10 Tips For Day Trading Crypto in a Bearish Market

2/14/2023, 1:54:13 AM - Henry Chikwem
10 Tips For Day Trading Crypto in a Bearish Market

Day trading in cryptocurrency avails traders the opportunities for quick wins through tiny margins. Day trading is popular with forex trading and the same trading strategy can be used to trade cryptocurrencies.

While this particular type of trading may interest you as a crypto investor, you must stick to the basics if you haven’t had a strong grip on how the cryptocurrency market works by trading cautiously and with funds you can afford to lose.

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Key Takeaways

 • Carefully select the type of crypto asset you wish to profit from in day trading checking for things such as liquidity, volatility, and primary motive.

 • Having a clear-cut trading strategy before going into day trading should be the first and foremost thing to do if you are serious about making profits using this trading technique.

 • Profit targets and Stop-loss orders exist to remind you of when to stop and exit the market when the trading objective has been met or vice versa.

 • Always try as much as possible to engage in day trading with a clear head and not allow your emotions to lead you into making unwise trading decisions.

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If on the other hand, you are an experienced trader looking for some tips on how to improve your strategy in day trading, follow me as I walk you through some of the tips you should know that can help sharpen your skills in day trading.

10 Quick Tips for Day Trading Crypto

1. Have a clear plan before each trade

The first thing you need to know before venturing into day trading is to understand that the market is highly uncertain and sometimes can yield unexpected results. For this reason, it is important to know what you want or what you are aiming at before trading.

On some days as well, rushing to trade may not come out in your best interest so it is always good to know when to step back and wait. This can sometimes be the only way for you to remain profitable.

2. Do not let your emotions get the best of you

Sometimes in day trading, we might be fascinated by the constant profits we make from buying and selling certain crypto assets that we forget that the potential for an unexpected loss always exists.

For this reason, when such occurs, we are driven by our emotions to continue trading with the hope of recovering that loss with an expected profit and when that doesn’t happen, we begin to panic.

In day trading, it is always important that you perfectly understand that the crypto market will not go in our favor all the time so you must learn to know when to stop and not let your emotions get the best of you.

If possible, have a set profit target, as this will guide you in knowing when to immediately pull out after the trading objective has been reached or you learn to make use of a stop-loss order if things don’t go your way either.

That way you don’t lose the money you started with.

3. Learn to lower your risks

Day trading is not for the faint of heart, and while this is true, you do need to learn to lower your risks by focusing on one or two crypto assets during a trading session.

You see, the higher the number of trades you open, the higher the risks involved and since day trading is very risky, that’s a lot of risks.

Maintaining one or two crypto assets at any one trading point guarantees that you can easily maintain better focus depending on your trading strategy.

Otherwise, the chances that you would make losses would be pretty high from thereon.

4. Trade with only what you can afford to lose

Trying to engage in day trading with something as vital as your life savings will be pretty much suicide. For this reason, you should only make use of your spare earnings while engaging in day trading.

This tip stays the same irrespective of whether you are an amateur or an experienced day trader.

In day trading, you will make losses at some point or if you are unlucky, in most cases so making use of your day-to-day earnings to day trade might be disastrous for you in the long run.

5. Focus your efforts on cryptocurrencies with high liquidity and volatility

The reason why you should let cryptocurrencies with high volatility and liquidity be your major focus is simply that day trading involves entering and exiting a trade at a specific time and so if you do not buy a crypto asset that can swiftly be converted into cash, you might lose whatever profit you hope to gain.

Speaking of crypto volatility, buying a crypto asset that is highly volatile means that you can easily reap profits from any abrupt change in the price of said crypto, especially when trying to sell it at a slightly higher price.

6. Do not subject yourself to the FOMO concept

FOMO simply means the fear of missing out and why this can be quite tempting, it is always advisable not to engage in day trading and even trading in general because we do not want to miss out on what we think is a profit surplus.

Most times, this might even be a trap meant to lure traders into buying a crypto asset only for it to decline at a rate less than what you bought it translating into an automatic loss for you in the process.

7. Don’t buy a crypto asset simply because the price is low

As I mentioned earlier, the major thing you should look out for before buying a crypto asset is its liquidity and volatility.

Trying to buy a crypto asset simply because you feel that the price is low and is easily affordable by you is a clear sign that you are an amateur trader and as such shouldn’t be day trading in the first place.

Some crypto assets may be low price-wise but this does not mean that they are volatile or liquid enough for you to buy them for day trading because when it comes to the point of expecting a price increase for you to sell and profit from or when it comes to selling at a certain time, you may find yourself in a major problem.

8. Know the type of crypto asset to use before day trading

While day trading, it is important that you know the type of crypto you want to buy before day trading. Some crypto-assets do not hold much value, some are just meme coins without any major motive behind their existence.

These are some of the things you need to look at before you proceed to profit from any crypto asset on the crypto market.

9. Diversify

I believe this is quite self-explanatory. Always make sure that you don’t focus all your attention on just one cryptocurrency during day trading.

While it is important that you do not focus on too much as well so that you don’t increase your risks unnecessarily, it is also important that you have at least two or three cryptocurrencies you are keeping tabs on while day trading.

10. Give yourself a break

The cryptocurrency market is a very volatile place and irrespective of whichever type of crypto trade you are in, it is always important to give yourself a break and take a step back when things don’t go as planned.

If possible, back out, relax, and give yourself some time to think and re-strategize before going back in. This would be of great benefit to you and would help prevent some mistakes along the way.

Frequently Asked Questions (FAQs)

How many day trades can I make on crypto?

You can make as many day trades as you want on crypto but I would advise that you limit your day trading to 3-5 times a week if you are an experienced crypto trader.

How many times can I buy and sell crypto in a day?

You can buy and sell crypto as many times as you want in a day as there are no laws that state that there should be a limit to how many times one can buy and sell crypto in a day.

Final Thoughts

While day trading is an excellent opportunity for you to make accumulated profits across multiple trades over time, it can be quite risky and as such should be engaged in with caution, a solid strategy, and with loss of experience.

If this is done, then you should be able to make a healthy amount of profits as you engage in it from time to time.

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