Having a cryptocurrency day trading strategy can be an important part of your investment plan. A clear plan to identify prospective digital currencies, determine investment amounts, and calculate your transaction timing is your most important asset. As you experience greater success in digital currency trading, you become more confident in your day trading and make more money.
Here are the steps to build a dynamic crypto portfolio with day trading.
1. Pay Attention to Hype
Rumors build the excitement for the release of a new digital currency. An active marketing strategy causes investors to buy early and drives the price up on the OKX crypto exchange. Unlike traditional investing, these rumors can artificially drive the value up. When the currency is released, the price bottoms out. Keep an eye on these fast-movers and see if you can time your purchase before the coin moves into the market.
2. Purchase Low
It’s easy to get caught up in the hype of a rapidly rising cryptocurrency. Do not get distracted by making multiple purchases as the price of the token increases. Stay with your investment strategy. Even if the value rises after you exit, you have made a profit and learned lessons for your next trade.
3. Don’t React
It is easy to hyper-focus on a purchase that drops in value as soon as you buy it. You will see many digital currencies fall for a moment and then increase in value again. Analyzing candlestick charts helps you visualize the fluctuations in value. Keep an eye on the current range to determine at what price you will make your transaction. Talk with your fellow investors to gauge their reaction to price fluctuations. Some of the time, sitting back and taking a deep breath can give you the clarity to see your next best step.
4. Know Multiple Coins
While one digital coin makes up about 50% of the market, there are still thousands of other cryptocurrency options for investing. Make sure you understand how the digital currencies interact with one another based on the dominant coin’s position. Investing in coins with a lower value can help your investment dollar go further.
5. Earn Interest
When you are not buying and selling coins, your coins can earn interest. If you have your digital currency in a crypto exchange, you can lend it for a return. A 2% monthly return is low but is higher than a traditional savings account. Alternatively, specific Proof-of-Stake digital coins earn interest just by being held in a specific digital wallet.
6. Make the Trade
It is easy to get distracted by researching a trade instead of making it. Some of the time, you simply need to take a deep breath and press the button. Many investors lose sight of their strategy by continually reviewing their research. They end up never claiming that purchase or making that sale. Confidence is key to cryptocurrency investing. Every transaction is a learning opportunity. Smart day traders end their day by identifying what made each trade successful or unsuccessful and learning from those lessons.
Crypto day trading is an exciting way to increase your financial portfolio. Monitoring your investment strategy helps you become a better investor.