There is no denying that crypto day trading has become very popular in the last couple of years and you should have a firm grasp of these trading strategies along with a clear game plan if you hope to benefit from trading cryptos on the market. So which are usually considered to be the best day trading crypto strategies. These include range trading and arbitrage. In this article, you can get deep insight into both of these crypto strategies and how you can effectively use them for your advantage.
In case you did not know already range trading happens to be one of the more popular crypto day trading tactics.
In the majority of the cases, crypto will trade for a rather long time inside a particular range. Bitcoin, as a case to point, traded between 8500 dollars and 10200 dollars for a month period This 10 percent range give or take seems volatile until you realization hits in that Bitcoin can realize a ±40 percent change in just one day or 24 hours!
Caps for the Crypto market are small enough that a single big mover can manipulate them rather easily. In a few of the cases, those big movers will manipulate the price of a crypto coin in a systematic manner up and down to profit from a certain range. If you observe these patterns and trends, you can reap benefits from them as well!
If you happen to be range trading, it is in your bets interests to pay particular attention to oversold and overbought zones. What overbought means is that buyers have saturated their requirement and the stock will sell off probably and oversold tends to mean just the opposite of this! Chart indicators that are a part of any reliable stock chart program, can assist you in finding these zones. Common indicators that are being used for this purpose tend to include the relative strength index and Stochastic Oscillator.
In addition to range trading, arbitrage is another effective crypto day trading tactic that you should know of, how it works and how you can reap benefit from it for your own gains when you trade on your crypto platform or exchange.
Arbitrage entails purchasing cryptocurrency in one particular market and then selling it in some other market at a much greater price. The discrepancy in the sell and buy price of a crypto asset is referred to as the “spread.” As a typically unregulated market, cryptocurrency enables anyone to develop an exchange. That can result in key differences in the spread owing to the discrepancies in trading volume and asset liquidity.
An important thing to know is that in the universal crypto market, traders often hold a portfolio on a crypto exchange they are trading. To begin an arbitrage opportunity, you can open up accounts on crypto exchanges that you feel as per your analysis will show considerable different prices for the same crypto asset.
At one particular point, Bitcoin traded at about 35 percent higher price in South Korea than in the United States of America. This was called “kimchi premium,” and it popped up more than a single time. Traders made profits by just buying Bitcoin on United States exchanges and instantly selling it on South Korean crypto exchanges. Although the difference will not often be this big, the low entry barrier for new exchanges brings new and golden opportunities for arbitrage more often than in conventional asset markets.
In addition to this, traders should also take fees of trading into account when they attempt arbitrage. The fees to execute a trade on a crypto exchange might wipe out the gains you make from the trading spread so this is a crucial point that you need to take under advisement before you have a go at arbitrage when crypto day trading.