What is Crypto Day Trading: Best crypto exchange for day trading

Introduction:

What is crypto day trading? 

Crypto day trading is a popular strategy among cryptocurrency traders. This particular strategy involves buying and selling digital assets multiple times within a single day to profit from short-term price movements. The goal of day trading is to take advantage of small price fluctuations and make quick profits. To trade cryptocurrencies successfully, traders need to closely monitor the market and be able to identify potential price movements. They also need to have a deep understanding of technical analysis and trading strategies.

Crypto day trading strategies:

Crypto day trading is one of the most lucrative ways to make money in the crypto currency market. However, it requires in-depth knowledge about blockchain technology and crypto to avoid unnecessary losses. The following points will shed light on the effective ways of crypto day trading and resolve all the doubts and ambiguities.

1.Scalping:

Scalping is a popular method used by day traders because of its potential possibilities, ease of automation for bots, and, of course, low risk. Day traders leverage scalping strategies not to get big wins but to build hundreds of small wins. Scalping has been a proven trading strategy with the fastest turnaround because scalpers use large amounts of liquidity to take advantage of small price changes over a short period of time.

Traders target to capitalize on increased trading volume and make profits by keeping up to date with the current news and future events likely to trigger price movements. Scalping is one of the best crypto day trading strategies because traders can set up a bot for frequent and high-intensity trades according to technical indicators or signals.

2.Range Trading:

Range trading capitalizes on non-trending markets by identifying stable high and low prices, represented mainly on two levels, i.e., resistance and support. Resistance is a price above, and support is a price below the current price. When the price ranges between the resistance and support levels, traders can purchase at the support level and then sell at the resistance level. By using this strategy for day trading cryptocurrency, day traders buy a crypto asset when it’s oversold and sell it when it’s overbought to gain profits.

Volume plays a crucial role in range trading since analyzing trends in volume helps validate patterns to decide if the timing is right to use a range trading strategy. It’s believed that volume precedes price. For that reason, to confirm any trend, we should keep in mind that volume should increase in the direction of the trend.

3. High-Frequency Trading (HFT):

High-frequency trading is a type of algorithmic day trading cryptocurrency strategy used by a sizable number of traders who develop algorithms and use trading bots to quickly enter and exit a crypto asset over a short period of time. These kinds of traders use computers programmed to host sophisticated algorithms to take advantage of price changes that occur in seconds or even fractions of seconds. The systems are designed to constantly monitor and analyze cryptocurrencies across multiple exchanges and identify trends.

This strategy is perfectly suited for advanced traders since developing such bots requires a strong knowledge of computer science and mathematics and an understanding of complex market concepts.

4.Technical Analysis:

Technical analysis is a proven strategy used to predict the possible future price movement of a currency based on market data. By applying their statistical trading strategy, the technical analysts can evaluate the future revenue or losses in crypto based on past performance. Technical analysis provides day traders with the science to find possibilities to trade and make profits, enabling them to detect short-term trading patterns and trends essential for day trading.

In this kind of trading, to maximize the chances of earning a profit, some technical analysis indicators are often used. At the moment, the best known in the market is the Moving Average Convergence Divergence (MACD).

5. News and Sentiment Analysis:

This particular strategy is similar to technical analysis because it also involves predicting. However, the significant difference is that it’s based on human reactions and actions rather than price trends. With this kind of strategy, day traders try to predict whether demand will rise or fall for some cryptocurrencies by analyzing various information sources to understand the social consensus on the currency and predict people’s actions.

This data’s sources are mostly industry news outlets and social media posts. Some sites also try to track the sentiment on the most used cryptocurrencies by reviewing Twitter chatter, as more positive tweets about crypto likely indicate the market is heading upwards, while more negative tweets indicate the market will experience a downward trajectory.

6.Arbitrage:

Arbitrage is one of the best strategies for day trading crypto. It involves buying a coin on one exchange and making a profit by selling it on another at a higher price. When the price of a crypto pair, including Bitcoin and a lesser-known altcoin, varies from one exchange to another, day traders can make a profit by taking advantage of the price difference across the two markets. The difference between what they purchase and what they sell it for is called the “spread.”

To use this strategy, it is required to have accounts on exchanges that show a large difference between prices. Arbitrage is particularly popular for day trading crypto because the market is not unregulated, meaning numerous exchanges tend to have decent differences in prices.

The top 8 popular crypto day trading exchanges:

If we want to day trade and are confused about which exchange to use, we have to consider the following factors:

  1. Low fees
  2. Strong Liquidity
  3. Automation
  4. Available cryptocurrencies
  5. Derivatives and available leverage

Considering all these factors, the following are the best-known crypto exchanges for day trading:.

1.Binance:

Binance is undoubtedly the top choice for cryptocurrency day traders due to its extremely strong liquidity, a large number of listed cryptocurrencies, as well as an extensive selection of cryptocurrency features and options.

Binance offers very competitive spot trading fees. The base fee in this exchange for both makers and takers is set at 0.1%. It offers a 25% discount on fees if the payment is made with the BNB token. Furthermore, the fees can be decreased if a lot of trading volume is generated.

Binance lists well over 350 cryptocurrencies, which means that any relevant cryptocurrency should be able to be traded when the right opportunity arises in the market. In terms of derivatives, Binance provides stablecoin-settled and crypto-settled futures, as well as options. Traders on Binance Futures can access large amounts of leverage, up to 125x in some cases.

2.Bybit

Bybit is another popular cryptocurrency exchange that is one of the best options for crypto day traders. Bybit was originated as a trading platform of the future. Over the course of time, it has offered all of the features one would expect from a top-notch cryptocurrency exchange.

Bybit’s base spot trading fees are similar to those of Binance — 0.1% for both makers and takers. Fiat-denominated trading pairs have a higher fee rate, with a 0.2% fee for takers and a 0.15% for makers. In this particular exchange, traders thoroughly enjoy higher volumes with lower fees.

The exchange lists a vast selection of cryptocurrencies, with more than 310 coins available for trading.

One aspect of Bybit that’s noteworthy is the exchange’s copy trading feature, which allows users to automatically copy the moves made by more experienced traders. Bybit also offers a demo trading mode, which can be used to test day trading strategies risk-free.

3.Bitfinex

Bitfinex is a cryptocurrency that originated in 2012. This is considered the most popular choice among advanced traders because this particular exchange offers both spot and derivatives trading and features advanced orders. On Bitfinex, multiple limit orders can be created by traders at once across a specified price range, simplifying the process of day trading.

Bitfinex trading fees start at 0.1% for makers and 0.2% for takers, but decrease substantially for traders with high volume.

One of the most alluring features of Bitfinex is that traders can customize the interface to fit their specific requirements. This is a great option to have for day trading, where efficiency and eliminating distractions is highly important. Highly advanced traders on Bitfinex can also benefit from Bitfinex Honey, a solution that allows traders to create and execute algorithmic orders.

Overall, Bitfinex has one of the most impressive offerings in the crypto industry for traders who require advanced features and customizability.

4.OKX:

OKX is another good option for crypto day traders, and it often serves as an alternative to Binance because these two exchanges are quite similar in their offerings. Just like Binance, OKX lists a wide variety of cryptocurrencies, with more than 330 different coins available at the moment.

On OKX,  spot markets can be traded. This suffices for most crypto day traders, as it also offers some additional products such as copy trading and simplified crypto options.

The fees on OKX are very competitive. Maker fees start at 0.08%, while taker fees start at 0.1%. Trading fees can be reduced even further based on the user’s trading volume and OKB token holdings.

One of the interesting features of OKX which is noteworthy is the exchange’s trading bot marketplace, which allows users to “follow” traded bots created by other traders. The creator of the trading bot is compensated with a portion of the profits generated by the bot.

5.KuCoin:

KuCoin is a type of cryptocurrency exchange that is best known for its extensive range of listed cryptocurrencies. It boasts a selection of over 650 different crypto assets available for trading, which makes it an ideal choice for day traders who want to trade low-market-cap altcoins.

KuCoin offers spot markets, margin trading, futures, and leveraged tokens as trading options. The exchange’s trading API can be used to deploy automated trading strategies, with the exchange even offering exclusive perks for API users.

KuCoin has a similar fee structure to Binance. Maker and taker fees both start at 0.1% and are reduced based on the user’s trading volume and KCS token holdings. However, it’s important to note that KuCoin divides the coins listed on its platform into 3 classes (A, B and C).

Coins which are marked as Class A have the lowest trading fees, while the fees are relatively higher for trading Class B and Class C coins.

6.BitMEX:

BitMEX is a cryptocurrency exchange that originated as a trend setter in the cryptocurrency derivatives space. Although the market share of BitMEX has significantly dropped in recent years, it’s still considered a powerful exchange for advanced traders.

Notably, BitMEX now also offers spot trading, but the exchange’s biggest strength is still its crypto derivatives platform where perpetual swaps and futures contracts can be easily accessed.

BitMEX has recently released their BMEX token, which functions similarly to other exchange tokens. BMEX stakers can receive discounts on both taker and maker fees, and large stakers can even be eligible for rebates on maker fees.

7.GMX:

GMX is another big choice for most day traders. It is a decentralized crypto derivatives exchange that offers up to 50x leverage. The exchange can be accessed on both the Arbitrum and Avalanche blockchain platforms, which offer relatively low transaction fees.

The best thing about GMX is that one can trade from their personal wallet and stay in control of cryptocurrency at all times. In this case, there’s no need to trust a third party to custody coins. However, the big downside of GMX is that the protocol can only be used to trade a very limited selection of cryptocurrencies, unlike other exchanges.

8.Fantom:

Fantom is probably the least known cryptocurrency on this list, but it does not make it any less lucrative for day traders. It has all the qualities one might wish for in a digital asset suitable for crypto day trading: low fees, fast transaction times, and high trading volume.

Fantom falls within the top cryptocurrencies by market capitalization on CMC, which ensures at least a baseline level of liquidity. A big crypto asset like this is also more likely to be listed on various crypto day trading platforms, which allows traders to use advanced trading strategies like arbitrage.

Conclusion:

Crypto Day trading can be an exciting and potentially profitable strategy for traders who put in time and effort to learn the market and develop a solid trading strategy. However, simultaneously, it’s important to be aware of the risks involved in the market and to start with a small amount to avoid significant losses. With the right approach and mindset, crypto day trading can be a rewarding and enjoyable way to participate in the cryptocurrency market.

FAQs:

Answer: The primary reason is the volatile prices of crypto, which create an opportunity for trades to make profits on day trading.

Answer: You need to have good market knowledge of crypto, have an appetite to take risks, have strategies in place, analyze the crypto price trend correctly, and know when to exit the market.

Answer: The top 3 best and most popular  crypto exchanges based on fees and trades volumes are Binance, Coinbase and KuCoin.

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