This article discusses the best crypto day trading strategies in 2023. But before moving to this topic, first, let us understand the meaning of Day trading.
What is day trading?
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 on the same day. This trading is also known as “Intraday trading.”
In other words, 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.
A quick glance
Day trading is a short-term trading technique where traders purchase and sell the currency or stock on the same day. This trading is also known as “Intraday trading.”
Two primary market conditions should be present for intraday trading, which makes you profitable.
- Liquidity
- Volatility
- Day Trading
- Range Trading
- Scalping
- High-frequency Trading
- Technical Analysis News and Sentiment Analysis
- Taxes and Regulations
- Short Term Capital Gains
- Wash Sale
Conditions of Cryptocurrency Intra-day Trading
If you are looking for the most profitable crypto trading strategy, here are some primary market conditions that should be present for the intraday trading strategy which make you profitable.
Liquidity:- Traders must be capable of entering or exiting the trades fast without moving 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 with 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.
Best Crypto Day Trading Strategies in 2023
The difference between trading and gambling is a helpful approach. The right strategy can be beneficial to finding random spots and even in long-term returns. You can use various advanced crypto trading strategies depending on your market behavior 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 positions and going on the same day. While assuming such a trade, the trader’s motive is to book profits among the price movements in cryptocurrency.
Investors usually depend on the technical indicator to estimate the entry and exit points for successful trade business in crypto.
These position trading strategies are formulated on the basis of technical and fundamental analysis of position charts. These are formulated by keeping the economic and social factors in mind that directly or indirectly affect the forex market. One can use these strategies not only in forex but also in all financial markets like stock and crypto.
Scalping Strategy: Scalping Trading Strategy is formulated in order to earn profit from small price changes. It is generally for beginners. Under this strategy, the number of trades is comparatively large, and the gain to the individual is very small. A small profit is generated by opening and closing multiple positions in a day. The main aim of scalping is to make a large number of winners with small profits and not a few successful trades with large winning profits. The formulation of scalping strategies is based on the idea of lower exposure risk, large numbers of winners, and a small amount of profit.
Trend Trading strategies: With the name, it is clear that these are the strategies that are formulated on the basis of the ongoing trends in the market. In other words, these strategies enable an FX trader to identify the movements or trends in the market and take advantage of these movements. These strategies are formulated on the basis of technical and fundamental indicator that gives a trader the right idea of buying or selling a currency pair due to change in market trends. A trader analyzes the historical and market movements to predict the future of a currency pair. For example, the price of company stock first increases by 50p, then decreases by 25 p, increases again by 100 p, and then decreases by 50p. So a trader can predict that the price of the currency will increase in the future.
Hedging Forex Trading Strategies: It is a process of opening additional positions to protect oneself against adverse movements in the FX market. In other words, hedging forex offsets the risk of changes in price in order to reduce exposure to currencies from other positions. Traders use hedging forex strategies in order to safeguard their interests against changes in the exchange rate. Hedging strategies are the risk management strategies frequently used by forex traders to reduce the possibility of loss. Under this, a trader selects two correlated currency pairs. For example, EUR/USD and GBP/USD trade in opposite directions. In this case, if a trade occurs loss from the first, he can settle it with the profit from the second currency pair or vice versa.
Bounce or Break Spot Trading Forex Strategy: When a forex trader takes reference from the past for future forex trading is Bounce or Break spot strategy. When a forex trader believes that the levels that were important in the past could be important in the future, then he will place the order according to past experience. If a trader believes that a market has dropped to a level, then it will be bounced back and feels that it is a great time to buy the pair. The strategy is called as Bounce or break spot strategy.
Range Trading Strategy: Under this trading strategy, a forex trader can identify the ranging position in order to trade more effectively. A trader identifies the support and resistance points of the market and places trade accordingly. The range position or points are identified on the basis of Technical analysis tools. These positions can be used in prediction with the Price Action trading strategies to predict better. These strategies are best to reduce the risk and identify various trading opportunities. However, rapid decision-making ability is required for placing the order at the right time on the basis of range positions.
Swing Trading: It refers to the strategy that takes oscillations into consideration for the generation of profit. The traders will seek opportunities within a time frame. Under this strategy, a trader aims to earn profit from a small part of a longer trend within. It is a medium-term trading style; a trader tries to earn profit from price swings. Under this process, a trader has to hold a trade for several days at a time. Swing trading can be done in two ways day trading and position trading.
Day Trading Forex Strategies: A Day trading forex strategy refers to the process of buying or selling position within the trading day. Under this process, a trader opens or sells a position within a single day’s trading on the basis of small price movements. A trader only takes a day to open a position and close it when the day is over. It is the best strategy for those traders who have enough time throughout the day to monitor, analyze and execute a trade within a day.
Counter Trend Trading strategy: With the name, it is clear that under these trading strategies, a trader trades in the opposite direction. Under counter trading, a trader determines the overall trend and trades in the opposite direction of the trend. It is a risky strategy as it is based on the idea of finding out the trend and waiting for the trend to reverse before placing your order.
CRYPTO DAY TRADING
Taxes and Regulations
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 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. It implies that 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
You have learned about the best crypto day trading Strategies in 2023. However, trading in cryptocurrency is a complex process, so take your time selecting your trading strategy.
Finally, Day trading in cryptocurrency can be a productive activity. It helps you earn daily profit but 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.
Understanding the crypto market is the best strategy to earn gains from day trading. Then create and stick to the right strategy. You can quickly become a successful professional crypto day trader through this protection.
