Day Trading Cryptocurrencies: 4 Things to Know

Cryptocurrencies have increased in popularity quite a bit over the past few years, and several distinct factors are driving the crypto train. The security, anonymity, and usefulness of cryptocurrency are helping cryptocurrencies thrive. And the volatility of cryptocurrency trading markets make it a perfect currency for day trading.

Day trading, which is making short-term trades to try to turn a quick profit, is a stock market activity traders have done for years. Typically, however, stock market prices generally move slowly, so profits may be small but they add up over time. With wild, almost minute-to-minute price swings in the cryptocurrency markets, these quick trades have the chance to provide larger profits.

If you are interested in exploring the cryptocurrency day trading scene, here are four points to keep in mind.  

1. There Are Many Exchange Options 

Before you start trading, you’ll want to find a great place to trade your favorite cryptocurrency. The good news (or bad news, depending on how you look at it) is that there are a lot of exchange platforms out there. This gives you many great options and allows for trading 24/7/365, but it also means you’ll have to do some work to see which one(s) are right for you.

Cryptocurrency exchange platforms generally fit into one of two categories. There are centralized and decentralized exchanges. For more advanced traders, a decentralized network could be your best option. These exchanges are not controlled by any single entity and are spread out over a host of connected computers, much like the cryptocurrency that they are  trading. These exchanges are safe and anonymous and do not require fees to use.

The other type of exchange, a centralized exchange, is more like trading stocks in E*TRADE or Ameritrade. The best of these platforms offer a lot of users executing a high volume of trades. They also offer users liquidity, meaning it is easy to cash out your cryptocurrency and turn it into cold, hard cash. For beginning or average traders, exchanges like Binance, Kraken, Coinbase, Bitfinex, and Gemini are great places to start

2. Pay Attention to Fees

On centralized crypto exchanges, where most day traders trade, the company hosting the exchange takes a fee for each trade. According to Cove Markets, trading fees can vary widely depending on which exchange you’re using. Fees can also vary based on additional factors, and some exchanges even have fees on deposits and withdrawals.

Some exchanges have tier systems based on the number of trades you make in a given window, often measured in 30-day increments. The traders who have a high volume of trades will generally pay a significantly lower percentage of each trade than a small-time trader will. There are also market maker vs. market taker fee structures, a practice borrowed from the stock market where advanced market maker traders pay a smaller percentage than the average trader who is a market taker.

The point is, make sure you do your research to see what the fee structure is for your style of trading before you start trading on a platform. Exchanges such as Poloniex and Binance offer lower fees for most traders while exchanges like Bitfinex and Gemini are on the higher side.

3. Know the Strategies 

In day trading, no matter the asset you are trading, the main strategy is to buy an asset at one price and sell it a short time later after that price has gone up. Easy, right? As simple as the mechanism of this type of trading sounds, the truth is it can be incredibly difficult and frustrating to do without doing the appropriate amount of research first and implementing strategies that have had proven success for others.

Depending on a number of factors that include your level of engagement, risk tolerance, time, and resources, there are different types of day trading strategies you may want to engage in. Each of these strategies is very different and what may work for one investor may fail miserably for another–so you have to be very careful and do your homework on how each works and which one to pick.

Some of the most frequently used strategies in cryptocurrency day trading include things like swing trading, range trading, scalping, and arbitrage. Each of these strategies has its own strengths and weaknesses and requires different skills and attention levels to execute at all, let alone to execute well. Before you take up day trading, look up each strategy and see which sounds best for you.

4. It is Risky

The reason that day trading and cryptocurrency go together so well is because of the volatility. With a style of trading that relies on quick, short-term price jumps to provide the profit, the up and down world of cryptocurrency, where prices can have big swings in an instant, is ideal. Before you start counting your cash though, you need to know that there is big-time risk involved. The flip side of this volatile market providing quick profits is that you could also encounter precipitous price drops in a single day or in an even shorter window as well.

This is not to scare you away from day trading cryptocurrency–but you should know about the level of risk as well as your own risk tolerance before you go into this line of investing. If you have the disposable investment capital and the risk-tolerance that you need to be a fearless cryptocurrency day trader, by all means, jump in with both feet. Just don’t be surprised if you take some lumps along the way. For those with the stomach for it, weathering these losses may enable you to hit it big in the end.


Day trading cryptocurrency Is not for everyone but it is becoming more and more popular. Especially in 2020, with huge economic uncertainty and traditional stock trading becoming less appealing, day trading cryptocurrency is having a moment. If you go into it and pick the right exchange, keep an eye on the fees, implement the strategy that is right for you, and recognize the risks, you will be on your way to becoming a successful (and hopefully wealthy) cryptocurrency day trader.