when you click the Buy and Sell button.

When you click the Buy button, you will buy from the first seller in the order book, in this case at $38068.9.

When you click the Sell button you will sell to the first buyer in the order book, in this case at $38068.8.

As you can see the price is very similar and this is because there are a lot of traders actively adding new buy and sell orders to get their trades filled.

But that is the basics of how the market order works.

You click buy or sell and you take liquidity from the order book.

Limit order

As described previously, the market order takes liquidity/contracts from the order book.

The limit order does the opposite, adds liquidity.

When you use the limit order you are not in a hurry to get in or out of the market, instead, you have an idea of where you want to enter or exit your position.

Let’s take a look at a real example from the KuCoin order selection:

limit order for day trading bitcoin and cryptocurrency

As you can see in the highlighted area, now we have the option to choose at which price we want to enter or exit the market.

This will signal to the trading platform that you want to buy or sell at a different price than the actual market price.

Your order will be placed in the order book, waiting to get triggered by the market.

When the price finally reaches your order, it will get filled once someone places the opposite order or uses a market order.

This all happens automatically and very fast.

Stop loss

A stop-loss order is a protection order that is essential for controlling your risk in the market.

You can use it whether you buy or short bitcoin or any other cryptocurrency.

Let’s say for example, that you buy bitcoin at $38.000 and you think the price will increase in the next couple of hours.

However, you want to protect your downside risk if the market were to start falling.

Then you will use a stop-loss order to automatically take you out of your buy position with a sell order.

It might sound a little complicated but it’s dead simple.

Let’s go back to the KuCoin trading interface and have a look at how it’s done:

stop loss order for bitcoin and cryptocurrency day trading

Here you can see that I’ve chosen Stop Market and all I have to do is to set a stop price when I want to sell or buy.

If we take the previous example of buying bitcoin at $38.000 I might want to use a stop-loss order to protect me from a price decline.

In this case, I can add a stop loss to sell at $37.600 and if the price falls to this level I am automatically “stopped” out of my position.

The stop-loss order is a crucial part of any day trader’s arsenal of tools and should be used together with every opened position.

Short selling

Short selling bitcoin and cryptocurrency is a trading style that is needed for most day traders.

If you want to be able to take advantage of movements in both directions, you need to learn how to short sell.

But what is it?

Short selling is the opposite of buying, you could say that you are betting in the other direction.

You should not think that much about how it works, most platforms that allow margin trading will have an automatic system.

Since the market is spending roughly the same amount of time going us it goes down, it’s very good to know how to short.

Also, if you learn how to trade on the buy-side of the market, you will be familiar with how to short sell.

All of the standard indicators will work in the negative direction as well so you can sort of reverse engineer your setups.

But when should you short the bitcoin or cryptocurrency market?

In general, only bet on the downside when you see the market is weak, don’t try to pick a top.

This is because it’s a lot more likely that a weak market will continue downwards and you have a higher probability of being right.

If you instead try to short a rising market you are only doing so because of greed.

Remember, day traders want to have a high probability in their trades.

Your size is what controls the profits, not the length of the trade.

So, short-selling bitcoin or any other cryptocurrency is a basic skill for any day trader, make sure that you pay attention to it because you will need to do it at some point in the future.

How to start day trading bitcoin and cryptocurrency

What is the best way to start day trading bitcoin and crypto?

Considering that you have read everything in this guide you should be ready to take your first steps and get start day trading cryptocurrency or bitcoin.

These are the steps to take to successfully get going:

  1. Find a trading platform
  2. Create an account
  3. Deposit money
  4. Choose cryptocurrency

These are very simple steps and you should be able to be verified within a day depending on what exchange you choose.

In this guide, I’ve included some of the best day trading platforms for beginners and I recommend that you try them before going more advanced.

If you are an intermediate trader, feel free to browse through the other platforms as well.

Find a trading platform

When choosing your trading platform, consider what you need to start.

Here are some things to consider before you sign up:

  1. Payment methods
  2. Restricted countries
  3. Available fiat currencies
  4. Security
  5. Trading interface

I suggest that you take some time to go through a couple of platforms to find which one will suit you best.

Create an account

When this is done start by signing up and make your first deposit.

Remember, you can start day trading cryptocurrencies as little as $100.

Most traders stop when they see their own bank account and they think they can’t make money because they only have $100-$500 to trade.

This is wrong!

If you learn how to trade, the money will come.

Also, if you use leverage for trading bitcoin, there is a way to multiply your profits.

So go ahead and create an account at your chosen platform.

Deposit money

Not all cryptocurrency and bitcoin trading platforms will accept all payment providers so make sure yours has at least card payments as an option.

This is a safe and quick way to fund your account to get ready for your first position.

After your first deposit, make sure the account has been funded, and only then head over to the trading interface.

Some other great ways to fund your account are through PayPal, Skrill, Neteller, and of course Bank transfer.

Choose cryptocurrency

Now to the tricky part, choosing your cryptocurrency to trade.

This is a lot of fun but it takes some research to know which one to start with.

I will give you a few tips to help you out:

  • Pick on with high volume
  • Choose a well-known cryptocurrency in the top 100
  • Make sure the cryptocurrency has some history of price movement
  • Make sure this cryptocurrency can be found on several exchanges

These tips are only to help you get started and it’s wise to choose a coin that is traded actively to ensure that it will stay active for a long time.

Also, if this coin exists on several exchanges you are later able to transfer it if you would like to change the trading platform.

When and how to enter/exit the crypto market

This is the million-dollar question for all traders out there.

Both these decisions are based on a structured plan that you have conducted before.

In this part of this cryptocurrency day trading guide I will explain a concept that you can apply to most of your setups and strategies.

Day traders in crypto rely on momentum for the most part and they will not enter the market unless there is “wind in the sails”.

What this means is that the entry point of a position should be in the direction of the current short-term trend when a lot of volume floods the coin and pushes prices either higher or lower.

The direction in the price of a certain cryptocurrency is what matters the most and also the number of contracts traded during the last minutes or hours.

With volume comes movement.

This is very true, especially for cryptocurrencies and volume is the precursor to volatility and potential movements.

The exact entry point of your position should be after the cryptocurrency has confirmed volume and some kind of movement in the direction of your analysis.

For example, if you are bullish on a coin and you are interested to go long, you should always wait for the market to confirm with volume and some kind of breakout with a decent price movement in your direction.

How to enter the market when day trading bitcoin and cryptocurrencies

To illustrate what I mean I’m going to show an example from a price move in the 3-minute bitcoin chart.

This is one of the strongest setups you can find when day trading any cryptocurrency.

When day trading crypto, your entry should always come at the moment when the market activity is increasing.

The background to this trade is the following:

  • Long-term positive trend
  • Top trendline that have been tested before
  • Volume slowly increases as the day progresses
  • All negative movements have been breif
when to enter bitcoin when day trading

Here we can clearly see that bitcoin has been in a slow uptrend and is ready for a breakout.

This is a perfect opportunity to pay extra attention and get ready to pull the trigger.

The entry comes after the first green candlestick has closed with a significant volume increase.

From here, the position should not threaten to fall back down, if it does you should close the position immediately and wait for the next opportunity.

This is one of the entries for bitcoin and cryptocurrency day traders that have the highest probability of success.

Whenever this setup is active in any coin you should get ready for a possible breakout and focus on the entry point.

How to exit a position when day trading cryptocurrencies and bitcoin

Crypto and bitcoin day traders should exit the position when the steam of the market has faded.

In other words, when the market is struggeling to continue in the direction of the trade, it’s time to throw in the towel.

It takes some experience to learn when the market has slowed down and is about to turn back around. However, there are some technical tools you can use to get a better picture of what’s going on and predict when the trade is overdue.

The way you know that the market is cooling down and the uptrend is about to end is not always easy but here are some typical signs:

  • Big sell offs at the tops with increased volume
  • Bigger trading range at the top
  • Fails to make higher highs and higher lows
  • Volume fades overall

To illustrate this I’m going to use the same trade setups as in the previous example.

This trade would have been very profitable and everyone who took this trade should have been stopped out when the market dropped below the trading range.

when to exit bitcoin day trading

Remember, this is the general idea of how a market will behave when it’s about to turn around.

Keep in mind that it will not always look like this, so you need to practice how to read these market signals when day trading bitcoin or other cryptocurrencies.

Crypto day traders use several different strategies to exit the market and this should be used in conjunction with your current setups to make better judgment and realize when the trade is over.

The more you practice the easier it will be to see when it’s time to exit the market when day trading coins.

Different styles for bitcoin and cryptocurrency day trading

What different types of day trading styles are there?

There are as many trading styles as there are personalities.

What you need to learn is to match your trading style to your personality.

You will soon realize why this is important.

Here are some of the different trading styles I’ve seen in my career:

  • Fast and aggressive
  • Slow and steady
  • Patient and accurate
  • Feeling the market
  • Focused

You will probably fit one or two of these trading styles.

Some people are very aggressive and some people are very passive and this is reflected in their way of trading.

If you are a very intense person and you want action all the time, you need to find a way of applying this to the markets.

You will probably be a very good scalper.

If you are a slow person that likes to think more than you act, you might need to look at a swing trading approach.

No matter who you are or what kind of personality you have, there is a trading style for you.

Bitcoin and Cryptocurrency market analysis for day traders

How do I analyze the bitcoin and cryptocurrency market?

When you day trade bitcoin or any other cryptocurrency you need to be aware of a few things to stay ahead and avoid mistakes.

This part of the guide is to explain the different market behaviors of bitcoin and cryptocurrency that I’ve experienced during my years as a trader.

Here is a list of market characteristics for bitcoin and cryptocurrencies:

  • Volatile
  • Very emotional
  • Seasonal
  • Naive

This is purely from my own experience as a bitcoin and cryptocurrency day trader for the past years.

I want to shine some light on this topic because I think it’s important that you know this before you start your journey.

So let’s break down this market analysis of the cryptocurrency market.

Volatile

The bitcoin and cryptocurrency market is known for its volatility and this is one of the main reasons why day traders gather for profits.

But do you really know why this market in particular is so volatile?

I will let you know something that I discovered a while back that helped me become more consistent with my profits while day trading bitcoin and cryptocurrency.

This market is very, very naive.

What do I mean by that?

There are very few professionals and institutions trading and investing in the market at the moment.

Today, we have the whales and the newbies.

The whales make sure to buy in bulk when the prices are low and then sell when they’ve made a 1000% return.

So, that leaves the rest of the action to the newbies, but why do they make the price so volatile?

Emotions, inexperience, and a lack of cash.

First of all, they are driven by emotions that make them enter and exit the market purely based on how big the numbers are when they login to their Binance account.

This makes no sense for a market and this alone will cause a lot of big swings up and down.

Second, they don’t have any experience to back their decisions and they get stuck in the same old mistake patterns as any other new trader.

They don’t have a plan, and therefore, they can’t be consistent with their trading.

Thirdly, there is no cash to make this market “thick”.

What I mean by thick is that there are not enough orders or contracts above and below the market price to make for stable trading.

When ever the price of bitcoin starts falling, there is no big institution to catch it.

It immediately starts freefalling until the last seller has sold, and then it turns back around.

You can use this knowledge when you are day trading bitcoin and cryptocurrency to gain an advantage.

Here are some quick tips on how to use volatility:

  1. Price increase or decline will usually attract more emotions in the same direction.
  2. If you spot a falling market, you know that there is none to catch it.
  3. When you feel the market becoming emotional, use it to ride the wave.

Very emotional

As discussed earlier, the cryptocurrency market is very emotional.

But what does this really mean?

It means that when prices start fluctuating, traders gets either scared or excited.

This causes them to make decisions while being emotional.

This is something that happens on a wide scale, like a heard of traders acting in the same way.

So, when you see the market acting irrationally, take note of what’s going on and see if you can join and ride the wave of these emotions.

The bigger the movement, the more emotions are connected to the price.

Remember, once the emotions have peaked in one direction, it usually retracts most of the movement.

This happens on big and small scales, so use it for both intraday trading and investing.

Seasonal

A market that is seasonal will be prone to bullruns and bearruns.

Once a trend has started it usually continues for a good while, and why is this?

This happens because it’s happened before and traders expect it to continue, so they gain confidence.

When traders are confident, they will buy or sell much more easily.

This attracts traders from all over the world until you hear your grandfather buying bitcoin, then you know the season is about to end.

This is something you can take advantage of when day trading bitcoin and cryptocurrency.

If you feel that the market is going into either a bull season or a bear season, jump on the train if you are an investor.

If you are a day trader, how do you use this seasonality to make money?

Here is the thing, if you are in a bull season, you will know that more days than not, the price of bitcoin will be increasing.

This is why you need to trade on the long side most of the days.

And on the contrary, if there is a bear season in the cryptocurrency market, you trade on the short side.

Naive

When I say naive, I don’t mean that people are being childish while they trade, quite the opposite.

Traders are trying to be as professional as possible, but they fail at it.

The market is naive because it’s a newborn market, and it hasn’t been around for long enough to gain global acceptance.

This is why we have so few real institutions trading the market at the moment.

And this is also why there is not enough professional liquidity in the market.

Professional or institutional liquidity is smart money.

They will not shy away if the market starts falling for example, they buy the dip and push the market higher, etc.

In the future, this is what will make the price a lot more stable.

But for now, enjoy the “fun”.

How to make money day trading bitcoin and cryptocurrency

What is the best way to make money as a bitcoin or cryptocurrency day trader?

If you are serious about becoming a day trader and making money day trading bitcoin and cryptocurrency, it’s good that you have started with this guide.

The truth is that you will need to spend a lot of time analysing the market and yourself as a trader.

The best traders study themselves to see how they react to certain situations in the market and then they focus on what they do best.

I will let you in on a secret tip if you really want to make money.

Focus on one setup and become really good at it.

You only need to have one edge in the market to profit.

Then, when you learn how to profit from your edge, you increase the size.

This is how many of the best traders have made such a good living out of day trading before, and this is how you can do it as well.

But, you need to be willing to put in the hours.

When you day trade bitcoin or cryptocurrency, you have to see it as your profession, not as a hobby.

You have to be dead serious about it to make it in the long run.

You might ask, how do I find this one edge that I should trade?

Well, that’s up to you, all traders are different and we find different edges.

Start by asking why the market increased today or why it fell, then go through all the scenarios you can think of, and sooner than later you will start to see an edge develop from your research.

This will take some time but keep doing it and you will be rewarded.

Top 10 quick tips

Here are some of my best tips for bitcoin and cryptocurrency day traders:

  1. Use a stop loss
  2. Don’t trade too big
  3. Take profits
  4. Lose small
  5. Only trade your own setups
  6. Learn when not to trade
  7. Write down your trade setups
  8. Don’t follow other traders ideas
  9. Trade what you see
  10. Don’t read the news

These are some day trading tips you can write down on a piece of paper and keep next to your computer while you are trading.

My own experience

When I started as a bitcoin and cryptocurrency day trader I was very lost. It was a new market and I felt that I didn’t have control over anything that happened. I decided early to only stick to day trading bitcoin and not the other cryptocurrencies.

This narrowed down my stress and it was easier to follow only one price.

When I made my first big win, I lost it within a couple of hours due to the excitement of making that much money day trading bitcoin. I quickly learned that I was not going to be able to make those profits every day. The key to my success in the market is that I learned from my mistakes.

Everytime I made a mistake, I wrote it down, and also why I think I made that mistake.

This helped me tremendously, and I started to see very good results with my trading. By this time I had learned to not give back the money to the market and I was slowly going from being a losing trader to a break-even trader.

The next step was to start making money.

This happened when I focused my energy on only one or two setups. Instead of trading ten different setups, I focused on my best one. I did this for a couple of months and I slowly started to make more money.

This made me confident to increase my size and this is when things took off. I haven’t looked back since then and I still trade this setup, among others of course.

That will be my last tip for this article, trade only one setup, and then increase your size when you are making money.

Conclusion

In this article, you will learn all the basic knowledge for day trading bitcoin and cryptocurrency. Some of the topics are more necessary than others.

You will be able to read my top 10 tips for beginner bitcoin and cryptocurrency day traders and also my most recommended trading platforms. Take your time to read through the whole article to learn what it takes to become a successful day trader.

Trading the markets is not what people think it is but with this day trading guide you will be one step closer to your goals. If you want to keep educating yourself on cryptocurrency trading I highly recommend that you read through our guide on how to read crypto charts and how to analyze cryptocurrency.

FAQs

Bitcoin is a very good asset for day trading due to the high volatility and good trading platforms available.

You can start with as little as $20. Many trading platforms allow for small initial deposits and also very small contracts for trading.

Yes, you can. It’s definitely possible to make money while day trading cryptocurrency. But you need to spend a lot of time practicing to learn the skills.

Yes, it is. Some countries however have banned cryptocurrencies completely, so make sure you are not from one of these areas. Otherwise, you are free to find a platform and start day trading today.

Most of the major cryptocurrencies from the top 100 list are very good for day traders. They have a lot of liquidity and they move every day.