How to Do Crypto Day Trading?
In the year 2025, the crypto market is experiencing significant movements. One way to take advantage of this is through day trading. Day trading in the crypto market requires you to actively trade major crypto assets every day, using the most suitable trading strategy. Day trading is more akin to forex trading, but crypto has also become a popular instrument for day traders, especially due to the liquidity and volatility present in the crypto market. Consequently, it becomes easier to adjust your trades, and volatility means there are always opportunities to capitalize on increases or decreases in crypto value.
What is Crypto Day Trading?
The goal of a day trader in the crypto market is to close the trading session with assets that have a higher value than at the beginning of the trading session. Day trading focuses on gaining small and gradual profits from the market each day. The term "day trader" originated from conventional financial markets, where retail traders began trading every day during business days. Whether you view crypto day trading, forex, or commodities, as a day trader, you will never leave positions open in the market overnight. This is because your goal is to capitalize on price movements during the same trading day, not over several days.
The most efficient crypto day traders will have a strong understanding of the crypto they are trading. This will give them solid fundamental analysis of each crypto asset, with the ability to identify opportunities for positive and negative market sentiment. Additionally, crypto day traders will also heavily rely on technical analysis to formulate their trading perspective. This typically involves charts and indicators to map potential entry and exit points for daily crypto trades.
How to Start Crypto Day Trading
First, you need to determine your crypto day trading style. Will you trade crypto using a crypto exchange or contracts for difference (CFD)? A crypto exchange may seem like the most logical choice at first glance, but trading crypto daily through an exchange carries inherent risks. To start, you must have a crypto wallet to store the crypto you buy and sell throughout the day. There is always a risk of losing your crypto wallet's private key, which can result in the permanent loss of your crypto assets. With crypto CFDs, you are not required to own and physically handle the underlying crypto you are trading. You are merely speculating on the direction of the underlying asset's price. If you believe the crypto price will rise, you will take a long (buy) position.
Conversely, if you believe the crypto price will drop, you will take a short (sell) position. If the price moves in your favor, you can close the trade for a profit, minus your trading costs. Given the unprecedented volatility in the crypto market – we're talking about potential movements of 5% to 10% within a 24-hour period – it's important to familiarize yourself with risk management such as stop-loss and take-profit orders to limit your risks.
Crypto Day Trading Strategies
Scalping: Crypto day traders typically use scalping as their basic trading strategy. This involves taking advantage of small price movements that occur in very short time intervals, often in minutes or even seconds. Scalpers will exploit market inefficiencies or gaps in liquidity between the bid (buy) and ask (sell) spread to gain small profits with the least amount of risk.
Range Trading: One of the most common crypto trading strategies, range trading relies on technical analysis, based on identifying support and resistance areas for crypto. Candlestick charts can show prices where supply exceeds demand and vice versa. A common strategy is to buy crypto at its support level and close the trade by selling it after reaching its resistance level.
Fundamental Analysis: The fundamental analysis strategy is driven by human sentiment rather than technical analysis. It requires day traders to monitor consumer perceptions and reactions to news about the relevant crypto. It’s up to you to interpret whether any press release about a crypto will generate positive or negative market sentiment.
Arbitrage: Some crypto day traders will apply arbitrage as part of their day trading arsenal. This involves buying crypto on one exchange and immediately selling the asset at a higher price on another exchange. The difference between the purchase price and the selling price is the arbitrage profit. This is most effective when trading crypto on multiple exchanges that consistently have differences in their spreads, i.e., the difference between the bid and ask prices.
Frequently Asked Questions
Cryptos to Consider for Day Trading: Bitcoin is the crypto with genuine global appeal. It has the highest liquidity of all crypto assets, and liquidity is one of the main factors to consider in daily crypto trading. This is because a liquid crypto market makes it easier to fulfill your buy and sell orders. Less well-known illiquid crypto assets are prone to gaps in the order book, which results in you having to accept worse prices when opening or closing your positions.
How Much Money Do I Need to Start Crypto Day Trading?: No matter how much money you have to start crypto day trading, the key is to ensure you manage your trading capital responsibly. This means adopting sustainable risk management in your crypto trading, by only taking 1% risk of your total capital per trade. This ensures you limit losses and can grow your capital with a profitable win rate.
How to Start Crypto and CFD Trading in Day Trading?: To get started, you need to open an account at a crypto exchange or a broker like Binance, which offers crypto CFDs. Then, develop a trading strategy, set a budget, and start trading.
What Are the Risks Involved in Crypto Day Trading?: Risks include potential large losses due to high volatility in the crypto market and the risk of choosing an unreliable broker or exchange.
Disclaimer: The information presented here is not financial advice; crypto trading is highly risky and volatile, trading decisions are entirely your responsibility, do thorough research before investing, and past performance does not guarantee future results.