Cryptocurrency intraday trading tactics for beginners

? Then read and you will find out everything. I can't guarantee that you will get rich quick, but below are a few facts that you can use to make day trading cryptocurrencies more successful.

The truth is that the price of Bitcoin is getting higher and higher over time than before. I am sure that at any moment the price of Bitcoin could increase to $50,000 in just one year. But at the same time, I think that simply buying and holding Bitcoin in the hope of a big growth is also not a very interesting option. Well, unless you are ready to afford to buy Bitcoin and wait ten years, then yes.

In this article I will talk about cryptocurrency trading on the exchange for beginners. There are many cryptocurrency trading strategies, and sometimes it makes sense to create your own Bitcoin trading strategy, but in general it is important to develop a universal approach that you can follow.

Is Day Trading Bitcoin and Altcoins Right for You?

Lots of people are involved in day trading Bitcoin and altcoins. Many people know about day trading from Forex, which has its own peculiarities of intraday trading.

The cryptocurrency market is built on exchange-traded funds, ICO projects, etc. and there is a certain sense of stability in this. Crypto trading is gradually becoming more legal and every day it is becoming more obvious. This means that in conditions of security and high liquidity, it is possible to use traditional intraday cryptocurrency trading strategies.

The dangers of day trading cryptocurrencies

Be sure to take into account that it is possible to lose all your money as a result of trading cryptocurrencies. And the risk here is very high: you need to protect your account on the exchange from hacking, erroneous transactions and much more.

I follow Vitalik Buterin and I remember well his message about how dangerous cryptocurrencies are

Here he talks about how cryptocurrencies are a hyper-volatile asset class and can drop to virtually nothing at any time. Therefore, you should not invest more money than you can afford to lose. And if you're wondering where you can store your savings, the safest option is still traditional assets.

Many newbies might be put off by this approach, but it's true. There is no place for easy money here and you need to read, as always, between the lines.

It is true that cryptocurrency is a hyper-volatile asset class. In just one day, a coin can increase in price by 10-15% or even double in price. And on another day it may fall by exactly the same amount. Of course, such movements do not happen every day, but they do happen.

By the way, similar things can be observed in the stock market, where, by the way, Russians can also work.

But the cryptocurrency market is still much simpler than the stock market. And it’s much easier for a beginner to start here. Therefore, a novice trader’s chances of making money on crypto are much higher than on the stock market, and especially the American one.

Therefore, below we will consider the key points on how to conduct intraday trading on the cryptocurrency exchange.

#2 What is cryptocurrency margin trading

Traders who trade with what is called leverage borrow money for their trading, thereby increasing their trading opportunities. The amount of leverage on a cryptocurrency exchange will depend on the exchange itself. Some crypto exchanges trade 1 to 1, some give leverage of 1 to 20 or even more.

Example of 5x leverage

• $1000 of your funds gives you the ability to trade $5000
• When you move 20% in your favor, you will double your funds

Example of 10x leverage

• $1000 of your funds gives you the ability to trade $10,000
• You can double your funds when moving >10% in your favor

Example of 20x leverage

• $1000 of your funds gives you the opportunity to trade $20,000
• With this amount, you can double your initial funds if you move >5% in the direction we need
• The maximum you can trade is $5000

#3 What happens if the price goes against you

In case the price goes against you by 20% from where you entered the position, you will lose everything if you trade with 5x leverage. Accordingly, if the price moves against you by 10% with 10x leverage, you will again lose everything. When trading with 20x leverage, you will lose your deposit if the price moves against you by just 5%.

However, if necessary, you will be able to increase the amount of margin on your account, because in critical cases, if the price goes too far against you, you will simply lose all your money. Therefore, adding money to the trade balance can save your investment.

#4 What is a spread

For Forex brokers that offer CFD trading, the spread may vary. A spread is a trading commission charged by a broker for buying or selling cryptocurrency. The spread usually varies from 0.5% to 2% (some I have seen above 5%) depending on the type of platform.

Specification of CFD contracts for cryptocurrency from some Forex brokers:

– spread 1.3 (floating)

Alpari: ECN.MT4 account – from 0.1 points, floating; account PRO.ECN.MT4 – from 0 points, floating; ECN.MT5 account – from 0 points, floating.

Forex Club: MT4-Instant account – from 0.00015 points; MT4-Market account – from 0.00015; MT5-Instant account – from 0.00015; MT5-Market account – from 0.00015.

Example for spreads:

1% spread and market price for one bitcoin is $10,000

• Position opening point if you buy 1 Bitcoin = $10,050
• Position opening point if you sell 1 bitcoin = $9,950

Be very careful when choosing where to trade CFDs and keep in mind that a spread exists regardless of whether you go long or short.

Brief information about Bitcoin

To trade, you need to have at least fundamental knowledge about the most popular digital currency. Bitcoin is outperforming conventional currencies, stocks and other commodities in trading. This happens for several reasons:

1. Bitcoin is subject to strong volatility, which allows you to make large profits.
2. The bidding doesn't stop for a second. Cue balls are bought and sold 24 hours a day.
3. Bitcoin is considered one of the most comfortable and convenient instruments for trading.
4. You can withdraw funds in a few hours in any part of the world.
5. Low interest rate charged by trading platforms for exchanging bitcoins.

#5 CFD trading or crypto exchanges? What's better?

I have already discussed this topic and conducted a detailed analysis, so I advise you to read here, but once again I will briefly tell you about the essence of the problem.

Do you want to be able to withdraw your crypto coins based on the results of intraday trading? If yes, then, for example, the same Binance exchange is an excellent option. Binance is a good exchange because: it is reliable, it has a lot of coins to trade (over 250) that are actively traded. You can buy any coin and then withdraw it to your wallet.

But the problem with exchanges like Binance is that they do not allow trading with leverage. That is, this means that you have one opportunity to make money on the exchange - buy some coin, and then wait for it to rise in price.

This tactic only works if you buy some cryptocurrency for pennies, which can be expected to grow exponentially in the future. Investing in coins involves buying them and holding them for many months.

Another problem with Binance is that altcoin trading is usually paired with either Bitcoin or Ether. Therefore, you always need to have either Bitcoin or Ether in your exchange wallets. And if you are tied to the dollar in your trading, then constantly converting all the coins you have into dollars can cause great difficulties.

By the way, in some countries like the UK, CFDs are a good option if you trade white, because trading is not taxed.

Differences between the cryptocurrency and the stock market

Remember one thing, the market is incredibly dependent on external events. If we are talking about the crypto market, then every project that has survived its ICO and has reached the point where its cryptocurrency is now traded on exchanges - there is always their own news and announcements that lead to jumps in the price of their asset.

Moreover, there is a tendency that from time to time the market reacts differently to certain types of announcements. For example, about a year ago, almost any exchange announcing the listing of a new cryptocurrency “pampila”, its value decreased by at least 20%.

OmiseGO course reaction to Bithumb listing

The chart with a time frame of 1 day shows how the cost of the OmiseGO cryptocurrency in the trading pair with Bitcoin has changed after the announcement of the Bithumb exchange. By the way, you can also see two green candles (the first of which has a large shadow) at the foot of the announcement; they indicate a suspicious increase in volumes before such an event. There is a possibility that there were people who had information about the listing several days before the event.

What else does the value of cryptocurrency depend on?

Having analyzed more than one hundred news items and impulses on the charts, several types of announcements from projects were identified that lead to an increase in the volatility of the asset. It is worth considering that this list is typical purely for the crypto market, nothing else is given.

Let's explain a little about each point:

• IEO on Launchpad - Launchpad is a completely new project from a well-known exchange in the form of a platform for conducting ICO - in simple words, the initial release of tokens to exchanges. It is difficult to make money with this event, but the result will be worth it. In 2022, 3 large ICOs took place: Fetch, Bittorrent and, most recently, CELR. We will look at the operating principle of the launchpad in more detail later.
• Competition Binance (competitions from Binance) are traditional competitions organized by the Binance exchange almost from the moment of its inception. Usually these are competitions for trading volumes over a certain period. In the official sources of the exchange, an announcement appears about the start of a competition for maximum traded volumes on a certain cryptocurrency; the winner at the end of the competition shares a pool of money pre-allocated for reward in the equivalent of the cryptocurrency on which the trading took place. You can follow such events in Binance chats or on Twitter.
• about the listing above, here it is worth adding that recently adding coins to sites has been bringing less and less benefit, although if you follow the project, then it is quite possible to predict the addition of a coin to a particular exchange. For example, ICO of large projects in the future a priori implies listing on other exchanges; it is difficult to imagine a new project entering the ICO and being ignored by such exchanges as Bithumb, for example.

#6 Binance does not offer USDT pairs

USDT is a tokenized dollar. And from many it causes a lot of criticism. The USDT cryptocurrency is controlled by Tether, which has not yet conducted a public audit. Therefore, a lot of questions still arise as to whether USDT tokens are backed by dollars, as the company assures.

If suddenly something happens to USDT, then there will be a lot of problems to withdraw your money from them. In general, I am of the opinion that if USDT ever goes bankrupt, we could face consequences similar to those that occurred after the collapse of MtGox.

As for CFD brokers, or simply put, simple Forex brokers, they do not have such problems, because all of their liquidity providers are real financial organizations that work with real funds, and not tokenized dollars. For example, in all the years of trading I never even thought that there might be any financial problems.

Therefore, in terms of safety of funds, I still am of the opinion that trading cryptocurrency through classic CFD Forex brokers is more reliable. It's simply a question of the number of altcoins available for trading, as well as finding a broker with adequate commissions.

Favorable Strategies

Beginners should know that there are a large number of strategies that do not work. Money losses often occur due to incorrect signals. To avoid failure, you need to adhere to clear rules, thanks to which you can predict the future movement of the Bitcoin rate.

What are favorable strategies? These are the strategies that guarantee profits and also provide strict rules. So, favorable strategies include:

• Trading on breakouts;
• Trading on pullbacks;
• Trading on impulses.

The above types allow you not to think about market changes. If you adhere to standard rules, then making a profit will be an inevitable event.

#7 What is technical analysis

Technical analysis is a method of predicting future prices of an asset based on price patterns. These patterns tend to be very similar to each other in different markets, from Forex to commodity markets, stocks and other securities markets.

This is how technical analysis works. Bitcoin had an upward trend, which was broken and now the price is going down

This chart shows that Bitcoin showed growth for two weeks, which subsequently gave way to the opposite movement. As you can see, the trend was upward, because the price consistently made more and more new highs, and then after the trend changed, the price began to make successive lows.

Many traders saw this clear trend and what did they do as a result? They became active each time when the price again reached the support level. And this worked for quite a long time until the upward momentum dried up. By the way, during this time frame there were good opportunities for intraday scalping.

After the uptrend was broken, the previous support level was tested.

Buyers did not have enough strength to return the price to its previous range. At the same time, new opportunities appeared for buyers to open long positions and fix them, because the previous support level turned into a resistance level.

But note that this is just a local top in the short term. We already learned a similar lesson in December 2017, when Bitcoin reached $19,000 per coin. Therefore, one of the main things in trading is to take profits after making a big profit.

Let's sum it up

Intraday cryptocurrency trading can be a tool for making quick money in the right hands. At the same time, an irresponsible approach to such work can, on the contrary, lead to losses.

You can find more schemes for making money on cryptocurrency in 2022 in our material.

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#8 Tip for Beginners – Follow the Trend

If the price goes up, look for cheap entries on drawdowns and sell after the price comes out of the drawdown a little. Then wait for the next higher low to form and enter the position again, then wait for the next peak and close. The same is true with short positions - we wait for a rollback upward after the next bottom, where we open a sell position.

From my own experience, I can say that you shouldn’t be greedy and expect the price to rocket up after each opening of a buy position. Our main goal in intraday trading is to open small positions and close them with a profit, and not wait for us to hit the jackpot in any particular position.

If we take 2% profit every day, then if we invest $5000 we will get:

• Day 1 – $5100
• Day 2 – $5202
• Day 3: $5,306.04
• Day 4: $5,412.16
• Day 5: $5,520.40
• Day 6: $5,630.81
• Day 7: $5,743.43

Agree that this is not bad. Approximately 15% profit in just one week of trading and a profit of $743.43 from $5000. However, it is worth considering that this level of income may not coincide with what you could see from people who have held a position in Bitcoin for several years. The secret here is not only in the right entry points, but also in the rules of money management. And then over the course of a number of months we can get such a picture

• Week 1: $5,743.43
• Week 2: $6,597.39
• Week 3: $7,578.32
• Week 4: $8,705.10
• Week 5: $9,999.42
• Week 6: $11,486.18
• Week 7: $13,194.00
• Week 8: $15,155.75
• Week 9: $17,409.18
• Week 10: $19,997.66
• Week 11: $22,971.01
• Week 12: $26,386.45

If we talk about what is more profitable - to simply buy and store or trade, then here is the answer - it is more profitable to trade. Subject to profitable trading! Because 12 months of trading with a profit of 2% every day will give more profit than 5x who knows when. Read more about this in the article - Trade Bitcoin or stick to the “buy and hold” strategy?

Let's run through the process. Suppose we can predict 50% of movements over the entire time, more is unlikely. But I think it's easier to predict 2% daily, right? Therefore, I believe that you can make a fortune in day trading cryptocurrency if you strictly follow the strategy and rules of money management.

I have been trading in the cryptocurrency market for several years and I can say that small trading opportunities appear in the crypto market almost every day. The easiest way is to consider entry points near the trend line. This minimizes risk and maximizes reward.

Therefore, it is imperative to use a stop loss below the support level to avoid being trapped if the market starts to fall (see Simple Rules for Cryptocurrency Trading).

In my opinion, here are the three pillars on which profitable cryptocurrency trading rests:

1. Candlestick patterns (Price Action)

2. Fibonacci levels

3. Moving averages

Be sure to read articles on this topic:

• Price Action – indicator-free Forex strategies
• My simple price action strategy
• 6 Price Action Secrets a Trader Should Know

Day trading

Day-Trading is trading assets within one day.

Day trading involves buying and selling assets on any time frame, but always within one specific day . This strategy is suitable for any currency pairs. But, as a rule, day traders aim for more income than regular traders and look for the most liquid asset or currency pair.

Within day trading they also use: scalping, technical analysis, news trading.

The essence of day trading is to take advantage of the up and down price movements. In simple terms, this is nothing more than speculation . But day traders do not wait for large market movements and begin to act on small, restrained price movements.

Extremely high volatility in an asset is always good news for a day trader

Day trading is important for the market and ensures its smooth functioning, since the level of trading activity of day traders is extremely high. ✅

Pros and cons of day trading

Quick profit;

High potential profitability;

There is no need to pay fees for holding a position overnight (swap);

Shorter recovery period after drawdowns.

The trader is maximally involved in the trading process and must continuously monitor the trading terminal;

Extremely high risks: Day trading is considered one of the riskiest methods of trading in the financial markets.

Successful day trading requires having substantial capital and sufficient knowledge of the industry . A trader must know the basic principles of market movement and be able to use various technical and fundamental indicators.

Technical analysis is the main tool of a day trader.

Trading CFDs on cryptocurrency – what is it?

CFD means contact for price difference.

To put it simply, we trade air. When we buy Bitcoin, for example, on the Bitfinex crypto exchange, this means that we physically own this Bitcoin. And when we open a long position (buy), for example, on Alpari, we will not own the cryptocurrency.

You are buying a contract that is backed by the value of the underlying asset. Classic brokers like Alpari, Amarkets or Forex Club take the cost of Bitcoin from crypto exchanges, for example, Gemini, Bitfinex, GDAX, etc.

I already mentioned this earlier in this article - CFD brokers also charge a spread and a commission for rolling over a position to the next day.

A spread is a fixed percentage of profit that the broker is guaranteed to take when you open a position. For example, if the spread is 2% and the current price of Bitcoin is $10,000 per coin, then when you open a long position (buy), your entry point would be at $10,100, and for selling it would be at $9,900.

Commission for transferring a position to the next day. In Forex this is called a swap. Such a commission can be either positive or negative. For example, such a commission may be charged if you rollover an open short position (i.e. a sell position) to the next day. This already depends on the platform you use for trading.