There are certain things I wish I knew before day trading cryptos.
This includes digital currencies like Bitcoin (BTC), Gala (GALA), Shiba Inu (SHIB), Polygon (Matic), etc.
You’d often find me trading one of these pairs at a time.
And choosing to trade only one pair before moving on to the next is something I learned over time.
It meant mastering the price action of that asset and as such, easier to predict future moves.
So, how long have I been trading?
And is it worth learning from my experience?
I’ll let you decide after reading this guide.
On the other hand, I’ve been actively trading for three years now.
And by active, I mean making entries after technical analysis instead of some random signal gotten off a Telegram channel.
Before this time all I did was check the high and low range for the day on Poloniex.
I’d use the coin’s trading range to decide if it’s a good time to buy or sell.
And you’d agree that was a very risky way to trade since price may not always constrict within this range during the day.
So, here are the top things I wish I knew even before taking my first trade.
Top Day Trading Tips
These day trading tips are the top things I knew before trading.
- The requirements for trading
- Always cash out
- Don’t fall in love
1. The Requirements for Day Trading:
I wish someone had told me you don’t just choose to be a scalper or day trader for the fun of it.
So here I am saying it to you if you’re towing the same path without knowing the requirements for day trading.
What are these requirements?
Let’s find out!
Top Requirements for Day Trading
Some of the top requirements for day trading are:
1. Acquire High-Level Skill:
The first requirement to successfully day trade is to acquire a high-level skill.
That’s because day trading requires you open and close your trades on the same day.
And for that to happen, you have to think and make decisions quickly.
The market is not going to wait for you to sleep on that big idea before you make an entry or exit.
On the other hand, high-level skill is gained from studying and practicing more often.
Let’s say you need to master the art of trading.
Start by reading one of the simplest books on trading.
I recommend Japanese Candlestick Charting Techniques by Steve Nison.
In line with that, you could check out technical analysis courses on Udemy.
These tutorial videos are not expensive since you get a great discount on your first purchase.
Here are some courses I bought on the platform.
You’ll also find free cryptocurrency courses with certificates on Udemy.
But I advise you opt for a paid crypto technical analysis course that is well detailed.
Such a course may also have high reviews from its students.
Hence, give it a try.
YouTube is also a great place to learn.
You may do well to check the great content offered by Rayner Teo, Karen Foo, and Jared Wesley on their channels.
It’s one thing to have these materials, it’s another thing to spend hours studying them.
Therefore, make out time to study even if it’s two hours daily.
The weekend is also a great time to go through these materials.
In my case, I cleared my schedule for the month and spent nine hours in daily study.
I had to take it like any skill learned in school.
So, how would you prepare?
I take it you’d rise up early, sit by a desk, and then learn with breaks in between.
Then go do it!
You don’t have to put in the same number of hours as I did but make sure you learn the concepts of trading.
It’ll pay off in the end.
2. Demo Trade:
Demo trading is also an excellent way to develop your trading skill.
There are mobile apps on Google Play and Apple store specifically built for demo trading.
You could also use the TradingView platform to set up these trades.
And yes paper trading is free on TradingView.
Do the following to set up your first trades;
- Navigate to the ‘Trading panel’ section at the lower-left corner of the screen.
- Move your cursor to ‘Paper Trading’ and select ‘Connect’
Set your demo account to $100 (or any other value) and use low leverage to grow it without losing everything.
All you have to do is reset the account from the default $100,000 to $100.
Here’s how to do it:
- Select the drop-down menu beside ‘Paper Trading’
- Click on ‘Reset Paper Trading Account’
- Enter the amount you want.
- Click on ‘Reset’
Finally, record your progress to see how long it takes to grow the $100 account to $200, $300, and higher.
And that’s how you develop a trading plan.
3. Know Your Trading Strategy:
I know so many trading strategies thanks to how much time I put into studying.
But do I use all these strategies?
No, I don’t!
That’s because some strategies are more reliable than others.
But how will you know which can give you an edge in your trades when you only know one or two strategies?
So you see, studying first is important.
Moreover, a strategy that yields more profit for me could make another trader run into huge losses.
Therefore, learn different trading strategies and then improve your skill on those that help you trade better.
But what are these strategies?
The first is price action trading.
Whatever magic you want to perform on your chart begins with reading candlesticks.
You need to know how these candles react to key levels such as support and resistance.
Good knowledge of retracement levels is also important.
Do we have a price rebound after a 25%, 50%, 75%, or 100% retracement?
What could trigger a reversal from these levels?
And what depth of retracement is good enough before you make an entry?
These are concepts you need to understand.
The mistake I made as a beginner and which most traders do too is having a heavy reliance on indicators.
These indicators include Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Simple and Exponential Moving Averages (SMAs and EMAs), etc.
Now indicators are great in helping you navigate the market but you can’t solely depend on them.
Price and volume should be your main focus.
That’s because indicators only confirm both of these key elements on your chart.
It’s just like a learner always driving with an instructor instead of paying attention to the road and how to maneuver it even without an instructor.
It’s the same way a pianist would spend time memorizing notes instead of learning how these notes come together to form a song.
That being said, some trading strategies include:
- Candlestick with support and resistance.
- Candlesticks with pivot trading.
- Candlesticks and chart patterns.
- A candlestick trading with order blocks.
- Candlestick and divergence.
Sure, it all boils down to candlesticks. Do not ignore them.
Choose three strategies and then backtest them to see which is easier to master.
Backtesting can be done on TradingView.
It involves pairing your strategy with past price action to see how it would’ve played out.
Record your results to know which strategy yielded the most profit and fewer losses.
And that’s the strategy you should implement in your live trades.
4. Have Enough Free Time:
Day trading requires time.
You may not have to sit at the screen all day but you have to check the chart often for good entries.
Missing these entries is equivalent to picking random trades which is not a good way to trade.
On the other hand, a scalper who takes small profits out of the market and compounds it for the day needs to dedicate a few hours daily.
That means if you have a 9 to 5 job, scalping is out of the question. Not unless you want to take a few minutes out of your work to trade which is still not ideal.
You might get distracted and then long when you should’ve short.
A lot could go wrong.
What am I getting at?
Ensure that you’ve created an environment to thrive before you begin day trading.
And that’s by having enough time to analyze the market.
A conducive environment is also important.
If it’s noisy with people constantly moving to and fro, the space may not really be suited for trading.
2. Always Cash Out:
I wish someone had given me a one-hour lecture on how important it is to take profit!
But then, I’d probably ignore the advice until I learned the bitter lesson.
Here’s what happened to me.
I began trading with 0.3 BTC and grew it to 1.1 BTC within a few months.
It took one month for everything to come crashing. And as you may have guessed, the loss was quite devasting.
How did it happen?
I’d been holding in hopes that the market will reverse but that didn’t happen until three months later.
And when it finally did, I’d only regained 50% of what was lost.
Imagine having to wait three months just to recover your capital.
It was based on luck and chance.
Don’t want that to be you?
Then cash out every so often.
I don’t just mean closing trades in profit but making withdrawals every now and then.
It’s not your money until it enters your bank. You are a day trader and not an investor.
Even investors are advised to take out cash occasionally.
That’s because the market is in seasons.
There’s the bull market and bear market.
And most times, the onset of these markets may catch us unawares.
Take Bitcoin, for instance.
The top crypto rallied to $67,000 and many had high hopes it’ll hit $100,000 by December 2021.
Even when early signs of a downtrend sprung up in November 2021, some holders hadn’t come down from the high of unending rallies.
At the time of writing, Bitcoin is trading around $29,000 and could tank lower.
The Bitcoin/USDT 2-week chart below shows a lower close, which could push price further to the $23,000 zone if not lower.
Here’s the point I’m trying to make:
Trading should make you richer and not poorer.
Therefore, train yourself to make weekly or monthly withdrawals to your bank.
Now you may disagree and argue that portfolio growth is more important.
But trust me that won’t matter when the same portfolio you’ve spent three months building tanks by 80% or more.
Now try not to send the same funds you’ve withdrawn back into the market.
You may be tempted to buy dips but that’s what your trading capital is meant for.
If you’ve exhausted everything, take a rest to avoid catching a falling knife.
You may get away with funding your account to buy dips once in a while but it’ll take one day to get stuck.
Accordingly, If your portfolio is $1,000 and you’ve grown it to $3,000, withdraw $1,000 into your bank account.
Do something tangible with the money.
Save to buy a house, car, or start a project.
Make sure what you do with the money is something you’ll be proud of even if you lose your trading capital along the line.
Now you have a portfolio of $2,000.
If it grows to $4,000, withdraw a $1,000 again.
At the end of the day, you’ll be growing both your portfolio and your bank.
There’s really nothing wrong in even withdrawing $2,000 from the $4,000 you made.
Guide your profit at all costs.
It’s why you’re trading in the first place.
The Binance Peer-to-peer (P2P) section can be used to withdraw to fiat or your local currency.
3. Don’t Fall Inlove:
What has love got to do with anything especially crypto?
A whole lot.
Don’t fall in love with any crypto asset and don’t also get obsessed with it.
Treat every pair like a business deal and not something you hold dear to your heart.
The limelight is always moving from one alt to the other.
Or may I say from one cryptocurrency category to the other.
When I began trading, Defi tokens such as Chainlink (Link), Aave (AAVE), Compound (Comp), and Band Protocol (BAND) were quite the rave.
BAND, for instance, was so volatile you could make huge profits and losses in a day.
Many traders loved the virtual token. I did too.
And even when it tanked from its $23 all-time high, they were very confident the token will recover within a flash.
So they chose to hold.
It’s been over a year already and BAND hasn’t recovered to the $20 zone.
As of May 2022, the asset is trading around $1.
And with more dips in Bitcoin anticipated, it won’t come as a surprise if BAND declines below $1.
Now imagine if those holders hadn’t been in love with its massive leaps and dips in a day.
Would they have taken profit or cut their losses?
They most probably would!
Now there’s a trend of Metaverse tokens like Apecoin (APE), Decentraland ( MANA), The Sandbox (Sand), and Axie Infinity (AXS).
What’s it going to be tomorrow?
I can’t say but I’m most certainly sure there’ll be a new rave.
Therefore, always remind yourself that your goal is to make profit as a trader.
And as such, don’t develop a high-level attachment to a particular pair.
There’s nothing wrong in trading the pair consistently since you can easily predict the behavior of its holders.
But know when to move on to other pairs especially when its fundamentals aren’t as strong as they used to.
The same goes for the coin’s technicals when it hints its trend is changing.
Frequently Asked Questions
Here are answers to some frequently asked questions:
1. Is Trading Easy to Make Money?
Trading is easy since anyone can buy and sell or long and short on the same day.
But making money consistently isn’t!
Most traders are profitable but aren’t making money consistently.
And that’s where the problem arises.
Imagine making $1,000 two weeks in a row and then losing $3,000 the following week.
You’ve not only lost last week’s profit but a large chunk of your capital.
Nonetheless, improving your trading skill and managing risk is how you make money consistently.
Risk management also involves good portfolio management.
Add this tip to the things to know before day trading cryptos
2. Is Crypto Trading Hard to Learn?
No, cryptocurrency trading is not hard to learn.
I’ve mentored students online and offline.
And as such, I can attest that their skill improved between three weeks to a month.
That does not mean they became professional traders.
They were also able to spot good entries and exits on their own.
Therefore, learning how to trade crypto is easy especially if you have the right resources and a mentor.
A mentor points you in the right direction, which means you’ll learn better and faster.
You can enroll for my mentorship session. Find out what it’s about here.
3. How to Trade Intraday Successfully:
You can trade intraday successfully using timeframes between 5m and 15m.
You’ll be scalping with these timeframes.
It may also be useful to use 30m as your higher timeframe or as confirmation to go long or short.
The use of candlestick and pattern analysis will also help you place profitable trades.
4. What Website Can I Use for Day Trading?
Websites like Binance, Coinbase, Kucoin, and FTX are top cryptocurrency exchanges.
These centralized exchanges have been around for years and have so far proven to be reliable.
For this reason, you could day trade on them.
Keep in mind that you shouldn’t store your crypto assets long-term on any exchange.
Rather, use an offline wallet such as a paper wallet.
The websites listed above should serve as temporary storage for funds you’ll use to day trade.
5. Should I Trade the First Hour of the Day:
Retail traders are often believed to trade the first hour of the day.
This includes uninformed traders who may impact opening prices.
Smart money, on the other hand, is known to trade later in the day and could influence closing prices.
The concept is to trade with the smart traders, which are often smart money.
As such, do not entirely rely on opening prices but give more priority to closing prices.
This means price may go contrary to what it started off with.
These are the things I wish I knew before day trading cryptos.
The tips above are based on my personal experience and what I did to become better at trading.
Learning from the mistakes of others is how you thrive in the market since you’ll be avoiding those pitfalls.
That being said, try out the tips to day trading outline above and see how well they work out for you.
You don’t have to master everything in one day but knowing how to begin is a step in the right direction.
And lest I forget, give yourself a target.
Tell yourself you have to be better at trading three months from now and then work towards it.
You may have to go offline for a while just to stay focused.
And that’s totally alright.