How to profit from day-trading
You want to increase your crypto holding ?!! check this Idea
Disclaimer:
** This not investment advice! **
You should always do your own research and perform risk management prior to investing.
Remember: never invest more than you can afford to lose
How to day trade Cryptocurrency:
Crypto is very attractive for all kind of investors because of the massive gain that can be achieved. In the crypto space most of the investors are strong crypto believers and they truly think that this new technology will help the word to be a better place.
In a given day you can see a coin go +50% and sometimes +500%. But it works both ways; positive and negative ;)
Crypto is very sensitive to fundamentals and can be predicted by Technical Analysis (TA) but not accurately. A single tweet can change your portfolio completely. If the tweet is related to the KING - BTC you feel the impact in your Alternative (ALT) coin holdings.
The relation between BTC and ALT coins is a strange one! Basically ALTs like when BTC is ranging. When BTC is in a trend usually ALTs will be bleeding or in negative. The sharper the move of BTC, the higher the impact on ALTs.
So the question is what can we do to make profit from BTC moves?
There are 10,000 ways to make profits from BTC trends. But in my opinion one of the most effective is to make free coins when BTC is ranging or dropping.
I will try to go in details about how I do that.
First of all I am long term investor and I invest only on Coins/Tokens that I see a value in the future, this should mean that I don’t have to care about the daily change in the price of my holdings. But… I have noticed that It might be a good opportunity to make more free coins when you see a pullback on the price action.
So let see the 1st scenario:
Lets say you are holding 1000 coins of X and it is trading at the price of 1 USD. BTC is trading in a range between 9K and 11K. The key here is to still have a bullish view on BTC in the long term.
If you see BTC trading at 11K near a major resistance and you see that there is not enough volume to break this key resistance. One thing to do is to sell 30% of your holding of the coin X (300 coins) to BTC and then to USDT. (you go all the way to USDT).
Here as always you have 2 possible outcomes:
- The lucky one: BTC price will drop all the way to support level 9K or 18% from our example. As BTC price has an impact in coin X it’s price will drop by -Y% let say a -10%.
Now at the support level you use your 300 USDT to buy back your X position now trading at 0.9.
This will give us 300/0.9 = 333.33 X coins. 33 free coins good deal ehhh :) Maybe you are thinking so why I do not sell all my coins and buy back (1000/0.9 =1111.11 X coins that’s 111 free coins)?
The answer for this question will be answered below: - The unlucky one: you sold to USDT but BTC goes up and broke the resistance and now it is trading 11.5K. I don’t want to do the math but let’s say it is a 3% up from the price of your coin X will go up a bit, maybe 1.05 so you buy back your position you will get 285 X coins so 15 coins less then before the trade. Let´s check it from a different perspective….
a. Did nothing/Hold: If you have not sold any coins and the price went to 1.05 you should get (1000 * 1.05 = 1050 USD).
b. If BTC went down: If you sold an you have outcome 1 (lucky!) and the price went up to 1.05 (1033 * 1.05 = 1084 USD).
c. If BTC went up: If you sold and you had outcome 2 (unlucky) and the price went up to 1.05 (1033 * 1.05= 1034 USD).
So if you see it in USD in the 3 outcomes you have more USD value than before the trade. The only difference is that you are making less profit in the unlucky scenario.
There are a few other things to keep in mind before trying out this strategy.
We are assuming that the coin X has very strong fundamentals and it will not lose it’s value in BTC or lose very little
This trading is based on a Bullish sentiment on BTC and X coin
BTC price is not trending up or down
You caught the top and the bottom of price action
Some additional advice before trying out this strategy would be to try to identify how coin X reacts to BTC price action.
2 things to be aware of:
Does my X coin lose very much BTC value when BTC drops
Does my coin recover quickly after BTC recovery
In the next article we will be looking at other day trading strategies.
Until then, stay safe out there :):)