How To Trade Cryptocurrency For A Living

Key Takeaways

• Educate yourself on crypto trading and make sure to do your due diligence

• Develop a clear trading strategy with a focus on capital allocation and your own financial situation

• Execute trades and your overall trading strategy based on market conditions and signals, making adjustments when necessary

• Manage risk by using techniques such as stop-loss orders, diversifying the portfolio, and only trading with money that you can afford to lose

How To Day Trade Crypto For A Living

Day trading cryptocurrency for a living can be a rewarding venture, but the high potential for profitability also carries an increase in risk. Success when trading crypto requires dedication, skill, and knowledge of the market.

To successfully day trade crypto for a living, there are four main step that should be considered:

• 1

  Learning about cryptocurrency trading

• 2

  Developing a trading strategy

• 3

  Executing the trading strategy

• 4

  Managing risk.

Step 1: Learn about cryptocurrency trading

At its core, crypto trading involves speculating on future crypto price movements and exchanging one currency for another. Traders aim to capitalize on volatility and price differences. To trade profitably, comprehensive learning about crypto markets is a fundamental necessity.

You'll need to grasp how exchanges work. Most operate 24/7, enabling constant trading. Prices fluctuate rapidly, often widely, based on supply and demand. Exchanges act as intermediaries, facilitating trades and connecting buyers and sellers.

Major centralized exchanges include Coinbase, Binance, Gate and Kraken. You'll also encounter decentralized exchanges like Uniswap, Pancake Swap or 1inch. Unlike their centralized counterparts, a decentralized exchange (DEX) doesn’t involve an intermediary, a centralized body. You buy and sell directly from other buyers and sellers.

While DEXes allow you to avoid certain fees, they can be complicated to navigate and don’t provide the same protections as reputable centralized exchanges.

Step 2: Develop a trading strategy

Successful crypto trading requires a thoughtful strategy. These are the most important things to keep in mind:

• Begin by defining your goals. Are you seeking long-term growth or short-term profits? Determine the timeframe that suits your aims.

• Analyze your personality and skills to decide what type of trader you are. Will you be a day trade, swing trader, or position trader? Day trading involves closing all trades within a single day. Swing traders hold positions for days or weeks. Position traders take a long-term buy and hold approach. Choose the style that best fits you.

• Pick appropriate timeframes for opening and closing trades. Day traders work in 5 minute, 15 minute or hourly windows. Swing traders look at 4-hour or daily charts. Position traders prefer weekly or monthly timeframes. Select intervals that match your strategy.

• Incorporate smart risk management tools. Set stop losses to automatically exit losing trades. Use limit orders to take profits at specified prices. Diversify your portfolio to reduce risk. Effective risk mitigation is imperative.

Read about the reasons that make investing in crypto a smart decision in the article: Best Ways to Make Money In Crypto

Step 3: Execute your trading strategy

Once you have a solid trading strategy, it's time to put it into action.

• 1

  Open an account on one or more trusted crypto exchanges. Research various platforms and choose those that offer the coins you want at competitive fees.

• 2

  Fund your account by depositing fiat currency (i.e. traditional currencies like USD or EUR) or transferring crypto. Ensure you have enough capital to implement your plan. Start small if you're a beginner.

• 3

  Execute trades per your strategy. Use limit orders, market orders, or advanced order types. Closely monitor open positions and price movements. Make quick adjustments if the market shifts. Remain nimble.

• 4

  Pay close attention to your trades in real time. Act decisively to take profits or cut losses.

Don't let emotions cloud your judgment. Follow your plan meticulously. With practice, trade execution will become second nature. You'll gain confidence making deals on short timeframes. Consistent discipline is vital for trading success.

Step 4: Manage your risk

Building on the risk management principles discussed previously, day trading cryptocurrency for a living requires traders to manage their risk in order to reduce losses and maximize profits.

Some of the most common risk-management strategies involve:

• Stop-loss orders

• Diversifying your portfolio

• Trading only with money that you can afford to lose

By understanding the risks involved and having strategies in place to limit and manage them, you can increase your chances of success and minimize the chances of incurring large losses.

It is also important to remember that no matter how good your strategies are, there is always a risk of losses due to the volatile and unpredictable nature of the cryptocurrency market.

To learn more on risk management, read our article on 5 major risks of cryptocurrency trading.

Best crypto exchanges

1

9.4/10

Go to broker

Your capital is at risk.

Minimum deposit:

$1

Review

The Binance exchange is one of the largest cryptocurrency exchanges in the world with its headquarters in Hong Kong. According to the CoinMarketCap cryptocurrency portal, Binance holds the top spot in terms of aggregate indicators of the platform's daily turnover, the number of novices and active users, liquidity, and web traffic (ranking, queries, statistics in search engines, etc.). The exchange is also a cryptocurrency startup that has its own “native asset” used in the Binance ecosystem as the “basis gas” (payment internal unit). More about Binance Card

Pros/Cons

•low commissions due to liquidity and trading volumes.

•high platform performance;

•proprietary BNB Coin which allows Binance to reduce the commission size;

•a proprietary cold wallet guarantees the security of your crypto assets by storing them.

•complex verification procedure;

•the exchange is not licensed by a regulator;

•The platform can go offline without warning;

•there are complaints about the technical functionality of the platform;

•there is an intricate mechanism for calculating commissions and rewards (grid system Maker/Taker).

Study Review

2

9.2/10

Go to broker

Your capital is at risk.

Minimum deposit:

₮1

Review

The BitGet crypto exchange provides traders with the opportunity to trade in spot, futures, and cryptocurrency. Cryptocurrency is used exclusively as instruments at the exchange: BTC (₿), LTC (Ł) ETH (Ξ), USDT (₮) and others. Trades are carried out on the crypto exchange’s own platform, which is available as a web terminal and an application for mobile devices. BitGet's fees are lower than its competitors in the market, with maker fees of 0.02% and takers of 0.06%. The commission can also be paid with bonus funds that each BitGet client receives upon registration, verification, and a trading account replenishment. There are no fees for maintaining an account, but a commission is charged upon withdrawal, the amount of which depends on the cryptocurrency in which the withdrawal is made. For investors, BitGet offers its own service for copying trades, and it is available at the exchange and at an affiliate program. Novice traders can use demo accounts to hone their trading skills, but there are no educational materials on the website. The BitGet cryptocurrency exchange provides services on an international level and cooperates with traders from different countries.

Pros/Cons

•availability of demo accounts;

•convenient ways to contact the support service;

•a wide range of cryptocurrencies for account replenishment;

•service of copying trades for receiving passive income;

•ability to reduce commissions using credits earned in the bonus program;

•ability to engage in algorithmic trading;

•the exchange uses hot and cold cryptocurrency wallets to store client funds.

•Deposits and withdrawals in fiat currencies are not available.

•There are no educational materials for novice traders on the exchange website.

Study Review

Tips for building a successful cryptocurrency trading career

To achieve longevity and profitability as a crypto trader, there are certain best practices that have often proved invaluable:

• Emotional intelligence: Mastering your emotions is critical. Don't let fear or greed drive your actions. Make calm, rational decisions. Have patience and discipline to stick to your strategy.

• Technical analysis: Analyze price charts, indicators, patterns, volume, and more. Technical insights inform profitable entry and exit points. You can use techniques like support/resistance, moving averages, and Fibonacci retracements.

• Fundamental analysis: Keep up with crypto news, releases, regulations, and trends. Fundamental developments often catalyze price movements. Staying updated on factors impacting coin valuations can be beneficial.

• Keeping a trading journal: Record your market analyses, trades, strategies, and reflections. Review your journal to continually improve and learn from wins and losses. A journal reinforces good habits.

By cultivating these essential skills, you can maximize returns and progress toward a thriving career trading cryptocurrency full time. Patience and dedication to mastering both the technical and psychological aspects of trading are required.

Thinking about a career as a crypto trader? Read our in-depth guide on how to day trade for a living: a beginners guide.