Does Day Trading Apply to Crypto?

Nowadays if you are interested in the financial world it is impossible not to come across cryptocurrencies. You read about them and think I want to trade with cryptocurrencies. I this article I’m going to answer the question does day trading applies to crypto?

What is crypto day trading?

Day trading with cryptocurrencies does not differ from day trading with any other commodity. It’s the same short-term trading strategy but with cryptocurrencies. The big difference between common markets for trading like the stock market and the crypto market is that the latter never gets closed. As a crypto day trader, you don’t have to close your positions before the markets close. A typical day trader however not let their position open for more than 24 hours.

Another big difference in trading volume. Although crypto investing becomes popular, trading volumes are significantly lower than in more established markets. A great example of this is the futures market. According to volume for the day in the past month was not more than 23000. It sounds a lot but looks at the E-mini S&P 500 futures. It’s in the millions.

It’s important because the more trading volume you have the more accurate information you can gather. I like to look at the futures market data to get a grasp of the market because in it every transaction goes through the exchange and is recorded. Even if there are trading hours and do it does get closed.

As a crypto day trader, your goal is going to be making a profit on the daily small movements of the price. This process involves quick decision making and you have to monitor the cryptocurrency market during your trading hours. The best practice would be to prep before your trading ours. Analyze what the market tries to achieve that given day. Look at it not just from the day’s perspective but from the week or even further than that.

For beginners, I’m not recommending starting with crypto day trading because of the reasons I mentioned above. First, be profitable on a more established market, get a feel for trading. It will help you make decisions when you lack the data to back them up.

How does crypto day trading work?

Day trading on cryptocurrencies does not differ from any other commodities. Once you register on an exchange deposit your funds you are greeted with an environment that is similar if you ever traded with for example forex. You going to see the trading pairs. If you click on them you will see the charts. Some exchanges like Binance have integrated trading tools.

Once you choose your trading pair, you have the options to put in a trade. You have direct market orders and limit orders. The main difference between the two is with a market order, you buy immediately. You accept the lowest price that someone who sells offers to you. With a limit order, you set a price in and wait for the market to get to you. With a limit order, there is the possibility that your request might not meet the other end and don’t get filled.

Once you have made your decision in one of the above you have an open position. Just like with other platforms, like MT4 you can put your stop-loss and take profit in. A stop-loss order means that if the price goes to that limit you sell/buy to get out of your position. That way you don’t risk the possibility of losing all your deposits in one trade. Take-profit works the opposite way. Once the market hits a targeted price you close your position taking the profit.

As a day trader, you will probably use the smaller time frame charts. Thankfully these exchanges made this option available on their websites. With these functionalities, you have everything to start day trading on them. Some even have indicators.
Below I talked about using the data of the futures exchange. You can use that as a proxy. Seeing the market data of the futures exchange, making decisions based on that, and then putting the trades in on the exchange’s website. That way you don’t risk as much money, as you would in the futures market.

How to start day trading cryptocurrency?

Start trading cryptocurrencies is not difficult these days. All you need is:

  • Cryptocurrency exchange
  • Trading platform
  • Money to trade with
  • Trading strategy

Cryptocurrency exchange: There are hundreds of exchanges in the market. When choosing an exchange you need to consider a few things. How big is the market cap of the given exchange? Are there enough active investors? How many trading pairs there are to trade with? Do they have margin accounts?

The first two questions are correlated. The more investors an exchange has the bigger their market cap. It’s crucial because you want to trade in a place where your trade orders meet the other party. On the trading pairs, most of the big exchanges have all the major crypto pairs well beyond that. The margin account option is important if you don’t have thousands of dollars to start within your bank account. Margin trading allows you to trade with more than you have. It also means that you lose/win more when the price moves.

Trading platform: a trading platform is a program where you can use your charts and tools for trading. If you are familiar with this term, MT4 (Meta Trader 4) is a trading platform. The good news is that the bigger exchanges – like Binance – have built-in trading platforms. When you open the website of the exchange you see the charts, indicators. You don’t need to have an independent trading platform. You can place your buy/sell orders, stop losses, take profits in the browser. It’s a convenient way of trading.

Money: You need money to start trading. As a general rule of thumb, you should never risk more money than you can afford to lose. But because of the minimum order limits, the minimum is around a few hundred dollars. I wrote an article about this in-depth if you are interested you can read it here.

Trading strategy: if you don’t want to gamble with cryptos you will need a trading strategy. This is a plan for your endeavour on the crypto market. In a strategy, you will set in stone the basics and nuances of your trading. From when you trade to your trading opportunities, entries, exits. With a laid-out plan, you can concentrate on execution. Your emotions and distractions won’t bother you because you follow your plan. It is crucial to be successful in this game. In the ‘Crypto Trading Strategies For Beginners’ post, I wrote about it step by step how to build it.

Is crypto day trading profitable?

This question is hard because it has no straight answers. I like to look at trading as a business. If you think about it you can ask that is selling Mercedes is profitable? The easy answer is yes it is. But there are a lot of factors involved. One man can make a fortune selling Mercedes while the other goes broke in six months.

With trading, this is the same. What works for someone, might not be the best fit for others. If we look at the statistics in general about trading, it is hard. 70%-80% will lose money on trading accounts. It comes down to individual traders.

But that doesn’t mean there is no hope. If you think about it 80% of businesses don’t live more than five years yet there are a lot of successful entrepreneurs. If you want to make it as a trader you need to take it very seriously.

It is not a hobby, not something you should do for fun. Don’t get me wrong if you enjoy it it’s great but don’t treat it like going to the casino. If you can put the work in making a trading strategy, research the market understand basic concepts about it, you set yourself up for success.

There is a lot of information out there. Always treat anything trading-related with a pinch of salt. Don’t get things for granted or look for magic indicators or strategies. At the end of the day if you are trading you get paid to make decisions. Understand the conditions of the market. If you consider these factors I would say yes trading is profitable. But it takes time to get to that level.


Day trading can be applied to cryptocurrencies. With modern exchanges and the option to trade crypto pairs, you have everything to start day trading. It’s an exotic market. You can make money in it, but you have to be careful. Never risk more money than you can afford to lose. Research the exchanges and strategies you want to imply. I wish you luck on the journey to becoming a profitable day trader on cryptocurrencies. If you find this article useful please share it with your friends, and follow us on Twitter to make sure you don’t miss any new articles.

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