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How to Day Trade Crypto? Simplest Day Trading Strategy Ever

|Updated February 8, 2023 03:52

The crypto market has spawned an army of day traders and long-term blockchain adherents in the recent past. The investors dreamed of retiring early and wealthy and capitalized on crazy market movements during the great crypto bull.

Different sources fed them a diet of news and analysis proclaiming crypto was headed to the moon. Well, the results were different.

It is, therefore, crucial to learn how to trade. This article will show you how to approach Bitcoin and crypto day trading, not as a blind believer in blockchain, but as a calculated pro speculator who knows exactly when to hold and when to fold.

First, You Need a Trading Plan

Before we get to the nuts and bolts of a day trading crypto strategy, let's give you a story for a clear perspective.

2018 will forever remain memorable due to the great crypto bull market. It went on to surpass the Dutch Tulip Mania of the 1630s. I was clueless about cryptos, preferring to trade stock indices or Gold CFDs.

But I had friends heavily invested in Bitcoin. Some told me I needed to get into Bitcoin ASAP. They were boasting how much they were making, and even quitting day jobs to focus solely on day trading cryptos. They often asked whether I've ever multiplied my returns on any investment in my trading career.

I kept my mouth shut. I like to keep my market maneuvers to myself. With the leverage that CFD trading offers, several hundred % on a single trade outcome (relative to the risk taken) is quite common.

At the time, Bitcoin was trading at $6k and growing. I told my buddies it would probably hit the psychological barrier of $10K and then collapse.

I waited – Bitcoin shot straight through $10K – making me look idiotic – and didn't stop till it hit $20K.

I could see guys getting rich all around me, and here I was, having traded markets for over 15 years, feeling like a pauper in comparison! I had to rethink my whole premise of how markets worked. Investing in cryptocurrencies seemed compelling.

  • Bitcoin has a limited supply

  • It can be used for global trade and is allowed anonymity

  • The Fed couldn't print it out of thin air.

  • It was giving back power to the people

  • It was going to be $100,000 or more, apparently

However, I resisted the urge. I hoped Bitcoin would return to gravity so I could load up. It wasn't long before things started going awry. Governments, JPMorgan's Jamie Dimon, and the Fed were concerned. Regulators started to ban exchanges, and the price started falling hard.

Fundamentally, you need a trading plan to trade the markets successfully, whether it's crypto, stock index, or Gold CFDs.

None of my friends had one, and it came back to bite them in the butt.

As a full-time trader, I'll make one thing clear – if you don't have an exit plan, you are doomed to fail in this business.


The bizarre idea of HODL

HODL is a funny acronym that stands for hold on for dear life. Surprised? I was too.

I was shocked that so-called serious investors were spouting this nonsense as a legitimate investment mantra. It goes to show how clueless most crypto investors were back then; I'm sorry to say.

Listen, If you're going to make money with Bitcoin, any other crypto, or day trading, you will need both an entry and exit plan.

Understand How to Read Charts

Traders use price charts to evaluate the market, predict trends, and develop trading techniques. Understanding how to read the charts helps you determine whether the market is going up, down, or sideways. It helps you determine which technique to use in each trend direction.

I've traded Bitcoin many times on the Mitrade platform for the past two years,

Now let's look at a typical chart of Bitcoin▼

Mitrade is a multi-asset trading broker that provides over 300 most popular global trading markets, such as currencies, commodities, cryptocurrencies, shares, indices, and more.

Open the chart now to analyze trades on Mitrade

Why Are Cryptos and Bitcoin Excellent for Day Trading?

Bitcoin and cryptocurrency trading is profitable if you understand how to analyze the market. You can reap massive profits in a short time.

Massive volatility follows consolidations. Price moves are dramatic, and declines are stunning.

I love the crypto market because short-term trading strategies, which I typically use on a daily chart, work like a charm on intraday.

If you want to learn more about day trading, read up on Jesse Livermore, a seasoned stock trader who first observed that different stocks and markets have different attributes nearly a hundred years ago. His observations are just as accurate today as they were then.


The Simplest Bitcoin Day Trading Strategy Ever

There's a perception that you need to watch multiple timeframes on multiple screens and access a constant stream of news to day trade successfully. I've made a career trading insanely simple patterns. I only employ a short-term simple moving average. Let's look at the simple day trading strategy.

Timeframes 2 hours

I am going to use a 2-hour chart. Anything lower has too much random noise, whilst anything higher is getting into the realms of swing trading, not day trading. The 2-hour chart in the crypto market works well for the system I will teach you.

Entry criteria

You need to look at only two things for a trading setup:

● A red candlestick bar

● A 10-bar simple moving average

The filtering process

You need to filter market noise to get an edge in trading. Avoiding lower probability setups and waiting for the higher probability ones is probably the most challenging part of day trading.

The filter system works as such:

      ● The most recently closed candle must be red

      ● It must be above the 10 bar SMA.

      ● Or, if below, it must touch the moving average. 

Order placing

If the most recently closed bar is red, and one of the other criteria is met we:

● Place a buy entry stop order 2 points above the high of the red bar.

● Place a protective sell stop at the value of the low of the red bar.

Canceling – a secondary filter

If the order isn't triggered by the next bar's close (in 2 hours), then cancel it. The setup has lost its effectiveness. And we look for a new opportunity.

Trailing stops

If the order is triggered, we prepare to protect our trading position. This means reducing the risk exposure. This is done using the trailing stop.

After the first candle is closed:

● Move the protective stop to the low of that bar.

● If the value is lower than the value of the original stop loss, do nothing.

● As each bar moves consecutively higher, move the stop to a new low

● Repeat until stopped out

Here are three images of this strategy in action.

Thoughts On Day Trading

You might be tempted to dismiss this system because it's simple. But I have made a career out of it.

Many traders choose to fill up their charts with all sorts of things; trend lines, support resistance levels, fib levels, MACD, RSI, etc. When you're day trading, you need to be able to think quickly. If you're processing too much data or metrics, it will confuse you.

Day trading is quite challenging because you can spend long hours at the pc, waiting for a setup to come along. This can lead to lapses in concentration. After sitting for hours, worrying about when a setup will form, and questioning whether you will make money that day, you can become prone to placing trades you shouldn't.

Also, crypto trading involves lots of emotions. You can make money in record time, leading to overconfidence or fear of the market. However, you can lose it as fast. You need a clear head when day trading cryptos.

If you win quickly, you can become greedy. If you lose money too fast, it can set you on a path of revenge trading.

Yep, day trading is hard – but that's why it rewards handsomely.

Treat Trading As Business With Mitrade

Successful trading is a business, not a hobby. Like any business, you have profits and expenses. How you manage them determines how far you go.

Day trading cryptos offer fantastic rewards, regardless of whether it goes to $100K or $20k. The volatility in this asset class is truly immense, a dream of every trader.

Do you know a business that doesn't require customers, selling, stock purchases, and marketing? Have you heard of a business that doesn't require a special business premise or license? Or one where you choose working hours?

There is only one such business in the world, Trading.

Here at Mitrade, we want to help you make your trading journey as enjoyable and profitable as it can be. Day trading cryptocurrencies is one of the ways. Happy Trading!

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1. What can you trade on Mitrade?

Mitrade allows you to trade CFDs on major cryptocurrencies such as Bitcoin, Ethereum, Ripple, Dogecoin, and SOL. It also gives you access to over 300 different US shares and currency pairs. The following are some of the most traded cryptos you can trade today: Bitcoin, Ethereum, Dogecoin, Ripple, Cardano, Solana, Polkadot, and more.

2. What is the Best Cryptocurrency for day trading?

Volatility is what day traders look for. Many altcoins and tokens have high volatility. However, I do not recommend day trading altcoins because you can rapidly blow away your position.

The forex market is the primary market for day traders because of the relatively low volatility. Cryptocurrencies are more volatile than forex, so I propose trading the mainstream crypto——Bitcoin. Bitcoin's market is fairly stable now and has considerable liquidity.

3. What are the best day trading strategies?

There are several tactics to explore for investors interested in day trading. One of the most effective strategies is news trading (fundamental analysis). The market is generally affected directly by news events, resulting in seismic price changes. A consolidation pattern can precede economic data releases followed by high volatility.

4. What are the risks of day trading cryptocurrency?

The majority of day traders lose money. The more you trade, the more you are likely to make a mistake. Another reason is the high fees. While the fee charged on each transaction is little, it can quickly add up when you trade daily.

Trade Popular Cryptos Access a user-friendly platform and app to enjoy easy, low-cost trading. Manage risk using limit and stop orders. Get Started illustration

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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