February 23, 2020

Bitcoin Day Trading Guide

Bitcoin is one of the most lucrative investments that you could have made in the last 10 years. Reaching a peak of $20,000 at the end of 2017, you would have made a staggering +1,900% return on your investment by just investing in Bitcoin at the start of the year.

Bitcoin Day Trading

Bitcoin Day Trading Guide

Bitcoin is one of the most lucrative investments that you could have made in the last 10 years. Reaching a peak of $20,000 at the end of 2017, you would have made a staggering +1,900% return on your investment by just investing in Bitcoin at the start of the year. This return absolutely dwarfs the returns that are seen in more traditional asset classes such as stocks and bonds.

The primary reason that it is possible to make such monumental gains in Bitcoin is because of its volatility. The volatility of an asset might be seen by some as a negative, as it is perceived as being ‘riskier’. However, from the perspective of a trader, volatility  provides the optimal market conditions in which one can generate returns. This is because, in a volatile market, traders can make money if the market goes up or down. This can be contrasted to a market that experiences little volatility, and simply trades sideways. It is because of Bitcoin’s volatility that more and more people are deciding to day trade this cryptocurrency. Here is a short Bitcoin Day Trading Guide that will allow you to get the most out of trading in Bitcoin.

What is Day Trading?

Day trading is a trading strategy that involves buying and selling a financial instrument multiple times throughout the day. With day trading, it is often common to see traders use a considerable amount of leverage on their trades to take advantage of small movements in price of a given asset. For example, a 2x leveraged buy position can be placed for Bitcoin, and even a small increase in the price of Bitcoin will double your return. The key to day trading cryptocurrencies such as Bitcoin is to place multiple trades throughout the day (some traders will place well over 25+ trades in one day. The idea behind this is to accumulate as many small ‘wins’ (i.e. execute profitable trades) as possible, instead of going for one big winner. That one big winner might never come, whereas, it is much more likely that there will be many small pockets of opportunity that traders can capitalize on whilst day trading Bitcoin.

Having a Strategy

One of the most important aspects for Bitcoin day trading is having an actual strategy. The advantages of this are obvious. Firstly, a trading strategy reduces the risk of trading on emotion. For example, the market could be rising, and your strategy dictated that you sell at X price, but instead, you want to ride your gains all the way to the top. The risk with not following your trading strategy and selling at price X is that a sudden market reversal could completely wipe out your hard-earned gains. This is exactly what happened to a lot of traders on Bitcoin’s run to $20,000. As is often the case, a lot of traders got greedy trying to call the top, and ultimately failed to do so. A trading strategy prevents a scenario such as this from occurring, because if followed carefully, your trades will be based on factors that have already been thought out, instead of spur of the moment decisions.There are a number of strategies that can be employed whilst day trading. For example, a momentum trading strategy can be implemented.

Momentum trading involves taking short-term positions in assets that are rising, and then selling as soon as they start to reverse. In other words, a trader that uses momentum trading should be The overall goal of momentum trading is to ride the wave of one asset as it goes up, and then jump to another asset before the first wave crashes. The key to implementing a momentum trading strategy whilst, for example, Bitcoin day trading is to be able to spot a catalyst that will cause the price of Bitcoin to break out or break down. This catalyst could be breaking news that results in immediate price action upwards. This would be a great opportunity for a day trader to place an early buy order, and then sell at an appropriate point where a certain amount of profit has been made.There are numerous other strategies that can employed, such as day trading based on technical indictors e.g. bollinger bands and Relative Strength Index (RSI).


The emergence of the crypto market provides a fantastic opportunity for day traders that are looking to explore other non-traditional asset classes. The sheer volatility that the crypto market experiences makes it an ideal environment for traders to generate substantial returns.

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