Beginner’s Guide: What You Need to Know About Crypto Day Trading
As the name suggests, day trading is a short-term trading. It can mean that you will only hold a crypto asset for minutes or a few hours. The goal is to earn small yet quick profit by selling your assets before the day ends.
This type of cryptocurrency trading is the direct opposite of HODL. The HODL strategy is short for hodling. While you might think that it’s a deliberate misspelling of the word ‘hold’, it actually refers to a strategy wherein the players will “hold on for dear life” on their investment during cryptocurrency market’s highs and lows. In short, an investor buys a given cryptocurrency and then he or she will keep it for long term.
The Rise of Day Trading
Day trading cryptocurrency has become popular in the recent months. This is because the strategy suits the volatile market and unstable trading volume in cryptocurrencies well. With this type of cryptocurrency trading, you only to get into the market, choose a position, watch over the position, and then you can exit with a profit. The time spans of holding on an asset can be as short as a few minutes.
The Types of Traders
There are different types of traders in day trading. Each of them has different strategies in gaining profit. These types are divided into two categories which are day traders and technical analysts. Speculators are those who try to find external market influences which can indicate whether a cryptocurrency will suddenly gain or lose its value. On the other hand, technical analysts look into the internal technicalities of the market. They rely on data such as financial charts to get a hint on where the prices might be heading next.
Is Day Trading Ideal for You?
Now that you already have an idea of what day trading is, you may be thinking of whether this strategy is right for you. Keep in mind that while it is a popular option, day trading is no guarantee that you’ll gain as much profit as you expected. There’s still risks of losing money, especially when you’re still familiarizing yourself with the strategy. Even the best day traders in cryptocurrency lost some of their investment before winning big. If you are financially able to manage the risks of losing some funds to learn, then this might be a good option for you. Just make sure that you are disciplined enough to study the facts before making a big decision. You should also not sour grape over losses.
If you can do all of these things, then it’s time to get started with day trading.
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