A day trader is someone who trades Cryptocurrencies on a day-to-day basis. Cryptocurrencies are volatile and unpredictable, which means day traders have to be nimble and ready to act at any given moment. With that being said, there are a lot of things you need to know before you decide to become a full-fledged day trader.
You need to understand the risks involved, learn how to manage them, and know how to protect your capital so that you can continue trading without too much trouble. If you’re ready, read on! Here are some of the mistakes that you should avoid when day trading Cryptocurrencies.
Focusing on One Exchange
Different exchanges have different trading volumes, fees, and trading APIs. That’s why you need to use several exchanges when day trading. Since you’re only trading on a small scale, it doesn’t make sense to use one exchange for everything. You need several exchanges for different coins. Depending on the market, you can trade on one exchange while keeping the funds on another. You can even move funds around as the market changes. This puts more options at your disposal. Bitcoin Loophole is the best trading exchange to use if you want to trade Bitcoins.
Not Trading At the Right Time
If you’re starting day trading Cryptocurrencies, you should remember one thing: the markets are volatile. Despite all your experience, you might make a wrong decision that can cost you a lot of money. This is why the best time to invest in a new market is when investors aren’t rushing in.
You can’t rely on the media to tell you when it’s a good time to buy. You have to be able to sniff it out yourself. When the general public is getting involved in a new market, it’s usually an indication that it’s overvalued. This is the exact opposite of when you should be entering the market. When you see investors rushing in, that’s when the market experiences a correction.
Overlooking the small details
When you’re day trading Cryptocurrencies, you might think that you can’t focus on the small details. That’s where you’re wrong. What other market requires the kind of attention that day trading does? You need to be knowledgeable about the market, trade accordingly, and protect your capital at all times.
It’s not a good idea to just trade and hope that everything will work out. You have to do your homework on the markets, study charts, trade with discipline, and take a serious approach to trade. This way, you’ll be able to protect your capital and increase your trading profits.
You Don’t Set Stop-Limit Orders
One of the things you should always do is set stop-limit orders. This way, you can have an upper and lower price limit on your trades. When the price reaches the upper limit, a stop-limit order is triggered. This means your trade is stopped and the funds are returned to your account.
It’s a great way to protect your capital when the price goes out of your reach. It also gives you a chance to enter the market at a better price. You don’t want to exit the market abruptly. You want to exit slowly, with a stop-limit order in place. This way, you don’t have to bear the full loss. If the price goes down again, you can put a stop-limit order at a lower price. This is a great way to protect your capital, especially if the market experiences volatility.
Trading with leverage
Cryptocurrencies are extremely volatile. If you’re day trading, you have to be ready for this. Cryptocurrencies might experience a sudden price rise. When this happens, it can be difficult for you to exit the market and protect your capital. That’s why you need to use leverage when trading with leverage. You don’t have to buy a single coin with a 100:1 leverage. You can use a 50:1 or even a 25:1 leverage. This way, if the price goes up too quickly, you don’t have to bear the full loss. You can use stop-limit orders or margin trading to protect your capital.
Day trading Cryptocurrencies is very exciting. However, it’s also very risky. This means that if you decide to give it a try, you need to be ready for the risks involved. Make sure you understand them and make sure you don’t make any of the mistakes discussed in this article. If you follow these tips, you can enjoy day trading Cryptocurrencies without too much trouble.