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In this article we discuss about the best crypto day trading strategies in 2022. But before moving to this topic,first lets understand the meaning of Day trading in short detail..The word “day trader “comes from stock market trading, where all the trades commonly occur during the weekdays or regular business hours. The crypto market remains open 24 hours a day and seven days a week. And these are the most crucial distinctions between crypto day trading and stock market trading.
Day trading is a short-term trading technique where traders purchase and sell the currency or stock during the same day. This trading is also known as “Intraday trading”. In Another meaning ,a method that the traders utilize to benefit from short-term fluctuations on the same day. It means Day traders try to use the intraday method to earn profit from the movement of the price of specific tools or assets.
Conditions about Cryptocurrency Intra-day trading
Two primary market conditions should be present for intraday trading, which makes you profitable.
- Liquidity:- Traders must be capable of entering or exiting the trades fast without any movement of prices too much. Slippage occurs with low market liquidity when a prominent position can’t be dissolved at the price traders want and can consume into a trader’s profits. Through slippage, the position should be sold in the living wages with every order which has a lower price than the last one, showing less overall profits over time the absolute position has been sold.
- Volatility:- Lack of volatility refers to the prices that are not moving, and there is no possibility of buying at low prices and selling at high prices. Because the traders buy and sell the currency during the exact day. The market may keep going up and down on a short-term basis.
6 Powerful Crypto Day Trading Strategies in 2022
The difference between trading and gambling is a helpful approach. The right strategy can be beneficial to finding the random spots and even in long-term returns. You can use various techniques in multiple situations depending on your market behaviour and capability. But ,It depends on how you understand the market and determine if it is suitable to apply a selected strategy.
Here are some best crypto trading strategies that help to understand how to do the day trade crypto in more detail.
Day Trading
This trading method involves taking the positions and going on the same day. While assuming such a trade, the trader motive is to book profits among the movements of price in cryptocurrency. Investors usually depend on the technical indicator to estimate the entry and exit points for successful trade business in crypto.
Range Trading
Range trading is trading where the traders believe that currency prices tend to move within a specific range. This strategy is beneficial and helps to estimate through watching support & resistance levels and candlesticks charts. Traders might purchase when currency prices go on a support level and sell when prices go on a resistance level. Or they might close out short when the price drop for support and reaches short when the price beats the resistance level.
Scalping
Scalping is a strategy used to create a small profit from many trades, extending to a more significant gain. It utilizes an extensive amount of currency to bring the benefits of a price that fluctuates over a short time. The time horizon can be short as seconds or a few minutes or longer as hours.
High-frequency Trading
High-frequency trading is a trading strategy where traders can benefit from price fluctuations that appear in seconds. The frequency in question is regularly on the order of dozens of trades per second – far more than the capacity of a human trader.
The only method to attract high-frequency trading is to utilize software named a trading bot. Based on trading logic, the bot watches the market and then implements trades continuously as long as it is related to the trade. By creating a particular trading logic, high-frequency trading can be connected with various other strategies.
Technical Analysis
Technical analysis is a statistical trading technique. The traders try to find the directions in the market by completing different statistical calculations based on the historical price data.For example,technical analysis based on past prices that may affect future prices.
News and Sentiment Analysis
News and Sentiment analysis is similar to technical analysis, but it has one critical difference: expecting actions of humans and reactions instead of expecting price trends. You attempt to predict whether demand will drop or increase for an offered cryptocurrency by analyzing the various other information sources through news and sentiment analysis. You try to understand the social peace on the currency and expect what steps the people will bear through analyzing the sources. The data sources are social media posts and other industry and mainstream news.
TAXES AND REGULATIONS:- CRYPTO DAYTRADING
The traders need to familiarize themselves with the rules and regulations of the daily trading taxes in their place. For example, two crucial things for the day traders to be familiar with are the wash sale rule and short-term capital gains taxes.
SHORT TERM CAPITAL GAINS
Short-term capital gains taxes are used to sell any asset owned for a smaller year. This implies that any profits are taxed as ordinary income or at the marginal price based on an investor’s tax bracket. The IRS adjusts these numbers each year to adapt to inflation. For the 2021 to 2022 tax rate, the rates varied from 0% to 37%.
WASH SALE
The wash sale rule should understand by day traders. When investors sell the security and then purchase the exact security within the next 30 days, this rule stops them from bearing a loss on their taxable income. There are many variations in day trading and taxes. Traders should confer with a tax professional to understand all the essential details of their circumstances..
Conclusion
Finally,Day trading in cryptocurrency can be a productive activity. It helps you earn daily profit, but it is also one of the most high-risk trading methods beyond profit. Firstly, you need to know how to day trade in crypto which is essential to watch long-term profits. The best strategies to earn gains from day trading is to understand the crypto market properly. Then create and stick to the right strategy. You can quickly become a successful professional crypto day trader through this protection.
