Day Trading Cryptocurrency – Making $500 Everyday With Consistency (2024)

Would you like to learn day trading cryptocurrency and make $500 a day trading cryptocurrency? We often hear about all the money you can make by day trading stocks. But what about crypto day trading? In today’s lesson, you’ll learn how to day trade cryptousing our favorite crypto analysis tools.

Our team at Trading Strategy Guides is lucky to have over 50 years of combined day trading experience. We’re going to share with you what it takes to day trade for a living, and hopefully, by the end of this trading guide, you’ll know if you have what it takes to succeed in this business.

First and foremost, when day trading, it’s essential to have a structured approach and a rule-based strategy. The same as swing trading or positional trading you are not going to trade every day, and you’re not going to make money every day. So, you need a day trading cryptocurrency strategy to protect your balance.

The high volatility nature of Bitcoin and other cryptocurrencies has made the crypto market like a roller-coaster. This is the perfect environment for day trading because during the day you’ll have enough up and down swings to make a decent profit.

Moving forward, we’re going to teach you what you need to learn how to day trade cryptocurrency and we’re going to share some out-of-the-box rule-based day trading strategies.

Understanding How To Day Trade Crypto: A Beginner’s Primer

The crypto market’s unique characteristics require you to have a firm understanding of how it works. Otherwise, your experience can be like skydiving without a parachute.

The good news is that we’re going to provide you with everything you need to survive crypto day trading.

See Also: Chainlink Staking For Beginners

Day trading in the cryptocurrency market can be a very lucrative business because of the high volatility. Since the crypto market is a relatively new asset class, it has led to significant price swings.

Before day trading Bitcoin or any other altcoins, it’s prudent to wait until we have a high reading of volatility. The good news is that even when we have a low reading of volatility relative to other asset classes, this volatility is still high enough that you can generate a modest profit on your trades.

Crypto day trading also requires the right timing and good liquidity to make precise entries.

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A lot of the cryptocurrencies and crypto exchanges are very illiquid and don’t have the liquidity to offer instant execution that you might find when trading Forex currencies

Before day trading Bitcoin or any other altcoins, it’s also important to check how liquid the cryptocurrency you wish to trade is. You can do so by simply verifying the 24-hour volume of the crypto trade.

CoinMarketCap is a good free resource to read and gauge the market volume of any particular coin.

Note* Always remember that not having enough liquidity could lead to substantial slippage and bigger losses.

As previously stated, crypto day trading doesn’t require trading every single day. We only like day trading cryptocurrencies when all the conditions align in our favor. In this case, avoid trading on weekends and limit trading only on the highest-volume days.

Put your seatbelt on because next, we’re going to reveal how professional traders are day trading cryptocurrencies.

Building a Winning Strategy for Day Trading Cryptocurrency

The idea behind crypto day trading is to look for trading opportunities that offer you the potential to make a quick profit. If day trading suits your personality, let’s dive in and get through a step-by-step guide on how to day trade cryptocurrency.

Now, before we go any further, we always recommend taking a piece of paper and a pen and noting down the rules of this scalping strategy.

In this article, we’re going to look at the ‘buy’ side.

Step #1: Choose High Volatility/Liquidity Coins

As previously discussed, the number one choice you need to make is to pick coins that have high volatility and high liquidity. If you’re not day trading Bitcoin, which is the most liquid coin out there, and you like the altcoins, try to pick those coins that have good liquidity and volatility.

There are more than 1600 coins on the market and growing. By following only the top cryptocurrencies, you’ll reduce your area of selection.

Day trading smaller cryptocurrencies can also be a very lucrative business, but there are higher risks. Remember, crypto prices can crash just as fast as they have risen.

Moving forward, you’re going to learn how you can make money on crypto day trading.

Step #2: Apply the Money Flow Index (MFI) Indicator on the 5-Minute Chart

This specific day trading strategy uses one simple technical indicator, namely the Money Flow Index. We use this indicator to track the activity of smart money and to gauge when the institutions are buying and selling cryptocurrencies.

The preferred settings for the MFI indicator are 3 periods.

We’re also going to alter the default buying and selling levels from 80 to 100 and respectively from 20 to 0.

How to use the IMF indicator will be outlined during the next step.

See below:

Step #3: Wait for the MFI to reach the 100 level

An MFI reading of 100 shows the presence of the big sharks stepping into the markets. When buying, smart money can’t hide their footsteps. They inevitably leave tracks of their activity in the market and we can read that activity through the MFI indicator.

Technical indicators aren’t always right, so to fine-tune our day trading strategy, we’ve added a few more conditions. Namely, during the current day, we need to skip the first two MFI readings of 100 and study the crypto price reaction.

The price needs to hold up during the first and second 100 MFI readings.

If the price drops after the first two MFI 100 readings, then this suggests that most likely we’re going to have a down day.

Let’s now determine the appropriate place to go buy Bitcoin and what are the technical conditions that need to be satisfied.

See below:

Step #4: Buy if MFI = 100 if subsequent candle is bullish

We can now wait for the third MFI reading above 100. It doesn’t necessarily have to be the third MFI = 100 readings, you can take every other MFI = 100 reading. If your time doesn’t allow you to catch the third 100 reading on the MFI indicator, you can simply pick the next one as long as all the other technical conditions are satisfied.

Next, we also need the candlestick when we got the MFI = 100 reading to be a bullish candle. The close of this candle needs to be near the upper end, giving us a candle with very small wicks.

This brings us to the next important thing that we need to establish when day trading cryptocurrency, which is where to place our protective stop loss and where to take profits.

See below:

Step #5: Place Stop Loss below low of the day. Take Profit within first hour.

The obvious place to hide your protective stop loss is below the low of the day. A break below it will signal a shift in the market sentiment, and it’s best to get out of the trade. This can also signal a reversal day.

We’re more flexible when it comes to our exit strategy. However, the only rule you need to abide by is to take profits during the first 60 minutes or the first hour after your trade got triggered. Holding the trade longer than one hour will result in a lower success rate. At least that’s what our backtested results showed us.

Conclusion – Crypto Day Trading

If you took the time to read the whole-day trading crypto guide, then you should be able to buy and sell Bitcoin and adults and make some daily profits. If you are interested in learning how to day trade cryptocurrency, be sure to equip yourself with enough information before diving into the market.

Crypto day trading can be a great way to grow your crypto portfolio and it’s a very lucrative alternative to the holding mentality that it’s crippling the crypto community.

Making a living day trading cryptocurrency can be a lot easier due to the high volatility nature of the crypto market. High volatility suits day trading very well, so you have the right environment to succeed. You may also be interested in reading our guide on the Best Cryptocurrencies Investments for 2019.

Thank you for reading!

If you liked this check out our article on How to Trade Bitcoin ETFs

Feel free to leave any comments below, we do read them all and will respond.

Day Trade Crypto Video

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