3 Tips for First-Time Bitcoin Day Traders

Investing in cryptocurrencies like Bitcoin isn’t for everyone, as it takes a great deal of skill to identify lucrative opportunities in a highly volatile market. Bitcoin values undergo rapid shifts that occur frequently within just 24 hours, making it difficult for first-time investors to keep up with such changes. There are approaches they can use to ride the volatile market and make significant gains, and day trading is one of them.

Much like any other asset class, Bitcoin opens up profitable opportunities for day traders. If you’re new to the term, a day trader is someone who takes advantage of sudden price fluctuations by buying and selling assets within a day. They are most common in stock markets but the strategy has become popular among young investors in the cryptocurrency sector. 

However, it’s not something you will want to use as a beginner unless you’re equipped with the right tools and knowledge. If ever you consider getting into day trading Bitcoin, here are a few essentials to keep in mind:

1. Educate yourself

As much as you want to generate fast money, you will only be setting yourself up for a painful fall if you start day trading with a limited idea of what lies ahead. If you want to succeed using this strategy, learn as much as you can about it from veteran investors and traders. There’s a good chance of getting significant profits if things go well with the Bitcoin market. 

Still, potential losses could be devastating when the cryptocurrency’s price suffers a massive drop. From the outset, you may have to assess if you can afford to lose large amounts of money in such a highly volatile market. It matters to consult with an expert first or, better yet, get a crypto guru to help you assess whether day trading is worth the risk – or if you’re better off using a different trading strategy.

2. Choose the right platform

Crucial to becoming a successful day trader is knowing which platform is best suited to a beginner like yourself. Not all crypto exchanges are ideal for day trading since speed and efficiency in the execution matter. 

Most platforms lack such characteristics because a majority of Bitcoin traders are all for the long game. Look for exchanges that offer not just user-friendly interfaces but also advanced trading and charting tools that help provide clear patterns of price fluctuations and trading volumes. 

If you want to cut the time it takes to find the best beginner-friendly platform, you may be able to find the best crypto exchange for day trading in a list recommended by Bitcoinist. Be sure to compare the pros and cons and, if you’re still unsure, ask for a second opinion from day traders within your network.

3. Take control of your trade volumes

The biggest mistake you will ever commit as a day trader is to allocate all your cash to this strategy. Considering how fast Bitcoin values change each day, high returns aren’t always guaranteed. You will have to consider buying Bitcoin in small increments. The only trade-off to this is that you may be slapped with higher fees. 

In case you’re opting for a higher trade volume, you can always place a stop-loss order on your trade. This reduces your exposure to risk if the Bitcoin market takes a nose-dive. With a stop-loss order, you can limit the amount of losses you can tolerate. Day trading requires keeping close attention to Bitcoin’s trajectory and current trends that should compel you to buy and sell rapidly.

Endnote

Day trading is for advanced cryptocurrency fans but that’s not to say beginners like yourself can try it out. You just have to make sure you’re fully prepared before entering the storm.