On a multi-year timespan, simply holding bitcoin or some other cryptocurrencies has been a profitable strategy. The gains have largely outpaced that of other asset classes.

So when considering how to invest in Bitcoin, one strategy might be to just buy and hold. This can be especially true during crypto bull markets, when corrections tend to be short-lived. However, it’s also important for investors to remember that Bitcoin and other cryptocurrencies are highly speculative investments. Just because an investment has risen in the past, that doesn’t mean it will continue to do so.

For investors specifically interested in day trading, there are numerous strategies to try. Technical analysis might be among the most popular strategies, as entire communities of traders have sprung up around this school of thought.

One thing’s for sure: having a rule-based trading strategy of some kind is a must for short-term traders. Here are five strategies for day trading cryptocurrency.

1. Technical Analysis

Technical analysis (TA) involves using mathematical indicators and chart patterns to try and predict which way prices will move next. Some technical indicators are simply generated with a computer program like TradingView (RSI, for example), while others must be identified by humans looking at charts (the cup-and-handle pattern, for example).

One popular technical indicator is the relative strength index (RSI). This appears as a single line beneath a chart with a value between 0 and 100. The closer the RSI gets to 100, the more overbought conditions are thought to be, meaning prices could fall. The closer the RSI gets to 0, the more oversold conditions are thought to be, meaning prices could rise. This is one example of how someone day-trading cryptocurrency might use TA.

2. News and Sentiment Analysis

While it’s less popular among short-term traders, looking at headlines and overall market sentiment can also be used in Bitcoin day-trading. Sometimes, big news items can move crypto markets quickly.

For example, on the day this article was written in mid-April 2021, the nation of Turkey announced that it would ban Bitcoin and other cryptocurrencies as payment options within its borders. This sparked a global crypto market selloff, with Bitcoin falling about 3.2% initially and more than 10% later.

Additionally, there are websites that attempt to track the sentiment of the most popular cryptocurrencies by analyzing Twitter chatter. More positive tweets about a crypto equals more bullish sentiment, while more negative tweets equals more bearish sentiment—or so the theory goes.

3. Range Trading

Range trading assumes that prices tend to move within a certain range. Using this strategy involves looking at candlestick charts and support and resistance levels.

Traders might buy when prices reach a support level and sell when prices reach a resistance level. Or they might go short when prices hit resistance and close out the short when prices fall to support.

Pivot points are an example of range-bound trading. Calculating pivot points gives investors an idea as to what price levels are likely to see reversals in momentum.

4. Scalping

This strategy involves trying to profit from very small price moves over short periods. Often these are market inefficiencies like gaps in the bid-ask spread or gaps in liquidity.

Because they are aiming to take advantage of tiny price movements, “scalpers” often trade using leverage like margin or futures contracts to amplify their gains. This also amplifies potential losses, however, so managing risk is especially important with this strategy.

Scalpers might utilize strategies like volume heatmaps, order book analysis, or a range of technical indicators to determine entry and exit positions for their trades.

Due to the fast-paced and high-risk nature of scalping, it’s better suited for experienced traders.

5. Bot Trading

Bot trading, or high-frequency trading (HFT), involves the use of algorithms and trading bots that can be programmed to execute a large number of trades very quickly. Using this method requires knowledge of advanced trading strategies and programming.

While crypto trading bots conduct the trading itself, high-frequency traders don’t simply sit back and let a computer program do all of the work. Trading bots involve coming up with a specific strategy, developing the appropriate program to execute that strategy, and then constant monitoring, backtesting, and updating of the algorithms to keep up with changing market conditions.

There are some pre-made trading bots available for purchase from certain dealers. One thing to keep in mind when considering such a bot is this: if the bot is profitable and easy to use, why isn’t everyone using it, and why are its creators selling it rather than using it themselves?

efore jumping onto what are the best cryptocurrencies for day trading, having a fair idea as to what day trading is, always helps. Day trading is one of the most commonly used trading strategies used in both – the stock market as well as the cryptocurrency market. Those who indulge in day trading employ intraday strategies to earn profits from the volatile market. A lot of techniques are used to earn from intraday trading. Day trading is a strategy that revolves around the opening and closing positions several times during a single day. Yet another important feature of day trading is that the trader closes all positions at the end of a given day. Now that we have a clearer picture as to what exactly is day trading, let’s jump straight into what are the top 5 cryptocurrencies that are best for crypto day trading.

Tether (USDT)

Priced at $1, it is considered to be one of the best cryptocurrencies. The reasons are many. Today, Tether has a large trading volume. To be precise, Tether grabbed attention for having one of the highest 24-hour trading volumes. No wonder why this is so critical to the cryptocurrency market. Such high trading volume is also one of the reasons why more traders are getting inclined towards it. Though there has always been a firm belief that the price won’t fall below $1, it was some time back that the price did fell. However, this being a stable coin without many fluctuations is what grabs attention.

Ethereum (ETH)

After bitcoin, Ethereum is the most popular cryptocurrency in the world. Yet another reason why this is popular is that in addition to being a cryptocurrency, it is also a blockchain platform. With this platform, it is possible to create new tokens and also develop decentralized applications. As far as day traders are considered, a good amount of volatility is what provides for a great opportunity to profit, and that too within a short span of time. Now that Ethereum is listed on most of the exchanges, it is quite easy to trade in the same. It is priced at $3850.

Binance Coin (BNB)

It was just a few years back that one of the most reputed exchanges released their own cryptocurrency – Binance coin. When traders saw a reputed exchange releasing their own cryptocurrency, the trust came in naturally. The reason why BNB is chosen by day traders is because of its growing demand. Priced at $560, this is an ideal currency to start with day trading.

Tron (TRX)

Tron has grabbed the attention of everyone across the globe for the developments it is associated with. This, in combination with high volatility, makes it one of the most favorable cryptocurrencies for day trading. Tron was initially created as a platform to clear all borders on the Web. Also, for every content that is exchanged, there is a reward. Since this platform has a valuable idea, Tron as a cryptocurrency is growing rapidly.

EOS

The price of this cryptocurrency has reached heights multiple times. This throws light on the high level of volatility. Hence, making profits because of this volatility is worth a mention. With active team support available in most of the exchanges across the world, this is yet another feather in the cap.