The Ultimate Guide to Day Trading Bitcoin and Other Cryptocurrencies

Over the past decade, Bitcoin and other cryptocurrencies (altcoins) have taken the trading world by storm. While many traders have been waiting for the crypto markets to become more predictable, others have realized that times of market uncertainty will often result in lucrative trading opportunities.

As a key component of a relatively new industry, the Bitcoin market is both high-risk and high-reward. However, while there will always be a degree of unpredictability that can be found when trading Bitcoin, there are still many things you can due to reduce the risk of the unknown.

Succeeding in the Bitcoin market will require you to identify when a price trend is moving in a given direction. Like all other tradeable assets, proponents of Bitcoin trading will need to exit the market at a higher point than they originally entered into it. Without the ability to correctly identify opportunities, your willingness to accept risk and trade in this dynamic marketplace will not be adequately rewarded.

In this article, we will discuss the most important things for you to know about trading Bitcoin and how this unique financial asset can be used to increase your periodic return on investment. By taking the opportunity to learn about Bitcoin and all of the intimate details involved, you will be in unique position to exploit both bearish and bullish markets.


What is Bitcoin?

Bitcoin is an electronic form of currency that has been actively traded for just over a decade. The market for digitized currencies—“cryptocurrencies”—has been continually expanding and increasing in value. Bitcoin uses blockchain technology in order to assure that the total amount of circulation is limited and can also be traced to a specific owner.

The “ownership” of Bitcoin is recorded on a public distributed ledger. Because Bitcoin, by design, is both useful (it can be used to purchase some things) and kept in a perpetual state of scarcity, it is able to claim at least some sort of intrinsic value. The value of Bitcoin, like other currencies, will be a direct product of supply in demand. When all else is equal, increases in supply will decrease the value of each Bitcoin while increases in demand will increase the value.

Success in the Bitcoin trading industry is the same as success from trading any other type of currency; traders must correctly identify when a demand shift is about to increase prices. Waiting too long or entering the market once demand has already materialized will result in missed opportunities.

What are the pros and cons of trading Bitcoin?

When developing a cryptocurrency trading strategy, it will be important to identify the various pros and cons associated with the industry. Each of these variables will have a direct impact on the strategy that’s right for you.

The pros of trading Bitcoin include:

  • High potential for returns. In 2012, Bitcoin was often trading for less than $5 per coin. By the end of 2017, each coin was worth nearly $20,000. While this kind of return can perhaps no longer be expected, the incredible range of Bitcoin is certainly quite appealing.
  • Decentralized. Bitcoin is decentralized, meaning there is no single institution (such as a Central Bank) dictating its supply. Many traders find decentralized markets to be much more “natural” and reactive to real-world changes.
  • Low Correlations. Contrary to most currencies, the value of Bitcoin (and other cryptocurrencies) is very loosely correlated with the stock market. This means that allocating a portion of your wealth in Bitcoin is a great diversification strategy.

Additionally, there are some risks involved in trading Bitcoin, including:

  • Low liquidity. Converting cash into Bitcoin and back into cash makes the currency notoriously less liquid than those in the forex marketplace.
  • High level of risk. Between December 2017 and December 2018, Bitcoin lost nearly 80% of its value. While high levels of volatility may create opportunities to earn strong returns, they also expose you to the risk of losing significant wealth.

Consequently, in order to effectively navigate this fast-paced and rapidly changing trading environment, you will need to work with a reliable set of technical indicators.

What are the top indicators I can use when day trading crypto?

Though there are many things that make the cryptocurrency market unique, Bitcoin is still technically a type of currency. This means that the technical indicators used in the world of forex trading can also be used when trading Bitcoin.

  • Moving Average Divergence Convergence (MACD): the MACD tracks the recent performance of a currency and attempts to identify whether it has the level of momentum needed to trigger a significant price change.
  • Bollinger Bands: these useful bands plot roughly 95% of all price movements, making it easier to identify if a price trend is unusual or likely to change.
  • Relative Strength Index (RSI): this indicator attempts to identify when an asset has been underbought or undersold. Consequently, this makes identifying the next price movement much easier.
  • Ichimoku Kinko Hyo: while this indicator is indeed very complex, it is also quite useful for identifying ongoing instances of resistance and support.

bitcoin invest

By comprehensively paying attention to these signals, you will be able to detect market trends much more effectively than the average “gut” trader. Additionally, because the value of Bitcoin can change quite rapidly due to events in the outside world, it will also be crucial to pay attention to coin-specific news. Succeeding in this 24-hour marketplace will require an ongoing level of engagement.

How else can I develop a successful Bitcoin day trading strategy?

The best Bitcoin trading strategies will allow you to identify when price increases are most likely to occur and also avoid opening a position after it is already too late. Unsurprisingly, there are many things you can do in order to increase the possibility of earning returns and decrease your exposure to asset-specific risk.

  • Hold relatively short positions. The long-term value of Bitcoin is much more difficult to monitor than short-term price trends. As a result, Bitcoin is much more useful for day trading than it is for building your retirement savings.
  • Don’t let FOMO bring you down. Many people entered the Bitcoin industry in December 2017 after seeing how much wealth others had already earned. However, at this point, price increases had already occurred. In the world of cryptocurrencies, buying high and hoping that prices go even higher is an unnecessarily risky strategy.
  • Diversify your holdings. There are still many “altcoins” that are yet to experience their initial rise in price; anyone who is serious about trading cryptocurrencies should trade multiple currencies at once. The same technical indicators can still be applied.
  • Trade in both directions. In a volatile market such as Bitcoin, assuming occasional short positions will increase your number of daily opportunities.
  • Issue stop loss orders. By issuing a stop loss order, you can cut your losses as they inevitably occur. Remember, successful trading is not about avoiding all loses, rather, its about managing your losses correctly.

By keeping these essential tips in mind—and by paying attention to the technical and fundamental indicators mentioned above—you can trade Bitcoin with a greater sense of precision. It will also be important to compare multiple different Bitcoin trading platforms in order to assure you are minimizing the actual cost of executing each trade.


Because the market for Bitcoin is relatively new, many people find it rather intimidating. However, even though Bitcoin is no longer at its value zenith, there are still many lucrative trading opportunities emerging each day. By using this guide and exploring the industry even further, you can establish yourself as a successful Bitcoin trader.

Built on Krop