There is a clear distinction when we talk about investing in bitcoin for the short term and for the long term.
When we talk about long-term investing, we mean buy bitcoin and keep it for a long period of time (also known as HODLing).
On the other hand, day trading is a completely different matter. It is a fast strategy in which all the transactions of an investor are carried out on the same day.
What is intraday trading:
Investors who use this strategy make all their transactions during the same day, thus avoiding keeping any kind of open position (assets still in the form of cryptocurrency) before going to sleep.
To do so, they will go to a cryptocurrency exchange platform, do the necessary research for that day, and start buying assets.
The assets that these investors end up buying will depend on their forecasts and the investment strategy that they use From there, they will see where the market for an asset is headed and buy or sell accordingly.
Due to the volatility of most cryptocurrencies, this will allow you to make small but significant profits from each transaction.
Intraday investment strategies:
Although day trading is already a strategy in itself, it also involves various sub-strategies or techniques. These are common ways of choosing which asset to invest in, which we will look at below:
This strategy involves day-trading investors looking for assets that are experiencing an uptrend.
As the value of an asset goes higher and higher, these investors will wait for a flashback (a sudden drop in price) in its value, when this happens, they will use that flashback as an entry point.
If this strategy is done correctly, the value of the asset will continue to trend up after the retracement, thus presenting the day trader with an opportunity to make a profit.
Follow the dynamic:
This means buying what is going up. In this case, you are basically looking for assets that are already experiencing an uptrend to jump on that bandwagon.
Investors will often use large price swings or consistent earnings as entry indicators.
Day traders who practice the scalping they depend on many small price fluctuations that add up to a significant final profit.
This means that they must invest their money as quickly as possible and realize any profit they can make.
These are some of the most popular investment methods, although there are many more. If these methods do not work for you, there are many other options that you can find in the forums, where you will find information on what other investors have been doing for a long time.
The importance of minimizing risk:
It goes without saying that day trading bitcoin involves a lot of risk. It’s extremely technical, so you need to be methodical with your investment style to make big profits. This is why experience is a key factor when it comes to making a profit.
Other than that, day trading is a full-time, work-from-home job that will take a long time if you’re serious about it. If you want to earn significant profits, you’ll need to be on the lookout for multiple windows at the same time, and look for profit opportunities everywhere.
When you find those opportunities, you’ll also need to act quickly before they disappear. That means that as a day trader, you will need to stay very vigilant and focused.
Recommendations when investing your money:
Keep in mind that the money you spend day trading crypto should be money you can afford to lose, but if you’re just starting out with this kind of strategy, these tips might help you stay on track amidst the madness:
Keep in mind that the time spent investigating will have a proportional reflection on the amount of money you earn. In fact, there’s a good chance you’ll end up losing money if you don’t do enough research.
Find out what’s cooking in the world of cryptocurrencies. Researching also includes using news, online sources, forums, and all kinds of media. You must be able to technically analyze all the data to identify any patterns from your research.
Have a goal in mind:
The primary purpose of most day traders is to get in and out of a trade as quickly as possible.
You can get greedy when the price goes up, or panic when it goes down, so make sure you have a goal in mind before you buy, and stick to it at all times.
You also have to be careful with the FOMO syndrome (from the English, fear of missing out), which means fear of missing out. If you have made a good trade, but the coin ends up going up in price, remember that FOMO is a demon that impairs good judgment and leads to losing money in the long run.
In other words, it’s okay to take advantage of volatility, but stick to your strategy and don’t get carried away.
Choose your platform carefully:
Each of them has its own commissions; they include commissions of the platform, of each transaction, and deposit/withdrawal of funds.
If you are making several transactions, the various commissions will also accumulate. Take note of how much you are paying so that later the commissions do not catch you by surprise.
Practice makes perfect:
It is logical to assume that this type of investment has a long learning curve. It’s important to remember that it doesn’t matter if you make mistakes as long as you learn from them.
Start by investing small amounts and then gradually increase them. This is the best way to improve your skills and knowledge. This means that there will be times when you will have to accept the losses and resign yourself.
Trying to fight those losses could do you more harm in the long run. Not everything will always go according to your plans. This you will have to accept.
The investment circus
Day trading bitcoin is a risky business, but it also gives you that thrill of competing against investors and market professionals who trade very frequently.
A main characteristic of investing “intraday” in cryptocurrencies is its ups and downs. The basses are incredibly low, and the highs, meanwhile, incredibly loud.
At the end of the day, day trading is a physical and mental game, and if playing the game is too difficult for you, there’s nothing wrong with considering a different strategy.
Continue reading: How to invest in the stock market online from home like a professional