Wednesday, July 24, 2024

5 Things You Should Know About Day Trading Cryptocurrencies

Day trading is the practice of trading some sort of financial product or asset on an exchange over a short period of time, from a few hours to just a few seconds. It takes its name from the practice of buying an asset and selling it before the end of the day. The idea is to make a quick profit on the transaction by buying the asset right before it goes up and selling it before it has a chance to go down.

When talking about traditional day trading on a traditional exchange like the stock market, these profits are usually relatively small. When you talk about day trading in a market as fast-paced and volatile as the cryptocurrency market, the profits can be huge within a very small window. This is part of the allure of day trading cryptocurrency. Here are 5 more things you should know about day trading cryptocurrency.

1. It Can Be Rewarding But Also Risky

As mentioned above, there is the potential to make huge profits literally in seconds when day trading cryptocurrency. People have gotten incredibly rich day trading the top cryptocurrencies.  That is obviously very appealing. In 2017, Bitcoin started the year at $830 and rose to over $19,000 by December. One of its top competitors, Ethereum went from $10 to $715 that same year. Day traders were able to take advantage of these incredible uphill climbs and make a killing. 

On the flip side, there is also the chance to lose an incredible amount of money day trading cryptocurrency. While big daily gains do happen, so do big daily losses. Bitcoin has dropped 50% in a single day.  And do you know the price of bitcoin one year after that all-time high of almost $20,000? That next December, the price of bitcoin was around $3,100. That is the risk and reward of day trading cryptocurrency. 

2. The Crypto Market is 24/7/365

If you can handle the risk because of the possible reward, the next thing you need to know about is the time commitment it takes to day trade cryptocurrency. Since cryptocurrency is, by definition, a decentralized form of currency, the exchanges are all around the world and operate around the clock so you can always access somewhere to trade. This is good because to be a successful day trader, you need a lot of practice. 

Although day trading is ideally done in short bursts, the time commitment is not short. You need to do research and spend time watching how the markets and specific assets operate before you jump in. In addition to lower stakes trading, you can find at any time to get started.  Some places even allow you to execute simulated trades before you deposit real money. 

3. You’ll Want to Pick a Good Exchange Platform

Once you are ready to start trading you will want to pick a good exchange platform. There are two main types of trading platforms: centralized exchanges and decentralized exchanges. The decentralized versions, much like many cryptocurrencies, are not run by a company but by a network of interconnected computers. This is safe and anonymous but there is no centralized control. This is for more advanced traders. 

Centralized exchanges are run by companies that offer a platform for users to trade. The popular exchanges will have an active trading community with a high volume of trades and offer liquidity. These are the best platforms for beginner and mid-level day traders. Some of the most popular platforms include Kraken, Coinbase, Binance, Gemini, Bitfinex, and Poloniex among others. 

4. There are Many Different Strategies

The basic strategy for day trading anything is to buy an asset at one price and sell it off when it goes up a short time later. This sounds great in theory but there is actually a lot of strategy needed to effectively do this. You may be able to have success just doing some research and picking cryptocurrencies based on that but such a process is a little too much like throwing darts with a blindfold. Sure, you’ll hit a bullseye occasionally but mostly your wall will just end up with a lot of holes. 

The strategies you implement can vary depending on your risk tolerance, your comfort-level trading and your ability to use more complex systems and tools. Many of the most successful strategies involve using a chart like the Money Flow Index (MFI) that uses price and volume to measure buying and selling pressure. Reading and understanding this can take some practice but can help you pick the right cryptocurrencies to trade. Cove markets has a useful guide to day trading strategies if you want to go deeper.

5. Security is Improving But is Mainly on You

Some high profile security breaches on cryptocurrency exchange platforms have occurred over the years, but security around day trading is improving. The fact remains, though, that because this is a completely digital endeavor, it will always entice hackers looking to steal a quick buck. Some exchanges do insure your digital wallet on their platform, but they will only payout if they are at fault. If a hacker gets access through your personal computer, you are out of luck. 

You could switch to a decentralized platform which, although much harder to use, is also much harder to hack. The best way to keep yourself safe while day trading is to follow standard online security best practices. You want to keep your computer security systems up to date using the best online privacy tools, not allow many people access to your computer, and never trade on public or shared computers. Taking large sums of money out of your digital wallet when day trading is also always a good idea.


Day trading has been around for a long time now but day trading cryptocurrency is a fairly new phenomenon. Along with the great potential for gain comes a lot of risk.  If you pick the right strategies and platforms, invest the time into research and practice, and take steps to stay secure, it can be a very lucrative endeavor.


  • Meet Amanda! She is an editor and writer extraordinaire with a passion for sharing information that helps people and communities to better themselves in some way.  As you may be able to tell by her work on Plunged in Debt, she loves keeping up with celebrities and, more importantly, what they are doing with their wealth. She has written for a number of other online publications and you can also catch her on our sibling sites: Saving Advice, Budget and the Bees, and Our Debt Free Family. In addition to writing online, she also freelances for local newspapers in her hometown of Charlotte, NC.

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