Cryptocurrencies are fast emerging as a new asset class. Similar to other investment properties, cryptocurrencies can be day traded as well. We have compiled the top 7 cryptocurrencies to day trade by evaluating unique offerings and characteristics of the coin.
So go ahead and learn more about the top 7 cryptocurrencies to day trade. But before we do that, let us understand the basics of day trading.
Day Trading: What Is It?
Day trading refers to the method of opening and closing trade positions in the financial markets in a single trading day. Typically, a trading day starts from 10 pm GMT to 9.59 pm GMT the next day. It is crucial to know why this time definition is defined. Few financial markets, such as the stock and commodity markets, are not traded round-the-clock. However, the cryptocurrency and forex markets are all-day markets. Interestingly, the crypto market is the only financial market that is open all day, every day.
So unlike other monetary markets, you can day trade cryptos even on weekends.
Day Trading: Key Considerations
There are several considerations to keep in mind when day trading cryptos. When choosing a digital asset to day trade, you have to select a cryptocurrency that can outperform the others in terms of price movements. But that is not the only factor you should consider.
Evaluate the following aspects before choosing an asset to help day trade efficiently and profitably.
Volatility refers to the magnitude to which the price of an asset will change within the day. Traders generally lookout for a cryptocurrency that can undergo rapid price changes while maintaining a wide range of price movements across the day. Fluctuation in prices in your favour translates into profits.
Low (or no) volatility means traders cannot make profits. They expect prices to change by a notable margin, with enough declines and rallies during the day to benefit from the price differentials between their entry price and exit price.
There has to be a good trading volume on the crypto asset you want to day trade. Good trading volume (liquidity) will ensure that your orders get filled at your chosen entry and exit prices. Besides, ample liquidity will also reduce your transaction charges.
3) Low Transaction Costs
Day traders generally take multiple trades in the course of a trading day. Hence, in addition to good liquidity to keep the cost of trading down, traders also have to use a brokerage that offers reduced fees on their preferred digital assets.
4) Information Feeds
In the crypto sector, assets respond rapidly to news in the marketplace. Unlike the forex market, unfortunately, there is no economic news calendar that one can follow. Therefore, traders must source the news about their preferred cryptos from unconventional sources. For instance, Twitter is a reliable source to get breaking news for crypto day trading.
5) Sound Capital
To conduct day trades of cryptocurrencies effectively, you have to be well-capitalized, especially if you are trading leveraged crypto CFDs (contract for difference). This is because spreads on digital assets are ordinarily higher than you will find for commodity or forex assets. Traders need enough capital to be able to endure the bizarre price movements that occur intraday sometimes.
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Top 7 Cryptocurrencies To Day Trade:
1. Bitcoin (BTC)
Bitcoin is the largest cryptocurrency in the market and is the most liquid of all cryptos, with high volatility. Therefore, it fits the profile of a digital asset that can be day traded easily. The daily range of Bitcoin generally averages between $50 and $100, with good intraday movement to the upside and downside.
Few Bitcoin exchange platforms offer leveraged trading, which could give traders better exposure to upside and downside price risk than their trading budget might usually allow.
You can begin day trading BTC anywhere in the world, 24 hours a day, seven days a week, 365 days a year. All you need is an internet connection. Moreover, since you would be day trading, you would not need to have a long-term view of the coin. Notably, while the stock market can be an expensive place for novice investors, with major tech firm shares costing around £110 per share, you can start trading crypto assets with just a few.
2. Bitcoin Cash (BCH)
For many reasons, Bitcoin Cash is an ideal asset for intraday trading. Firstly, it is a fork of Bitcoin and so has some of Bitcoin’s characteristics. The price movements for BTC and BCH are generally highly correlated. The second reason pertains to the impending hard fork, which is supported by the Binance exchange, driving up volatility and trading volumes of BCH.
Typically, traders have two choices when trading in the crypto market. They can buy cryptocurrencies, such as Bitcoin Cash on an exchange like Binance, Bitstamp, BitMax, Kraken, Gemini, or Coinbase. In this case, they own the BCH themselves. This is a long-term investment as the investor waits for the price to increase significantly to sell their BCH coins for a profit.
Alternatively, traders can trade a contract for difference (CFD) on a particular cryptocurrency and speculate on the price difference. A CFD is a type of contract (usually between a broker and an investor) where one party agrees to pay the other the difference in the value of security between the trade opening and closing. This is considered a short-term investment as traders use CFDs within shorter time frames.
Read Also: Will Bitcoin Cash Make Me Rich in 10 Years?
3. Litecoin (LTC)
Litecoin was created out of Bitcoin’s source code. The asset is also highly correlated to Bitcoin prices. Hence, LTC has sizable intraday volatility and trading volume to aid day trading. For traders who find Bitcoin’s transaction costs restrictive, Litecoin is a ready alternative because of the high correlation.
While the asset's long-term outlook may be uncertain, its massive market capitalization ensures liquidity and profit potential for traders and investors. Notably, the market cap of Litecoin has helped it consistently remain in the top ten rankings. So Litecoin will provide day trading opportunites.
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4. TRON (TRX)
Ever since the TRON blockchain network launched its mainnet, it has recorded an increasing number of decentralized applications (dApps), helping it challenge the Ethereum network’s dominance in the crypto space. As a result, trading activity in Tron has been increasing as well. The immense growth seen by the Tron network is providing individuals with day trading opportunities.
Tron has grabbed the attention of the crypto community for its developments. This, coupled with high volatility, makes it one of the most preferred digital assets for day trading. Tron was first created as a platform to clear all borders on the Web. The network rewards content creators as well. Since the platform has unique, valuable ideas, TRX is rapidly growing as a cryptocurrency.
Therefore, we consider TRON crypto worthy of making our list of the top 7 best cryptos to day trade.
5. Monero (XMR)
Monero has been posting good intraday price movements with a very healthy volume. Therefore, experts consider this crypto asset worthy of ranking in the top seven cryptos to day trade.
Monero also has notable accessibility. Day trading when you do not have market knowledge can be a bit risky. However, there is a wealth of information online that ensures traders get all the information about Monero’s offerings. Traders can find whitepapers, yearly charts, price graphs, 5-year predictions, and detailed price analyses online.
The official Monero website makes it easy to obtain full nodes and even walks you through the process.
6. Dogecoin (DOGE)
Dogecoin is one of the hottest coins in the crypto market. Originally created as a joke, Doge trading has witnessed record growth, which has resulted in many investors taking this coin seriously. In addition, Doge's high volatility and media influence make it an ideal asset for intraday trading.
Like many other crypto assets, Dogecoin is powered by blockchain technology and uses the proof-of-work (PoW) mechanism. However, the Scrypt algorithm, which it shares with Litecoin, makes it simple to mine without complex equipment and has a lower hash rate, which means it uses less computational power.
Though the price of Doge has risen exponentially in recent months, its cost is still low as compared to other cryptocurrencies such as Bitcoin.
7. Shiba Inu (SHIB)
Shiba Inu, a relatively new cryptocurrency, has already taken over some Dogecoin markets. SHIB is a decentralized, community-building experiment developed within the SHIBA INU ecosystem. The Shiba Inu coin dubbed the "Dogecoin Killer", has attracted a lot of attention and is emerging as a popular choice among investors, especially in the light of a bear market in assets like Bitcoin and Ethereum.
Shiba Inu's volatility and increasing trading volumes make it a good candidate for intraday trading.
These 7 best crypto assets to day trade will serve as the base assets for any trader looking to start day trading in the cryptocurrency market.
Before day trading, traders are advised to perform due research and choose the assets based on their preferences and priorities.
eToro – The Best Platform to Day Trade Cryptocurrencies
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.