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Published By Smart Securities & Commodities | Forex Brokers | 2025

Cryptocurrencies are increasingly popular trading instruments. Crypto investors and traders can choose from a wide range of trading methods and techniques. In this session, we will go over the fundamentals of day trading digital currencies and emphasize some of the most critical concerns while engaging in short-term trading.

Best Cryptocurrencies to Day Trade
Before we can explore the various approaches for day trading cryptos, we must first investigate the various cryptocurrency trading instruments and choose those with the best qualities for short-term day trading chances. There are several factors to consider during this choosing procedure. Some of the more crucial aspects to consider include daily volatility, average volume traded, market capitalization, and transaction fees.

Daily volatility is the average high-low range for a trading instrument. The higher the daily volatility, the more likely it is that the market will produce a movement large enough to pay our trading costs while also yielding a profit. Trading volume is the level of involvement in a trading instrument. The higher the trading volume, the easier it will be for us to execute deals at the desired level with little price slippage.

Market capitalization refers to the total market value of a single traded instrument. Many new cryptocurrency traders are familiar with market capitalization as it applies to stocks. The concept applies to cryptos as well. Cryptocurrencies with greater market capitalizations, like blue-chip stocks, are thought to be safer and secure. Bitcoin is the largest cryptocurrency by market capitalization.
Transaction costs can take many different forms. This includes commissions paid to your cryptocurrency broker, bid-ask spreads when buying or selling your digital coin, and additional execution charges like slippage.

When choosing a cryptocurrency to day trade, look for a broker with the lowest trading fees and the tightest bid-ask spreads. Although this is a good concept regardless of the timeframe, it is especially important for short-term traders.
Now that we’ve covered some of the traits that make a cryptocurrency appealing for day trading, let’s have a look at a few coins that meet these criteria and are among the best cryptocurrencies for day trading.

First and foremost, Bitcoin is at the top of the list because it includes all of these essential attributes. In addition, Ethereum is an excellent tool in this sense, making it ideal for crypto day traders. Beyond these two popular cryptos, we may include Binance Coin, Tether, Ripple, and Tron on the list.
Although these are not the only digital coins that work well with a day trading timeframe, they are the most obvious selections based on the key features discussed above.

Day Trading in Crypto: Discretionary vs Systematic
There are two main trade execution methods. The first is known as a discretionary-based strategy. The second method is generally referred to as a systematic strategy. A discretionary-based strategy means that the individual trader handles the majority, if not all, of the decision-making procedures. This includes trade selection, execution, and management.

A systematic approach is one in which most, if not all, decision-making processes are delegated to an algorithmic model or trading system. The trader is in charge of programming all of the rules into the algorithmic trading system, after which all trade-related procedures are executed by the algorithm in accordance with the rules defined inside it.
The topic of whether to approach bitcoin markets in a discretionary or systematic manner emerges frequently. This is not a simple question to answer. This is because the optimum technique is not universal and is greatly influenced by a trader’s talents, weaknesses, and personality attributes.

For example, there are certain types of traders who are more visual and hence excel in chart reading and pattern detection. These traders are more likely to employ a discretionary trading strategy.
On the other hand, there are traders who excel at data mining and quantitative modelling. This category of traders typically has a background in computer science or engineering, therefore, they are more likely to employ a systematic trading strategy.

As a result, each crypto trader must conduct an internal assessment of their unique characteristics in order to determine which style best suits them.
Each strategy has advantages and downsides, as do all market strategies. As a discretionary crypto day trader, your decision-making processes are quite flexible. While this freedom can be beneficial, it can also pose difficulties for some traders. All of this greater freedom can sometimes lead to analysis paralysis, which is extremely unhelpful.

A system-based crypto day trader is not involved in any of the decision-making processes associated with market execution. This can be quite beneficial from an emotional standpoint; nevertheless, leaving all trade-related considerations to an algorithm might backfire at times, especially when market conditions shift suddenly due to an unanticipated incident or black swan. During these circumstances, market choices may be better handled by humans rather than computers.

Crypto Day Trading Strategies
So, what are the greatest strategies to day trade cryptocurrency? Let’s look at some of the numerous methods for day trading cryptocurrency. The three basic market analysis categories are technical analysis, fundamental analysis, and sentiment analysis.
Technical analysis seeks to forecast future price movements based on the concept that prices tend to repeat themselves in a repeating manner, and that, while these recursive patterns may not appear to be identical, they are similar enough to be used as a predictor.

Some technical studies use indicators like the Relative Strength Index, Stochastics, and MACD. Additionally, technical analysts can employ support and resistance, as well as supply and demand levels. Horizontal lines that identify major price levels, diagonal lines such as trendlines and channels, and hidden levels such as Fibonacci-based ratios inside the price movement are some of the more common types of support and resistance indicators.
Fundamental analysis is the second type of market analysis that many financial market day traders undertake. Fundamental analysis is far more prevalent when it comes to market analysis of stocks, bonds, fiat currencies, and commodities. Fundamental analysis is less commonly applied by cryptocurrency day traders.

The price chart below shows Bitcoin, BTCUSD, over a 15-minute interval. The light blue band overlaid on the price is the Keltner channel, with our unique settings of a 20-period lookback and a 1X multiplier. The momentum indicator, which is visible in the lower window below the price action, has a default look-back value of 10.

At the extreme left end of the chart, we can see that there was a significant price move lower, which resulted in a period of consolidation, as seen by the overlapping price action. After some time, we can see that a strong bullish candle resembling a marubozu candlestick has closed above the upper Keltner channel. This would have alerted us to a potential shift in trend, which could result in future price hikes.

However, we would have waited for our signal before engaging in the trade. Remember that our purchase signal happens when a bullish candle is entirely above the top Keltner channel. In addition, we want to verify that the momentum indicator registers a value over zero simultaneously. This situation appeared on the second bar after the marubozu candle. So we would have placed a market order to purchase on the very next opening candle.

Once our long trade was complete, we would proceed to the stop-loss placement. The stop loss would be set below the entry price, which signals a recent swing bottom. The black dashed line indicates the most appropriate technical level for the stop loss.
From this point forward, we would actively monitor the price action for the exit signal to appear. Specifically, we would quit this trade either when the stoploss was reached or when a bearish candle closed below the lower Keltner channel. The price chart shows where the exit trigger happened. In this situation, the deal proved to be highly profitable.

Day trading cryptocurrency can be extremely profitable, but it is a fast-paced market in which traders must remain concentrated at all times. Short-term trading in any market is typically more difficult than intermediate or long-term trading horizons. This is especially true in the cryptocurrency markets, where most digital coins are far more volatile than other financial instruments.

Most traders who scalp or day trade cryptocurrency use some type of technical analysis, as market timing is crucial at lower time frequencies. Some of the more computer and software-aware traders use a systems-based approach, allowing them to capitalize on intraday price fluctuations without being physically linked to their computer monitors.
Regardless of the execution model or technique chosen, traders who day trade cryptocurrency must comprehend all of the risks involved and plan properly for the unexpected.

Posted by Waivio guest: @waivio_smartfx