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Hakiza

Factors to consider before employing day trading strategy in cryptocurrencies?

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Hello, explain the factors to consider before employing day trading strategies in cryptocurrencies.

 

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Hi Hakiza,

While choosing any trading style, you have your reasons at hand. You can comfortably say why you find that option more viable than the other method.

However, you need to consider some elements before you select that style and be sure that it is the one you want to use. Checking on the various factors that underly that technique will save you from significant losses that may occur.

Volatility is one thing you ought to consider when day trading with cryptocurrencies. When the market is volatile, the price of the cryptocurrency will rise and fall rapidly.

 From this, you can either make a loss or a profit. Some trading sessions have very volatile conditions, while others, such as the New York session, are low. This means that the change in the market price is not very rapid. Also, some cryptocurrencies are more volatile than others.

It would help if you also practiced well before you try day trading. You can now deposit funds into your account and start trading after you comprehend the market trends. You can practice day trading using a demo account.

Another critical factor to keep in mind is that you are bound to make losses. You know that there is a possibility that you will make a loss while day trading will make you more vigilant while trading. It will also help you calm down your emotions in case you make that loss.

 Note down your objectives. Setting the goal of your trade is one stepping stone to your success in day trading. Of course, as you set these objectives, you also state what you will do to achieve them.

Setting a stop-loss in day trading will protect you from significant losses.

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Hi Hakiza,

This strategy involves the purchase and sale of a security before the day ends. The aim is to make a profit regardless of whether the trade takes seconds or hours. For cryptocurrencies, day trading success relies on several factors.
The first one is volatility. Unlike stocks, digital coins experience sharp swings within 24 hours with some cryptocurrencies being more unstable than others. The way you use this volatility determines your profit. But trades don’t always go as planned. Hence, avoid chasing losses when your prediction is wrong. Moreover, use a simulator to perfect your trading skills beginning with small amounts when you’re ready for the market.
Don’t forget to set targets. In most cases, traders commit below 1% of their bankroll. Therefore, your risk won’t exceed $10 per trade if your account has $1,000. Though the returns may appear minimal, investing small percentages ensures you don’t go broke. Stop-loss orders are also necessary for preventing losses.
 

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