Understanding Of Cryptocurrency Day Trading

Source

Good day fam,

It is your humble friend again @mato445 and I hope everyone is doing fine.

I am happy to be here in this great community to make post and interact with members of this community.

I also want to use this opportunity to appreciate the members and moderators of this community for their hard-work towards community growth.

We shall be learning a lot about day trading and what time frame they base their entries on, please join me as we begin.

DAY TRADING

Day trading can be explained to be a short term trading strategy where traders sell and buy asset within a day.

The aim of day trading is to exploit little price movement and make huge profit from the price flunctuation in the market.

Day traders get involves in various financial market like forex/crypto trading by using chart patterns, technical analysis and other important analysis tools to make trading decisions.

And day traders don't leave their trades over night as their try to manage the risks that comes from night price movement.

KEY PRINCIPLES OF DAY TRADING

There are some key principles of day trading and explained below are some of them.

• Leverage:

Leverages are most often used by day traders for the amplification of their position size.

As leverage has the ability to multiply the profit of traders, it also possess the ability to increase loss encountered by a trader if the trade goes against them.

• Technical Analysis:

Day traders are heavily dependent on technical analysis, technical indicator and chart analysis to spot strategic entry and exit positions.

Some common technical indicators used by day traders are, moving average, rsi, bollinger band, trix indicator etc.

• Volatility:

Volatility creates opportunity for quick profit and as such day trader thrives on it.

Within short periods, a volatile market allows for more visible price movements, thus providing more opportunities for profitable trades.

• Risk Management:

Source

An effective risk management schedule is always the backbone of a successful day trading technique.

Day traders often attempt to limit the potential losses from a trade by making use of stop loss, and this also helps to maintain a favorable risk-reward ratio.

Also, position sizing and diversification are very important inorder to avoid significant losses in a single trade.

DAY TRADING STRATEGY

To be a successful day trader, there are some important strategies that traders watch out for, some of them are:

• Trend Following:

  One strategy used by day trader is what we know as trend following strategy.

  Day traders identify and follow the trend of the market and they enter their position in the direction of the trend.

  They avoid taking trades that are not in the direction of the market trend.

  • Range Trading:

  Day traders also watch out for ranges in the market and make effective use of support and resistance levels.

  They take their trade off this key levels and also profit from price rejection on this level.

  Conclusion

  Day trading is a very important trading strategy that makes use of chart analysis, technical indicators for it's analysis.