Best Crypto Day Trading Strategies

In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win. You’ll find the nerves of steel and intuitive trading platform through research, research and more research. Let’s take a look at the X-factor in this gumbo, that is, the best crypto day trading strategies you can use. 

There are plenty of trading strategies out there and several platforms that some of the most popular day trading strategies are range trading, scalping, and arbitrage. If you want to save time, you can instantly copy professional traders plays with eToro, and learn as you go.

Range Trading

In many cases, a cryptocurrency will trade for a long time inside a certain range. Bitcoin, for instance, traded between $8,601.40 and $10,210 for a 30-day period. This ±9.4% range seems volatile until you realize that Bitcoin can realize a ±42% change in 24 hours. 

Cryptomarket caps are small enough that they can be manipulated by a single big mover. In some cases, those big movers will systematically manipulate the price of a coin up and down to profit from a range. If you notice these patterns, you can take advantage of them as well. 

If you are range trading, you want to pay attention to overbought and oversold zones. Overbought means that buyers have saturated their need, and the stock will probably sell off; oversold means the opposite. Chart indicators, included in any reputable stock chart program, can help you find these zones. Common indicators used for this purpose include the Stochastic Oscillator and relative strength index (RSI).

Attribution: Wikimedia

Flynt Finance

Flynt Finance is an innovative new high-risk high-reward passive staking platform with 3 unique high-yielding pools, each with its own automated trading strategy. Flynt prides itself on its security and works with industry-leading custodians BitGo and FireBlocks to secure user funds. It also uses sophisticated multi-signature wallet infrastructure and multi-layer cold wallets.

Its highest yield strategy, with an average APY between 20-80%, sells far out-of-the-money (meaning high strike prices), short expiration term covered call contracts on Bitcoin to earn interest for stakers. For those uninitiated in options trading, selling covered call contracts means that buyers are paying the Flynt pool for the option to buy a certain amount of Bitcoin for the strike price at the expiration date. If Bitcoin's price is below the strike price at the date of expiration, the Flynt pool walks away with the entire cost of the call contract.

The high risk comes in when Bitcoin rises above the strike before the expiration date, meaning that the Flynt pool has to sell its Bitcoin to the contract buyer at the strike price (now below the current price of Bitcoin). Luckily, this doesn't happen often because of the kind of options the pool uses are all very short-term and far-out-of-the-money.

Flynt also offers an Ethereum covered call strategy that works similarly to its Bitcoin strategy with a few tweaks and generally lower leverage. Its lower leverage makes it significantly less risky and it still earns an impressive 10-25% APY. If you are looking to decrease your risk further while still earning high yields, Flynt's last pool may be perfect for you. The USDC GMX:GLP pool brilliantly utilizes the decentralized exchange GMX's special liquidity pool that it calls GLP. High-leveraged traders (up to 50x) trade against GLP, earning stakers high fees when their positions blow up. The pool's directional exposure is hedged by holding futures, reducing its risk significantly.

IFC Markets

IFC Markets offers a range of investment options, providing you with the variety you need to build your portfolio. Specifically, you can trade CFDs on the site in several styles, including:

• More than 600 financial instruments
• Low spreads
• No hidden commissions
• Instant order execution

You have the freedom to build your own financial instruments, and you can create a strategy that makes the most sense for you, your family or your business. Crypto CFDs have rolled out for BTC and ETH, and more will be on the way. You can also take advantage of 1:8 leverage and low minimum volume requirements as you build an appropriate trading strategy for your portfolio. Unfortunately, however, IFC markets is not yet allowed in the U.S.

EndoTech

Surprisingly, one of the best crypto day trading strategies is one of the easiest to execute. EndoTech is a leading automated crypto trading platform that has been fine-tuning its trading algorithms since it launched in 2012. EndoTech isn’t an exchange. Rather, it connects to your exchange account and uses it to trade. This may seem a bit scary for some but EndoTech never gets permission from your exchange account to withdraw or transfer funds so you don’t have to worry.

EndoTech is one of the most transparent automated crypto trading platforms and wants you to know exactly how its strategies have performed in the past. You can check out its 25 strategies on its website. Crypto day trading can be extremely difficult and EndoTech does it all for you. It takes the emotion out of trading and instead it trades using strong artificial intelligence to perform fact-based technical analysis.

Scalping

Scalpers take advantage of increased trading volume to profit. Scalpers may exit a trade seconds after entering, and many use automated bots to increase the frequency of their trading cycles. Ideally, scalpers want to exit a trade before any news item or short-term fluctuation has a chance to change the market’s sentiment on a coin.

Attribution: Quora

It is best to have a large bankroll to take advantage of this extremely short-term day trading crypto strategy. Although the ROI of each trade is very small, staking a large amount means the scalp comes back with a substantial amount of money (0.5% of $100,000 is $500, enough for a luxury car payment). Trading frequently — sometimes making 10-20 trades per minute — also means those small gains add up. 

Playing Bitcoin Volatility

The Chicago Mercantile Exchange (CME) offers options on Bitcoin futures, opening up a wealth of volatility strategies for traders. Crypto has 5X the volatility of traditional asset classes. Volatility trades are ideally directionless, meaning there is a possibility of making money whether Bitcoin goes up or down.

The long straddle is one directionless volatility strategy using Bitcoin options. To initiate, you buy a call and put option at the same time for the same strike price and expiration date. The Bitcoin straddle is profitable when Bitcoin falls or rises away from the strike price by more than your premium. To exit the trade, you sell the call and put at the same time. 

In simple language, a big move up or down is in your favor. 

Arbitrage

Arbitrage involves buying cryptocurrency in 1 market and selling it in another market at a higher price. The difference in the buy and sell price of an asset is known as the “spread.” As a generally unregulated market, crypto allows anyone to create an exchange. This can lead to major differences in the spread because the differences in asset liquidity and trading volume. 

In the crypto market, traders usually hold a portfolio on an exchange they are trading. To start an arbitrage opportunity, open accounts on exchanges you believe will show significantly different prices for the same asset.

At one point, Bitcoin traded at a 40% higher price in South Korea than in the U.S. This was known as the “kimchi premium,” and it showed up more than once. Traders profited by simply purchasing Bitcoin on U.S. exchanges and immediately selling it on South Korean exchanges. Although the discrepancy will not usually be this large, the low barrier to entry for new exchanges brings new arbitrage opportunities more often than in traditional asset markets.

Traders should also take trading fees into account when attempting arbitrage. The fees to make a trade on an exchange may wipe out the gains from the trading spread.

Looking for more trading strategies? Head over to Coin Market Manager.

Best Online Cryptocurrency Trading Platforms

There are several cryptocurrency exchanges and brokerages to choose from, and some may be a better fit for you than others. if you're a day trader, you'll want to use an exchange with low or zero trading fees. Some exchanges that are good for day trading are Coinbase, Crypto.com, and eToro. If you're a long-term investor and care more about user-interface and unique features, then Coinbase or Voyager may be for you.

Tip From a Pro

We’ve got top forex & crypto trader Ezekiel Chew, who makes 6 figures a trade and trains the bank traders behind the scenes, to share with us about crypto day trading strategies and what exactly it takes to be successful in crypto trading.

Ezekiel believes there are three key aspects to successful crypto day trading:

1. You’ve first got to learn how to read the charts. And one of the best ways to learn this is through price action; the technique that the majority of professional traders use. Once you have learned how to read the charts, you will know why the market is going up, down or sideways and then will you recognize which strategy to put into play in that direction.

2. Trade with a proven trading strategy or a combination of strategies. A proven strategy is one that is comprehensively back-tested and has been shown to work consistently. It is only in this way that you will have the confidence to stick with it during the lull periods.

3. Have a solid trading system. One that is defined not only by the technical aspects but also the business behind trading; a proper structured trade that is in line with the overall trading plan that has been proven to work. In contrast to what most new traders think, trading is not just about strategies, but the system itself also contributes greatly to becoming a successful trader.

Most of all, Ezekiel has a famous trading mantra – “Win big, lose small” that he and his students abide by.

“Trading is all about having an edge in the game and knowing the mathematical probability behind each trade”. By winning big and losing small, a single win can potentially cover 3 or more losses. If you apply this methodology in the long run, you will be a winning trader.

To learn more about Ezekiel’s method of trading backed by mathematical probability, you can check out his one core program.

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Regardless of the strategy you choose, you must be willing to accept losses in a volatile market like cryptocurrency. Have your exit plan ready before you enter any trade. Don’t follow the hot tips crowd; invest only in coins that you actually believe in — even for just the day. The hot tips crowd is often selfishly motivated and is not giving tips to make you money.

Also, keep in mind that the market provides endless opportunity. So don’t bite your head off if you’re playing cautious and miss one, and don’t chase the gazelles that have already run off of the farm. Trading is more than anything an emotional journey — you must keep a clear head and stick to your chosen strategy through thick and thin.

Frequently Asked Questions