Trading refers to buying and selling an asset with the aim of making a profit.
In trading world, people trade stocks and shares such as Apple, Currencies like Dollar and even metals such as Gold and Silver.
No matter what the product of trade is, the objective is the same for all — which is to make profits.
The same rule applies even in Crypto world. There are various trading goals divided into short-term trading and long-term trading, which depends on how long you would want to hold an asset before you sell it.
Day trading is very short-term trading, which involves holding an asset for a very short time — a few seconds to a couple of hours. In general the idea is sell your assets before the day ends, hence the name day trading. This type of trading aims at making small but quick profits. Different people use different methods to day trade, although all of them are based on either speculation or chart analysis.
Another technique to day trade is called Scalping, which involves actively placing buy and sell orders at different prices, using a unique trading tool called Brackets. Brackets allows the trader to place their buy and sell orders simultaneously without frequently tracking them.
KoinFox is one such multi exchange-trading platform which provides an efficient tool to enhance your Day Trading practices.
There are few factors that makes day trading different than long term trading.
Day trading makes a trade very volatile as it involves frequent changes. There is a huge difference between trading a crypto currency in day trading or other real world assets because of its volatile nature. Volatility in trade is when the price of an asset goes up or down real fast, leading to either a great success or worst failure to a trader. The prices of crypto currencies are very volatile. It is very common for the price of a coin to rise or fall by more than 10%-50% in a single day. In some circumstances, even more which is not the case with real assets trading.
Experiencing losses is a part and parcel of any trading, so is the case with Crypto. One must accept facing losses as a part of the trade. Even the most successful traders in the world make losses. Other than analysis, a large part of the trading involves prediction. No one can make the correct prediction all the time, so bearing losses is inevitable. Always remember, not to “chase” your losses. Chasing losses is the act in which a trader experiences a bad loss and they attempt to make it back by taking really high risks. This is one of the main reasons why the majority of traders fail. Accepting to make losses as a part of the game and don’t take risks to cover them.
Practice and More Practice
Even before you start real trading with your funds, practice a lot. Only KoinFox offers a professional Simulator, a one of its kind demo trading platform, to practice trading using dummy tokens. KoinFox offers virtual cryptocurrencies worth USD 30,000 to start with. Not only this helps the trader to understand the functionality of the platform better, but it also provides a real time trading in live markets without incurring losses. This is like your cricket net practice before you hit a sixer on the real pitch.
It is advisable to start off trading with low investments, so that the capacity of a loss is also minimized.
This is a very important step in trading. Here, you will learn to make projections of the goal you want to achieve, which is making x amount of money in x time. As we have discussed previously, day trading involves making quick short-term gains, which can be lower than 1% per trade. Such traders have large bankroll. Whether the trade gains are big or small, day traders still make good amount of money. Experienced traders will rarely risk more than 1% of their total bankroll, which means that if you have $1,000 to invest, you only use $10 on each trade. This might look too small in the beginning, but it is the safest way to day trade.
Another important aspect to day trading cryptocurrency is that you set yourself a stop loss. A stop loss is when you decide on a price and automatically exit the trade upon reaching there. Suppose, if you bought Ethereum at $700, you could set yourself a stop loss of 10%. This means that if the price of Ethereum went down to $630, the system would automatically sell your investment. This protects you from a sudden decline in price, even if you are not monitoring your trade continuously. You can also do a “limit sell order”, which means that your trade can be automatically closed when your coin hits a certain higher price. Let’s say, you bought Ethereum at $700, and set up a limit of 10% as a limit sell order, the moment price reaches $770, the system would automatically sell your trade leaving you with a profit of $70.
Other than day trading, an investor can also trade using long-term investment plan. Long-term trading is less volatile and less stressful. Once you buy a coin you can leave it for a longer period of time. Long term trading involves waiting for a trade to grow in value. Let say you bought a coin worth $15 in the beginning of the year. By the year-end the value of the same coin increases to $1500 from $15, you make a profit of 10,000% This can be done without monitoring it so frequently. Techniques used in day trading can also be applied in long term trading. Such as setting stop-losses or market limit-orders.
But make note, that bear markets in crypto currencies are longer than bull markets. Which means you may not make any money for moths or years if entry price is not in your favor.
To summarize this, it takes a really long time to learn successful long term trading. No one likes to incur losses in trading, however, if you do it at an early stage of your trade learning, it will help you not to make the same mistake later in trading.
KoinFox has been instrumental in taking up educational seminars and hands on practice sessions to help budding traders and creating awareness in general about risks and rewards involved in crypto currency trading or investing.
Mail us here if you are interested in learning crypto trade.
We would love to assist! Meanwhile, for your free trading account and mock crypto currencies worth $30000, click here