Cryptolesson 2

Daytrading?

So you have decided to take a dive into the crypto world. You have selected your exchange and you are ready to do business. What are your options?

There are two main paths you can take, daytrading and HODL. HODL stands for Hold On for Dear Life.

For this lesson we focus on daytrading.

Daytrading

The goal of daytrading is to buy your tokens low, sell them high and buy more tokens back for the same money. When the price goes up again, you will have more money as well.

When you are just getting started, the name daytrading can be a little misleading.

Depending on your tactic, you can stay from only a couple of seconds up to a couple of days in a trade.

The major advantage of daytrading is the power of compound interest. If you can make a trade with 1% net profit every single day of the year, you will have 37 times as much money after the end of one year. Making a 1% trade every day in a highly volatile market should not be that difficult.

Easy money, isn't it?

What is the catch? In order to make a 1% trade every day, you need to obtain the skill of technical analysis. There are a number of markers that can predict how the market will react. But trading is an emotional activity and no marker can tell what people do out of emotion. When you entered the trade and the market plummets, you will have to sit out the dip, or take your loss and enter a new trade another time. Investing in your knowledge about risk management, money management, reading charts and recognizing the right moment to step in, will pay great dividends in the long run.

One major lesson in daytrading is to change the perspective, do not only look at the 3 minute chart, but also at the 15 minute chart and the 4 hour chart (or another larger timeframe). This will give you a clear view of what the trend of your coin is at the moment. Is the trend upwards? Is the price going down? When the trend on the 4 hour chart is upwards and the 3 minute chart shows a dip, this normally would be a sign to enter the trade.

You should avoid trading out of emotion. Fear of missing out can cost you a lot of money. When in doubt, do not make the trade.

When you daytrade, you need to constantly check what the market is doing. Compared to HODL daytrading takes a lot more time.

A long story short:

– daytrading can be extremely profitable

– daytrading takes considerable skill and knowledge

– daytrading takes a lot of time

The lesson to be learned: Invest in your knowledge and keep your emotions in check.

Stay tuned for more lessons in crypto trading.

If you want to get started, I would recommend you use Binance as exchange. I have two accounts, one at Binance and one at Kraken. Binance has far more options to get the most bang for your buck.

When you apply via this link, you support me as the host for Get Financially Smart. It will cost you nothing and you can get started right away.

Get started now via:

https://www.binance.com/nl/register?ref=65941781

Stay safe and healthy!

Richard

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