What is Day Trading?
Day trading, as the term suggests, involves making dozens of trades in a single day, based on technical analysis and charting systems. The objective of the trader is to make a living from trading stocks, commodities or currencies by making small profits on trades and capping losses on unprofitable trades. Those who are into day trading usually do not keep any positions or own any securities overnight. Thanks to cryptocurrencies being released and in circulation today, there is now a new influx of new day traders who are making a very comfortable living day trading crypto! Below our team does an in-depth review of different day trading cryptocurrency trading platforms, we at BlockchainAcademic.com, hope you enjoy it!
Advantages of Day Trading
1. Being your own boss
A day trader works alone and free from the demands of a regular office job. This means that as a day trader you manage your own time and you get to do what you want to do. Transactions flow according to your preference.
2. Self employment benefits
If you choose to work as a day trader, you will be able to write off certain expenses for tax remittances and enjoy the incentives that employed individuals can’t. You basically save more from being self-employed.
3. Potential to make better profits
If you possess all the traits of a good day trader, you will be as successful as any regular trader in the market. A good day trader has to be decisive, diligent, and wise in managing different transactions and since everything happens by the day, you have to think and act quickly.
4. Expensive Education is not required
Unlike any business or profession, becoming a day trader does not require a diploma or bachelor’s degree from well known schools and universities. Although extensive knowledge in financial management is necessary, a day trader may opt to acquire his day trading skills by means of research and experience, quite an advantage for those who want to save money from expensive education and training fees.
Risks and Disadvantages of Day Trading
1. Vulnerability to substantial losses
Day trading is considered a fast paced trading strategy that aims to only seek profit from short-term stock movements. Unlike long-term investments, day trading requires a very unique skill that is quite a challenge to master. One reckless transaction may lead to a great loss of income. Day traders are advised to risk only the money they can afford to lose to save them from possible bankruptcy due to large investments.
2. Significant start up and ongoing costs
Since high-frequency traders and market professionals spend millions to gain trading advantages, day traders have to compete with them by spending heavily on a trading platform, charting software, state of the art computers, not to mention other costs for obtaining live price quotes and commission expenses.
3. No definite pay
A trader may have to quit a day job (if he has any) to effectively make his trades well-managed. (Say goodbye to steady monthly paycheck!) A day trader would then have to depend solely on his skills and strategies to generate enough profit and reach a specified daily quota.
Keeping track of the market’s spot trading opportunities can be very stressful as you need to watch multiple screens and go around every transaction quickly. This has to be done day by day and the concentration you need to keep up with the flow would lead to burnout.
Best Exchanges for Day Traders
There are brokers and exchanges in the market that offers cryptocurrency day trading options. Not all exchanges however allow bitcoin and altcoin deposits. A lot of traders are also reluctant to engage in the technical aspect of blockchain technology. It is advisable for these traders to use CFD derivative trading as it offers a great solution to benefit from the price changes of crypto assets.
You can buy and sell crypto coins just like an ordinary exchange without the need to wait for confirmation times on the blockchain. It is crucial for day traders to have quick access to funds.
Here are options you can choose from for your day trading needs:
This bitcoin margin trading site is a Peer to Peer trading platform that offers leveraged contracts that are bought and sold in bitcoin. Users can trade cryptocurrency derivatives with up to 100 times leverage. The pairs include BTC/USD, Yen, Monero, Ripple, Dash and Ethereum. Bitmex employs auto deleveraging which means that in some unusual cases, leveraged positions in profit may be reduced during certain time periods if a liquidated order could not be executed in the market.
The Hongkong based company serves over 15,000 traders daily and provides service to over 190 countries today. It started live trading in January 2016 and since then has taken the blockchain industry by storm. Whale club does not require identity verification making it one of the rare exchange to offer such feature.
Whale Club also offers Turbo trading – a sort of binary options gambling where the traders predict the price rise or price decline within a specific period of time (within 1 – 5 minutes). If the user is correct, it makes a profit equivalent to a specific payoff.
Bitfinex is an advanced cryptocurrency that focuses on serving professional traders and regional exchanges. This currency-storage platform which was founded in 2012 is owned and operated by iFinex Inc. It has been one of the largest Bitcoin Exchange Platform with over 10% of the exchanges’ trading.
Binance is a China based cryptocurrency exchange founded by Changpeng Zhao that purposes to give users access to a wide set of trading tools, charts and security features. This site was created after attracting funds via an Initial Coin Offering (ICO) and started trading in July 2017.
This site has been known for its fast transaction processing as well as its low trading fees of only 0.1%. Its technology is capable of processing 1.4 million orders every second. This is why it has been known to have big potentials in becoming the lead in exchange volume.
Cryptopia is a trading exchange which heavily focuses on creating a fully immersive cryptocurrency experience for users, making it a one stop shop for all types of trading and information.
This currency support varies depending on what you are looking for in a crypto trading exchange. Traders must note that there are minimal fiat currency options for Cryptopia. Besides being an exchange and a wallet, it also functions as a marketplace where you can go around and manage your crypto coins, buy and sell almost anything for bitcoins and altcoins.
GDAX is an excellent cryptocurrency trading platform that is being widely used by both institutional and power brokers, it has the killer trio-combination of high liquidity, strong user base, and supprts major cryptocurrencies of Bitcoin, Ethereum, Litecoin, and now Bitcoin Cash.
Coinbase which now has 4,800,000 users has an attractive interface in which most users find more easy to navigate. It is a great site to purchase bitcoins with a debit card and several online wallets for digital currency. With over 45,000 merchants and 9000 developer apps, coinbase has been one of the most popular site in Europe, America and Canada.
Ultimately, choosing which exchange to use for your trading needs must not only suffice your needs and preferences; you must also be able to select the one that you are comfortable with. Remember that as a day trader, part of your daily routine is to religiously check and stare on your screen, so you better choose wisely!