Though it may be scary, it’s a time-proven truth in investing: To earn more return, you must take more risk. When aiming to make money in the short term, you must be prepared to lose your investment (and maybe even more!) in that time frame as well, especially in a volatile market like cryptocurrencies.
Another term for short-term trading is aggressive trading. Why? Because you’re taking more risk in the hope of making more profit. Investment of any kind requires a constant balancing and trade-off between risk and return.
Short-term trading can be divided into different categories within itself based on how quickly you realize the profits — hours, days, or weeks. Generally speaking, the shorter the trading time frame, the higher the risk involved with that trade.
Cryptocurrency investing: profiting within hours
If you’ve ever wondered what a day trader does, this is it! Day trading is one form of aggressive short-term trading. You aim to buy and sell cryptos within a day and take profit before you go to bed. In traditional markets like the stock market, a trading day often ends at 4:30 p.m. local time. But the cryptocurrency market runs 24/7, so you can define your day-trading hours to fit your schedule. Pretty neat, right? With this great power comes great responsibility, though. You don’t want to lose your shirt and get your spouse or partner angry at you.
Here are a few questions to ask yourself to determine whether day trading is indeed the right crypto route for you:
Do you have the time to dedicate to day trading? If you have a full-time job and can’t stick to your screen all day, day trading probably isn’t right for you. Make sure you don’t use your company time for trading! Not only you can get fired, but you also won’t be able to dedicate the required time and energy to trading either. Double the trouble.
Do you have sufficient risk tolerance for day trading?
Even if you can financially afford to potentially lose money day trading, are you willing to do so? Do you have the stomach to see your portfolio go up and down on a daily basis? If not, perhaps day trading isn’t right for you.
If you’ve made up your mind that day trading is the right crypto route for you, the following sections share some tips to keep in mind before getting started.
Define crypto trading sessions
Because cryptocurrencies are traded internationally without borders, one way you can define a trading day is to go by the trading sessions in financial capitals of the world like New York, Tokyo, the eurozone (made up of the European countries whose official currency is the euro), and Australia. This method follows similar trading sessions as in the foreign exchange (forex) market
You must be logged in to post a comment.