Day Trading creates possibilities for all of those who put in the time and effort to recognize the market in which they have been trading. It’s no different for cryptocurrencies. Far more so, as this emerging industry has created huge opportunities for day-to-day traders to benefit from price disparities and movements that do not occur in other, more developed markets.
But, What is Day Trading? Day trading is the strategy of speculation on financial goods and resources. Day traders also buy and sell any number of financial instruments within a few hours or less, and benefit from speculation on short-term price fluctuations. Day traders remain visible with what drives markets in the short term and can position hundreds of orders in a single day to make a profit in the long run.
Now, we have got a brief understanding of Day Trading. Let’s understand the concept of cryptocurrency.
Meaning of Cryptocurrency:
A cryptocurrency is a modern form of a network-based digital asset that is scattered across a large number of computers. This decentralized framework enables them to exist outside the control of governments and centralized authority.
The term “Cryptocurrency” is extracted from the encryption methodologies used to protect the network. Blockchains, which have been managerial methods for helping to ensure the integrity of transactional data, are a crucial element of many cryptocurrencies.
For the past decade, traders have been focusing on the few distinct markets to reap the benefits of profit-making prospects. During the last few years, cryptocurrencies have been seen as a growing industry with greater liquidity and trading opportunities.
Variety of Cryptocurrency
Bitcoin was the first blockchain-based cryptocurrency. It was launched by “Satoshi Nakamoto” an individual or group known by the pseudonym in the year of 2009. The virtual currency has risen not only in popularity but also in technology. Bitcoin is developed as a type of decentralized digital currency that can be used around the globe beyond the fear of censorship resistance. Bitcoin has a set supply of 21 million which can be mined. It remained the largest cryptocurrency on the market, with a value of close to $200 billion. About half of the total trading volume is in bitcoin, with billions of dollars in regular turnover.
A few of the competing cryptocurrencies generated by Bitcoin’s success, known as “altcoins,” are including Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, and EOS. Today, the overall value of all existing cryptocurrencies is around $214 billion — Bitcoin currently accounts for more than 68% of the combined worth of the cryptocurrencies.
Day trading using cryptocurrency
Traders are seeking cryptocurrencies with high liquidity and trading volumes. Higher volume means more of the cryptocurrency is rising in value. With a lot of action, traders find it easier to buy and sell their assets, but they mostly make money out of crypto-volatility. This includes making trades by projecting how quickly the price will fall or rise.
Trading with cryptocurrency uses strategies like,
- Range Trading: Based on the estimation of two different price levels of a cryptocurrency, range traders make trading decisions. The “scope” of a high/low pattern predicts it.
- Scalping: Reaping the benefits of the “Small Price Movement” Day traders who adopt this strategy search for liquidity discrepancies and sometimes the gap between the price of the bid and the price of the offer.
Disclaimer: There are potential risks relating to trading and investing and you should not trade with money that you cannot afford to lose however, for those that educate themselves and adopt appropriate risk management strategies, the potential update can be significant. Please note that all opinions, research, analysis, and other information are provided as general market commentary and not as specific investment advice.
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