Day trading cryptocurrency can be profitable, but it takes skill and knowledge. This article walks through the basics of day trading cryptocurrency.
Cryptocurrency has been growing rapidly over the past couple of years.
With the recent surge in popularity, there are now thousands of crypto traders out there trying to profit off of the market.
But what exactly is cryptocurrency trading? And how do you invest in it?
I’ll show you everything you need to know about Day Trading Cryptocurrencies.
What Is Day Trading Cryptocurrency?
Cryptocurrency is digital money that uses cryptography to secure transactions.
It was created in 2008 by an anonymous developer who called himself Satoshi Nakamoto.
He released Bitcoin, the world’s first decentralized digital currency. Since then, hundreds of cryptocurrencies have emerged.
Each one offers its own unique set of features, such as transaction speed, security, and anonymity.
Some are very similar to traditional currencies, while others are completely different. For example, Litecoin is based on Bitcoin, but it has some differences.
So, what makes a cryptocurrency a good investment?
There are two main factors that determine whether a cryptocurrency is worth investing in.
The first is the demand for the coin. The second is the supply of the coin.
Demand
When a cryptocurrency becomes popular, the demand for it usually grows. This means that people want to use it instead of fiat currency.
As soon as they see that the demand is increasing, investors begin buying up coins in anticipation of their value going up.
Supply
On the flip side, when a cryptocurrency loses value, the demand decreases. This causes the price to drop.
Investors sell their coins at these low prices, taking and may take some losses of their investment.
The higher the demand, the lower the supply, and vice versa.
But why do we call them “daytraders.” Daytraders typically hold their investments for a day or even a few hours. They try to buy low and sell high.
Because of this, most cryptocurrencies are volatile. That means that they fluctuate significantly in price over short periods of time.
However, this volatility is what attracts many investors who try to profit from these frequent price swings.
Why Do People Buy Cryptocurrency?
People buy cryptocurrencies for several reasons. Some people believe that it could replace fiat currency.
Others think it could become a safe haven during times of economic turmoil.
Still, others believe that it could become a store of wealth.
Regardless of the reason, there are still plenty of people who are interested in investing in cryptocurrency.
How Can You Invest In Cryptocurrency?
Now that you understand what cryptocurrency is, let’s talk about how you can actually invest in it.
To start, you’ll need to find a reliable exchange where you can purchase your coins.
There are many exchanges available online. Some charge fees to trade, while others don’t.
Before choosing which exchange to use, check each one’s reputation. Look for reviews and feedback from customers.
Once you’ve chosen an exchange, you’ll need to create an account. Make sure to choose a strong password that contains numbers, letters, and special characters.
After creating your account, you’ll need to fund it using a bank transfer or credit card. Next, you’ll need to deposit funds into your account.
Deposits take between 24 hours and a week to process. Depending on the exchange, deposits may require additional verification. You should receive an email once your deposit has been processed.
At this point, you’re ready to start trading.
Trading involves purchasing a certain amount of a cryptocurrency, holding onto it for a period of time, and selling it again at a later date.
Most exchanges offer margin trading so you can borrow money against your holdings.
If you have enough capital, you can leverage your position by borrowing more than you own.
Leverage allows you to make larger trades but with more risk. It also increases your potential profit.
In order to do this, you’ll need to open a margin account.
Margin accounts are similar to futures contracts. Instead of owning the actual asset, you place a bet on its future performance.
For example, if you’re betting on Bitcoin’s price rising, you’ll be using your coin as collateral on a loan from the exchange. If the price goes up you can use your profits to pay off the loan.
When the price rises, you get paid back. When the price falls, you may lose your investment.
Cryptocurrencies come with risks just like any other financial instrument.
