How To Make $100 a Day Trading Cryptocurrency: Tips and Strategies

Whether you’re new to the crypto scene or looking to refine your trading skills, mastering the art of making $100 a day is a realistic goal with the right approach. From understanding market trends to leveraging trading tools, there are practical methods that can help you carve a successful path in the crypto market. Read on to discover how you can make $100 a day trading cryptocurrency.

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Understanding Crypto Trading

Cryptocurrency is a speculative investment, which means it has the potential for large gains and a high risk of losses. Understanding what crypto trading is and how the markets work is key to earning consistent returns.

What Is Crypto Trading?

Crypto trading consists of buying crypto at a lower price and selling it at a profit. With day trading, you’ll typically sell the crypto the same day you buy it to take advantage of short-term price changes, rather than hold the crypto in the hope it’ll appreciate over time.

You can use traditional day-trading strategies in your crypto trading. Here are a few:

• Spot trading: Spot-trading crypto is buying and selling at current market prices, hoping to sell it for more than you paid.

• Futures trading: Futures are contracts to buy or sell an asset at a specific price, on a specific date in the future. They’re called derivatives because they derive value from an underlying asset — in this case, cryptocurrency. Unlike spot trading, where you buy and sell the currency itself, with futures trading, you don’t have. If the underlying assets are worth more when you sell the contract than when you bought it, you profit.

• Margin trading: Margin trading involves borrowing funds, usually from the crypto exchange, to buy crypto. The idea is to quickly sell the crypto at a high enough profit to repay the loan with interest and still profit from the transaction. Because of the extreme risks of trading speculative investments with borrowed funds, crypto margin trading is highly regulated and generally not available in the U.S.

How Crypto Markets Work

Unlike the stock market, which is open from 9:30 a.m. until 4 p.m. on weekdays (excluding major holidays), cryptocurrency markets never close. The 24/7 trading schedule provides liquidity by allowing you to sell your crypto whenever you want, assuming there’s a buyer for it.

According to Quantpedia, around-the-clock trading makes the crypto markets more vulnerable to the “overnight effect” seen with other equities. This is where most gains happen during the day and prices fall at night. But whereas stock exchanges close at night, which limits wild swings, crypto markets have no such protection.

Setting Up for Success

Day trading is always risky, but taking the time to research your options can maximize your chance of success.

Choosing the Right Exchange

Centralized exchanges like Coinbase and Binance.us are better for beginners. The more popular ones have reputations built on long track records and offer customer support options. In addition, they come with the following features:

• More predictable fees.

• Higher likelihood that you can purchase crypto with fiat currency.

• Easier to use.

• More likely to have enough trading volume to ensure liquidity.

Decentralized exchanges have algorithm-determined prices. Potentially low liquidity makes them a poor choice for day trading, where mere seconds mean the difference between gains and losses.

Compare these features across several exchanges before selecting one:

• Fees

• Security

• User-friendliness

• Research tools

Creating a Trading Account

Centralized exchanges have “know your customer” processes to verify identity, so you’ll have to go through a few steps to open an account. Those steps might look slightly different depending on the exchange.

Here are the ones you’d follow to open an account on Coinbase.

1. If using a mobile device, download the app — it’s more secure than your mobile browser. Otherwise, you can use your computer’s browser to navigate to the exchange website and select the option to open an account.

2. Follow the prompts to create a username and password. Enter your valid email address, name and phone number for verification.

3. After verifying the phone number, continue entering information as prompted, including your Social Security number and information on your government-issued ID. You’ll need to send a photo of your ID and might be asked to record audio and video of yourself.

4. Add a payment method for funding your account.

5. You’re ready to trade once your verification is complete and the funds have been deposited into your new account.

Selecting the Right Cryptocurrencies To Trade

Which coins are available to you depends on the exchange. You’ll find Bitcoin and altcoins like Ethereum, XRP, Solana, BNB, along with hundreds of others on most exchanges.

The more popular coins have lower volatility than some day traders might prefer, but they’re also safer cryptos to get started with. If you’re willing and can afford to risk your investment, you might research some of the more volatile altcoins, such as Dogecoin, to try to profit off of short-term swings.

Strategies To Make $100 a Day Trading Cryptocurrency

To consistently make $100 a day in the volatile world of cryptocurrency, it’s key to have a well-thought-out strategy. Here are some tactics to know.

• Day trading: Day trading involves capitalizing on daily market fluctuations. By identifying small price movements and executing timely trades, you can potentially accumulate $100 a day. This strategy requires constant market monitoring and quick decision-making.

• Scalping: Scalping is a day-trading strategy where you trade crypto very quickly, according to price trends, but in stages that follow the trends. For example, if Bitcoin is on the rise, you might buy some, hold it for five minutes, and then sell at a small profit. Repeating the strategy over the course of the day can add up to significant gains.

• Swing trading: Swing trading isn’t day trading, but it’s a good compromise for some investors. With this, you hold your crypto for days or weeks, which lets you take advantage of market cycles and still profit from shorter-term volatility. This is an advanced technique that requires familiarity with technical analysis to execute successfully.

Tools and Techniques for Successful Trading

Successful day traders understand signs that prices might be about to move in one direction or another, and they structure their trades to mitigate risk.

Technical Analysis

Technical analysis uses charts to watch trading patterns and identify certain indicators, such as:

• Relative strength index: This shows how prices are moving and how quickly they’re changing.

• Moving average convergence divergence: Shows how trends are changing.

• Candlestick pattern: Shows points where price trends might reverse.

• Bollinger bands: When combined with other indicators, can help predict price reversals.

Risk Management Tools

Crypto traders can use some of the same types of transactions as stock traders to limit their losses. For example:

• You can place a stop-loss order to automatically sell your crypto if prices drop to a level you set.

• You can use a take-profit order to automatically sell your crypto if prices increase to a level you set, to shield your gains from a sudden reversal..

You can also limit your risk by limiting how much of a particular asset you trade. Rather than go all in on a crypto you think is ready to take off, you might invest just a portion of your capital. This strategy is called position sizing. Although it limits your gains, it also protects some of your money from losses.

Crypto Trading Bots

Crypto bots use artificial intelligence to automatically execute strategies you define when conditions are right. The bot frees you from having to constantly monitor charts and data — it does that work for you.

Although you’ll pay to use a bot, the speed with which it can perform analyses could help you make more successful trades.

Risk Management: Protecting Your Capital

Losses are inevitable with day trading, but these strategies can mitigate them.

• 1% rule: This is a position-sizing strategy where you limit positions to 1% of the funds you have available for investing.

• Avoiding overtrading: Develop sound trading strategies and stick with them.

• Diversify your trades: Invest in several different cryptos with varying risk/reward profiles.

Tracking Your Performance and Learning From Mistakes

Creating sound trading strategies takes time and a lot of trial and error. Keeping a trading journal of each trade, the strategy you used and the result can reveal which strategies are successful and which aren’t. Review it once a week or once a month — enough time for patterns to emerge — and revise your strategies as needed.

Common Challenges and How To Overcome Them

You’ll encounter plenty of challenges while trying to make $100 a day trading cryptocurrency, especially in the beginning. Here are some of the more common ones and ways to overcome them.

• Market volatility: Crypto markets are volatile by nature, so structure and time your trades to mitigate some of the risks. Scalping, for example, lets you move in small steps that automatically limit your losses. Stop-loss orders have the same effect. And position limiting strategies like the 1% rule confine losses to a small percentage of your investable capital.

• Emotional trading: The best way to overcome this challenge is to stick with your chosen strategy. That way, you base decisions on data rather than emotion.

• Scams and security risks: Well-known exchanges like Coinbase and Kraken provide more protection against crypto scams than decentralized platforms where you trade directly with other individuals. Never buy into promises of “safe” crypto investments or big returns, and never trust someone else to invest in crypto on your behalf.

FAQ

Here are the answers to some of the most frequently asked questions about making money with crypto.

• Is it really possible to make $100 a day trading cryptocurrency?

  • Yes, it’s possible to make $100 a day from cryptocurrency trading by implementing effective strategies, diversifying your portfolio and keeping a close eye on market trends.

• How much money do I need to start trading?

  • Minimum investments vary by exchange, but generally speaking, you can start with $10 or less.

• Which cryptocurrencies are best for day trading?

  • Cryptos with higher volatility are better for day trading because they have larger price swings throughout the day. You can research coins on sites like CoinMarketCap to identify which ones have an acceptable balance of risk and potential reward.

• What tools should I use for technical analysis?

  • You’ll need charts to identify candlestick patterns, resistance levels and other indicators. Some trading platforms, such as Webull, offer them.

• Are trading bots worth it for beginners?

  • Probably not. A bot can recognize patterns and execute trades more efficiently than a human can, but the bot is only as good as the instructions you give it. So you’re better off learning and refining trading strategies first, and then using a bot to execute the ones you’ve had success with.

• How do I minimize losses while trading crypto?

  • You can minimize losses by doing the following:

    • Placing stop-loss orders.

    • Restricting trades to a small percentage of your investable funds.

    • Diversifying your holdings to include less-risky coins.

Elizabeth Constantineau contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: How To Make $100 a Day Trading Cryptocurrency: Tips and Strategies