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Best cryptocurrencies for day trading

Thu, 03/26/2020 - 19:59

Day trading is a very popular strategy on the cryptocurrency market because of its high volatility. Many people earn tens of thousands of dollars with day trading. However, you can’t just enter the market on the spot. You have to analyse many factors and choose the best cryptocurrency for day trading. This brings us to the question: what assets are the most suitable for this strategy today?

What is day crypto trading?

First, you have to understand what trading means in general. Trading is about exchanging one item for another. Hence, cryptocurrency trading means exchanging assets. The aim is to sell an asset for a higher value than when it was bought.

Day trading is a strategy that includes opening and closing positions several times during a single day. The main feature of day trading is that the trader closes all positions at the end of a given day. A trader has to operate with many factors if he doesn’t want to lose the entire budget.

Cryptocurrency day trading might be one of the best ways to make a fast profit.

However, if you want to earn a lot, you have to close many positions during the day. One of the benefits of this strategy is that even long-term investors can use it to double their holdings.

Cryptocurrency selection factors for day trading

Day trading can’t always be profitable. Obviously, some of your deals will be lose. This happens because of different factors, like price manipulations, your own mistakes and the probability theory. That being said, you can increase your chances of making a good profit and minimize the risks. How? You have to analyse some factors that influence the market. They are:

  1. Volatility
  2. Volume
  3. Exchange platforms
  4. Liquidity
  5. Active team
  6. Recent news

Cryptocurrency traders review the statement of these factors every day. It is the only way to gain as much profit as possible. You will not be successful without deep analysis.

Volume

Trading volume is one of the most noteworthy cryptocurrency metrics. Firstly, it helps to identify the future trend of an asset. Moreover, there is a possibility to track its rate in the last 24 hours, 7 days or a whole month. Thus, a trader can figure out if value changes are an aberration or the norm. For instance, if an asset usually has little volume, heavy trading in the last 24 hours might indicate good support, so the cost may rise.

Generally, the most popular coins have the biggest volume. According to Coinmarketcap, Tether has the highest trading volume at around $54 billion every day. It’s followed by Bitcoin with $40 billion and Ethereum with $20 billion. The extended list often changes, because the gap in trading volume is very small. Litecoin, EOS, Bitcoin Cash, Tron and some other cryptocurrencies have a $3-5 billion trading volume every day.

Volatility

Volatility is an indicator that shows the dispersion of cryptocurrency values. The asset is volatile if its price changes strongly up and down during the day. For instance, gold or bonds are stable, because their values don’t change very often, while cryptocurrency is the most volatile asset in the world.

Crypto for day trading
Volatility explained

The main purpose of volatility is to show the risks for trading. Thus, a highly volatile asset is accompanied by high risks, but does give an opportunity to gain good profit. On the other hand, a cryptocurrency with low volatility guarantees earnings, but your profit will be very small.

Exchange

First, you have to check out the volume on different exchanges. Many platforms are geographically-focused. For instance, Kraken is a mostly European exchange, whereas Huobi is oriented for the Asian market. In order to have less difficulties with day trading, it’s better to choose platforms that operate globally, such as StormGain.

Moreover, cryptocurrencies for day trading must be recognized by reputable exchanges. If an asset is not listed on different platforms, you will have fewer opportunities to open and close many positions in a short period.

Liquidity

Liquidity is about the ability of an asset to be sold for fiat or other cryptocurrencies. This is very important for every trader, because it provides the opportunity to open and close every position in a short period.

Cryptocurrency for day trading
Liquidity features

Furthermore, assets with high liquidity are guaranteed to have fair prices. High trading activity means that sellers will establish competitive prices, so every market member will be in a favourable position. High liquidity also ensures that prices will not swing very often. Therefore, one order won’t change the whole market situation.

Active team

Before day trading, you have to be sure that the cryptocurrency’s team is always active. Check out for their updates and general activity, take a look at their interviews and comments, and listen to their predictions. An active team is a guarantee of fast and accurate information about the given cryptocurrency. A trader will thus have less risks while using a day trading strategy.

Latest news

The latest news is one of the most important things to consider for the market. You won’t find a successful trader who doesn’t follow the Breaking News, CNN, BBC and other broadcasts. Some types of news greatly influence the market and can change the trend for most cryptocurrencies. For day trading, it is very important to pick assets without bad news, because their prices will be more stable.

TOP cryptocurrencies for crypto day trading

Beginners often try day trading because this strategy doesn’t require many skills. That being said, it is crucial to pick the correct cryptocurrencies. If a trader chooses an asset with low liquidity or, for example, an inactive team, he won’t gain much from day trading. Here is a list of the best crypto for day trading.

Tether

Many traders consider USDT to be the best cryptocurrency for day trading for several reasons. First of all, it is a stable coin without rapid fluctuations. A trader can buy Tether without any fear that its price will go down in the next moment.

Today, Tether is important to cryptocurrency markets, because it has the highest 24-hour trading volume. That is why more and more traders are adding this asset to their portfolio.

Nonetheless, there is some bad news about Tether. Firstly, founders stated that its exchange rate wouldn’t go below one dollar. But some months ago, it fell to $0.9, so some analysts considered that Tether’s statement regarding this was fake. Moreover, Tether’s volume has risen lately. This fact increases the risk of a price collapse.

Binance Coin (BNB)

Just two years ago, one of the most reputable exchanges, Binance, released their own cryptocurrency – Binance Coin. Seeing as it was founded by a popular exchange, BNB is very trusted. This is why it has a stable exchange rate and a high trading volume. Many analysts and exchanges recognize this asset, so it would be very difficult to dump its rates. Thus, if you want to start day trading, you may want to begin with BNB.

Ethereum (ETH)

Ethereum is just as popular as Bitcoin is in the world. There is one reason for that: Ethereum is not just a cryptocurrency, but a blockchain platform that allows the development of decentralized applications and the creation of new tokens. This asset is usually connected with a lot of good news, so traders can easily use it for day trading.

ETH is listed on most of exchanges, so you can trade it anytime, anywhere. It has one of the best liquidity rates, so many traders consider ETH to be the best cryptocurrency for day trading.

Tron (TRX)

Tron was created as a platform that aims to clear all borders in the Web. It provides a reward for content exchange. One of the best things about it is that you can earn TRX by adding everything, from simple mems to complex applications. This platform has a valuable idea, so its cryptocurrency is fast-growing and it has a reputation on the markets.

TRX for day trading

TRX have one of the most active teams, who develop the platform every day. You can therefore see a lot of positive news on different websites. That is why Tron’s popularity is growing from month to month. Even bad news doesn’t affect its price, because there are many TRX supporters today.

If you want to begin day trading, TRX may be the best choice for you. This cryptocurrency has got low prices, so you don’t need a big budget to begin trading. Moreover, it is stable enough, so it will be easier to manage risks.

Conclusion

Day trading can be both easy and difficult. This depends to your trading style and the chosen cryptocurrency. However, if you operate with the factors we mentioned and learn everything about the cryptocurrencies in your portfolio, you have a good chance of becoming a successful day trader. Who knows, maybe one day you’ll even quit nine-to-five work.

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