Pro guide to choose a crypto for day trading

sold or traded on cryptocurrency

Day trading is one of the most popular trading strategies followed by crypto traders, especially those looking for quick profits. But, you need to find the right crypto for the trade. There are around 10,000 cryptos that are sold or traded on cryptocurrency exchanges today but not all would be conducive for day traders. For day trading, you would need to focus on cryptos that can provide you gains in the short-term. Mex group

Your choice of crypto can make or break your prospects with day trading. There are certain factors to keep in mind while choosing the right crypto for the trade. So, make sure to do your homework and practice due diligence while selecting the right crypto. Remember, crypto is a wildly volatile and unforgiving zone. While sudden upswings can shoot up the prices to the moon, extreme lows can bring down the price to abyss in the blink of an eye. Thus, make sure to conduct extensive research while choosing your crypto for day trading.

Overview on the concept of day trading

Day trading in crypto

The concept of day trading refers to a trade that is started and ended in one particular day. The entire trading activity will continue throughout the day and the profit attained at the end of the day will be calculated as the profit for the trade. Traders here can conduct just one trade or else multiple trades. Scalping is a common day trading strategy where traders place trades after every few minutes, all through the day. The idea is to gather small yet multiple profits that comprehensively make up a standard volume of profit. buy bitcoin

Day trading in the crypto sphere is almost the same as that of in the traditional trading world. It’s just that, the asset is a new emerging asset class here. There is another major difference as well. Traditional trading markets are not open 24 hours a day. But, the crypto trading market operates round-the-clock and all through the year. So, crypto day traders get a longer time to continue with the trade.

Tips to find right crypto for day trading

No, we are finally at a place where we can discuss the tips to follow while choosing the right crypto asset for day trading activities.

High volatility

This is the first point to remember while choosing a crypto asset for day trading.

As mentioned above, day trading involves frequent trades throughout the day to attain a bunch of small profits. The most suitable crypto here is a coin or token that goes through frequent market swings. High volatility results in frequent swings, thereby leading to higher chances of upswings for a crypto in comparison to other cryptos.

Most other crypto trading strategies such as position trading suggest looking for coins with low volatility as these assets tend to be more stable. When you are planning to invest long-term for trading at a high price, you would need high stability. But, when you want fast trade, a crypto with low stability won’t work. It’s because, in this case, you don’t have time to wait for the coin to surge up after months. In day trading, you are supposed to tale fast action as the entire trading activity will have to be completed within just one trading day. In this case, only the cryptos with high volatility would be able to save you.

Mind loss risks

However, remember, while high volatility can result in frequent upswings, fast downswings won’t be uncommon as well. Thus, you would always need to stay alert and constantly monitor the position of the crypto to bypass risks of sudden  losses.

It’s to note here that new altcoins often show up with wild volatility and hence are commonly chosen by several day traders. But, these new assets could be extremely risky as well as these have not been able to establish their presence in the market. Thus, if they swing down, it would be a deep steep dip. Thus, experts suggest looking for coins that come under the top 20 list of cryptos. These are established cryptos  and hence even if they take a dip, it won’t always be a deep spiralling downtrend. Also, as these are popular cryptos, these coins boast a higher chance of recovery as well.

High trading volume

Day trading is all about frequent trading, and sometimes, within just minutes. If you take to scalping, the maximum wait time or interval within two trades is no more than 1 hour. Thus, the perfect cryptos for day trading are especially those assets that command high trading volume.

The metric of high trading volume implies that the crypto is being traded frequently. In other words, the high volume signifies that the crypto is in high demand and several buyers are looking forward to purchasing it. Thus, the crypto would get traded faster and that too at a compatible price.

When you sign up for day trading, you are always in a rush. You need to execute trades faster so that you can opt for a long line of trades throughout the day. In such a situation, a crypto with anything less than “high” trading volume would spoil the game for you.

Thus, make sure to check the trading volume in 24 hours of a crypto while choosing the asset for day trading.

Final words

While these two are the most important factors to check while choosing crypto for day trading, you should make sure to check the historical performance of the crypto as well. In trading jargon, this process is called TA aka Technical Analysis. The TA will reveal to you how the crypto has performed in the past that will eventually offer a basic idea on its upcoming performance in near future. Check when the crypto was down and how long it took to bounce back. Your focus would be on the one with a fast bounce back rate.

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