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5 Popular Crypto Day Trading Strategies

Crypto day trading strategies provide the same structure and guidance that have been used over the years across financial markets. Given the volatile nature of so many of today's digital assets, day trading has quickly become a popular way to take advantage of price swings on an intraday basis.

Before we get into the top strategies that any novice trader can try, let's first define Day Trading.

What is day trading?


  • Crypto day trading is the practice of buying and selling cryptocurrencies like Bitcoin in a short time frame, typically a day.
  • The goal is to earn a small profit (between 0.5% to 5%) on each trade and then compound those gains over time.
  • Day traders heavily rely on the market's volatility to earn their profits.
  • There are numerous day trading strategies that can involve different tools: media, technical indicators or bots.

Scalping

Scalping is one of the most popular crypto day trading strategies to make profit in the short term. Scalping requires you to make small, but frequent trades that typically last anywhere from a few seconds to a few minutes. Repeating the process, traders can take advantage of small price changes in markets.

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At the same time, you can implement this strategy to leverage both the top and bottom markets. The only limit of this strategy will be your reaction time and the latency of the platform you are using. After all, crypto scalping doesn’t require any technical knowledge and can be used in a wide range of market conditions.

High-Frequency Trading

Next, high-frequency trading is a crypto day trading strategy that uses algorithms and bots to execute trades. It's essentially automated scalping. The bots can execute very frequent small trades for profit faster than a human could manually. It can take time to find your ideal strategy, but luckily Quadency makes it easy to configure bots for high-frequency trading.

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High-frequency trading will give you the edge you need to catch shorter price movements.

Range Trading

Range trading is a great crypto day trading strategy that has the potential for profit while mitigating the downside when markets move sideways. Range trading basicaly works by setting a range between support and resistance levels.

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The key in this strategy is to buy after the price of an asset hits the support level and sell when the price hits the resistance line. This technique has some limits as the asset will inevitably break out from the range. However, using Quadency's Grid Trader bot allows you to configure a custom action when the asset breaks out.

Technical Analysis

Technical indicators are a prominent tool in crypto day trading strategies. Typically, indicator strategies make trades based on secondary sources of information such as MACD (Moving Average Convergence Divergence), RSI (Relative Strength Index), Bollinger Bands, and much more.
Technical Indicators will help you avoid day trading at a risky price points while potentially providing new opportunities. Of course, you can also sign up for market signals based on indicators recommended by other traders on TradingView.

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With technical indicators, you can trade manually within our multi-exchange trading interface. You can also run an automated trading bot like MACD or Bollinger Bands and take advantage of both technical indicators and high-frequency trading.


Sentiment-Based Trading

Sentiment-based trading is another popular day trading strategy, using data sourced from public information like news sources, social media media outlets, or even Google search trends to find entry or exit points for their trades.

For example, Elon Musk tweets about Dogecoin. You could set up notifications for the moment that type of tweet goes live, with the potential of getting ahead of the game. The quicker you can receive and act on new information, the higher your potential to make trade decisions ahead of everyone else.

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These types of notifications and even automation of strategies are coming soon to Quadency, so please check back often for updates!

Conclusion

As you can see there are many strategies out there for day trading cryptos. All of them work differently, so you just need to find the one that works best for your goals.
Scalping allows a fast way to create profit as long as you stay updated. Range trading permits profit while being safe with a stop loss in place. High-frequency trading helps you to make a profit with higher volumes. Technical indicators provide information to include a technical analysis perspective. Finally, sentiment-based trading will help you stay informed and trade using trends.

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Disclaimer: contents of this article are for general market education and commentary and are not intended to serve as financial, investment, or any other type of advice.