Do you want to start day trading cryptocurrencies? Maybe you are a new investor in the crypto market and you decided to become a day trader. But how much money do you need to start day trading cryptocurrencies?
In this post, I’m going to try to help you answer these questions. The short answer would be as many as you don’t afraid to lose. But we will dive into this topic a little deeper so you will know the minimum budget for day trading in crypto.
Day Trading Cryptocurrencies
Day trading on the crypto market is a little bit different than on the mainstream ones. In the original definition, a day trader is someone whose trading positions are closed by the end of the day when the market closes. Because crypto exchanges don’t close, a day trader in the crypto market can be defined by someone whose trading cycle is less than 24 hours.
As with any other markets day, trading with cryptos is not an easy task. It involves quick decision-making and a well-defined trading strategy. It is also considered a risky investing practice, especially in the crypto market. But if you fine-tune your strategy, handle the stress that comes with it, and have time to do such activity day trading can be profitable.
The main point to understand about the budget you start with is that it will affect your profits. In investing/trading you make money on the percentage of the amount you invest. For example, if you start with 500$ and your trading strategy says that you risk the 1% on one trade. You will make 5$ trades with about 1-3$ profit. Of course, over time your money will add up. As a beginner, it’s advisable to start with a few hundred dollars. With time your capital will go with your knowledge and experience.
Exchanges and Their Minimum Trade Orders
If you looked into the topic of day trading you know that on certain markets there are regulations. Pattern day trading is one of them. If you are categorized as a pattern day trader you need to have at least 25000$ on your account. The good news is that most of the exchanges that I’m going to talk about don’t have such rules. The other good thing about the crypto market is that their regulations rarely apply this rule.
Here you can find the most popular exchanges with the best UIs for trading. They are equipped with charts, indicators, and hundreds of crypto pairs to trade with.
Binance
Binance was founded in China in 2017. It is one of the most popular exchanges in the world. On this exchange, billions of dollars worth of coins switch owners every day.
In their trading rules, you can see that they have four major markets. BNB Markets, BTC Markets, ALTS Markets, and FIAT Markets. On the BNB markets, the minimum order size is 0.05 BNB which is around 23$ at the moment. On the BTC markets, the minimum order size is 0.0001 BTC which is around 6$. The ALTS market has a 0.005 ETH minimum order size which is around 19$. The FIAT market’s minimum price order is 10$.
So if we go back to our example that you want to start trading with 500$ and on each trade you want to risk 1% of your funds. On a simple account, it not going to work out. But Binance thought about the beginners who want to invest just a few hundred and they have margin accounts.
Their margin trading account works the following. You transfer your funds to your margin trading account, and then you borrow the amount that is missing for your trade. After you made the trade you have to repay what you borrowed. If you choose to use this type of day trading be extremely cautious and measure your risk. You want to avoid forced liquidation.
OKEX
OKEX was also funded in 2017. It’s a Seychelles-based cryptocurrency exchange owned by the Ok Group that also owns the Okcoin. This exchange also has hundreds of cryptocurrency trading pairs to trade with.
Their minimum order rules are a little bit complicated. They recently changed the minimum trading orders. The minimum is unique on each pair but on average the minimum order is from a few cents to a few dollars. They also have the option for margin trading. But just as with Binance, always read the specifics about the trading conditions and be very careful when investing.
Upbit
Upbit is a Korean crypto exchange founded in 2017. Being one of the biggest exchanges all the features that I mentioned above are there.
They have a relatively easy rule for minimum trade order because every trading pair they list have 0.0005 BTC which is around 30$.
Houbi
Houbi is one of the oldest exchanges it was founded in 2013. Houbi has multiple base countries in Singapore, United States, Japan, South Korea, and Hong Kong.
Their UI is also designed to help traders with built-in features like charts, indicators. Their fees change from pair to pair so before you make your trade make sure to check it.
As you can see on these exchanges the minimum trading orders can vary. Before you start trading on any of these make sure to read their guidelines about it. after you confirmed that the minimum trade orders are okay with your budget using these exchanges is not difficult.
What to Expect When Day Trading Cryptocurrencies
Another factor in deciding how much money you should start day trading is how much money you want to make. As with any other investing form the more money you have the more you will make.
For example, a good daytrader can make 5-10% each day. That means if you know what you doing and start with just 500$, you can make up to 5-10$ each day. But remember that it is not a guarantee. It is impossible to know exactly the outcomes of each trade. And I can’t stress enough that never invest more than you can afford to lose.
Summary on How much Money To Start Day Trading Crypto?
In my opinion, it depends on your experience level. As a beginner, your best bet is to start with a few hundred dollars. We looked at the minimum trade orders on some exchanges so probably your range should be in the 200-500$ at first. Below that you risk more than 4-5% of your capital on a given trade. Even if you start with this little amount, you learn and become a better trader each day as your bank account grows. By the time you risk more money, you will be confident in your skills, your tolerance to risk and stress increases and you can make wise trading decisions.
If you are a more experienced day trader use the amount that you are comfortable with. As you can see there are only minimum trade orders so theoretically you can start day trading with just 10-50$ but it would be extremely risky putting everything on one trade.
Despite the amount you start with, there are options on margin trading accounts. But be careful when choosing to use them. With borrowed crypto always make sure that you can afford to lose the money you risking.
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