5 Best Crypto Exchange for Day Trading in 2022 [Update Oct 2022]

FxBrokerReviews.org – By day trading cryptocurrencies, you will buy and sell virtual money all day long. This implies that you will typically begin a position to close it with a bit of profit a few hours or even minutes later.

In this article, we analyze the top crypto day trading platforms available today, along with some essential details on the operation of this investing market.

What Is Crypto Day Trading?

Comparing cryptocurrency day trading to a long-term purchase-and-hold strategy is like comparing apples and oranges. Because experienced day traders rarely stick to a position for longer than a few hours, this is the case.

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You might even discover that day traders open and exit a position in a matter of minutes, relying on the commodities.

The main idea behind day trading in cryptocurrencies is to hunt for opportunities to profit from transient market patterns. This implies that you will target modest profit margins with particularity but much more frequently.

Let’s look at a straightforward example of a crypto day trading position before moving on:

• You trade the BTC/USD pair because you anticipate that the value of Bitcoin will rise relative to the US dollar.
• Several hours after starting your position, BTC/USD has gained by 7%. You decide to invest $500 in this transaction. You end the deal with a profit of $35.

The crypto day trader was pleased to close their BTC/USD position at a profit of 7%, as you can see from the sample above. This is true even if the trader thinks Bitcoin will probably continue to appreciate over the following days. So, as a day trader, you must practice discipline.

Pairs

When day trading cryptocurrency, one of the first things you’ll need to understand is that digital currencies are purchased and sold in pairs, for instance, Bitstamp’s trading platform enables you to trade both crypto-cross and fiat-to-crypto combinations.

• Fiat-to-crypto pairs will include a fiat currency and one digital asset (like XRP) (e.g., USD). These pairs are simpler to day trade because you can calculate each pair’s value in your favorite currency.
• On the other hand, crypto-cross pairs include two digital assets. For example, in day trading ETH/EOS, you may bet on whether Ethereum would increase or decrease in value relative to EOS.

Crypto-cross pairs are best avoided by beginners because there is no fiat benchmark that you can use to determine the worth of your position quickly.

Crypto Day Trading Orders

You also need to comprehend orders if you plan to day trade cryptocurrencies in addition to pairs.

When day trading cryptocurrencies, the following orders should be taken into consideration:

• Sell orders enable you to leave a position, while buy orders are utilized to enter the market. This is inverted if you participate in short selling. To short-sell BTC/USD, for example, you would open the trade with a sell order and finish it with a buy order.
• You can determine the price at which your trade is opened with limited orders. Use a market order if you want the trade to go through immediately at the next best price.
• Think about placing a stop-loss order to make sure you don’t lose a lot of money.
• You can use a take-profit order to lock in your profit targets automatically.

We should be aware that not all cryptocurrency day trading platforms provide the above order types. As a result, this is another element you should consider while selecting the most refined cryptocurrency platform for day trading.

Crypto Day Trading Rules

US-based traders must abide by the pattern day trader rule in the conventional financial world. This indicates that you are a day trader if you execute four or more trades in a 5-day timeframe.

Therefore, you need a capital balance of at least $25,000 to qualify. It should go without saying that this prevents many people from engaging in day trading.

Nevertheless, the good news is that the pattern day trading restriction does not apply to cryptocurrencies. As a result, you are accessible to day trade cryptocurrency with any amount you like.

Having said that, if you choose to leverage your cryptocurrency trading and use a platform governed by the SEC, you will still need to maintain a minimum margin amount of $2,000 to do so.

The Best Exchange For Day Trading Crypto

There are no limitations on which digital currencies you can pursue while day trading crypto, which is one of its best features.

Since you only intend to have positions open for a few hours or minutes at a time, your main objective is to benefit from short-term trends.

Some digital currencies are better suited for day trading than others, particularly those that gain from high levels of liquidity.

Additionally, cryptocurrency traders frequently choose pairs with higher volatility because they offer numerous opportunities for profit-making throughout the day.

Explore the five digital assets covered below if you’re still unsure which cryptocurrencies are the best trade today for your financial goals.

1. Lucky Block

Lucky Block is one of the top cryptocurrencies to consider if you want to day trade cryptocurrency. A thrilling crypto-lottery platform called Lucky Block aims to use blockchain technology to provide open daily prize draws with better odds of winning for each participant. LBLOCK, the native token of Lucky Block, had significant price gains in the days and weeks that succeeded its debut listing on PancakeSwap in January 2022.

Early investors received tremendous gains when LBLOCK rose over 3,200% from the token’s pre-sale price by the middle of February. Despite a minor decline in price since then, Lucky Block still has a market cap of more than $318 million when all dilution is considered. Importantly, LBLOCK’s extraordinary popularity across numerous exchanges has made the token perfect for day trading, with daily swings of 10% or more being usual.

Incidentally, the V2 of the LBLOCK token, which will be interoperable with controlled exchanges, was recently described in a post on the official Lucky Block Telegram channel. This is fantastic news for day traders because it vastly expands the pool of possible investors using LBLOCK, resulting in more liquidity and real price action. Overall, LBLOCK is our choice for the best cryptocurrency to day trade this year because of the criteria mentioned above.

2. Bitcoin

You may also want to stick with Bitcoin until you feel more at ease if you start cryptocurrency day trading. Depending on your chosen platform, you might trade this at BTC/USD or BTC/USDT. Both pairs let you day trade Bitcoin’s potential value relative to the US dollar.

Unlike other digital currencies, Bitcoin has the most liquidity and trading volume. You will gain from tighter spreads as a result. Additionally, even while Bitcoin’s price fluctuations are still erratic, you’ll probably notice that they are less extreme than other digital assets.

3. Ethereum

Ethereum is a large-cap cryptocurrency that enjoys high volume and liquidity, much like Bitcoin. You won’t have trouble locating an appropriate trading platform because this cryptocurrency is the second-largest in the world by market capitalization.

Ethereum has a 52-week high of $4,900 and a low of $1,300 to indicate price movement over the past year. Because of its high volatility and spread of more than 110%, Ethereum is a fantastic cryptocurrency for day trading. Ethereum can be exchanged against hundreds of digital assets in addition to US dollars.

4. Dogecoin

In the first half of 2021, Dogecoin was one of the most popular cryptocurrencies, with gains of almost 10,000% in a few months. However, Dogecoin has started a negative cycle, with 2022 lows of $0.17, after reaching highs of $0.74 per token.

With that stated, Dogecoin is worth considering for this technique if you want to follow market trends and trade cryptocurrency based on hype and volatility. This is because conjecture frequently determines its value, particularly when Elon Musk tweets about virtual currency.

5. BNB

BNB is another cryptocurrency asset that is worthwhile concentrating on if you’re an upside investor looking to day trade cheap coins. The Binance exchange, which supports digital currency, has established it as one of the top 5 crypto assets.

BNB reached a peak of about $700 in late 2021, but it has since fallen to below $400. As a result, you can day trade this coin for a discount price.

How To Choose Crypto For Day Trading?

Specific digital currency pairs are superior to others for crypto day trading based on several fundamental factors.

The following is included in this:

Volume & Liquidity

When choosing which crypto pair to target for day trading, volume and liquidity are the most crucial factors.

• The term “volume” describes the total quantity of trading activity that a particular pair draws over a given time frame, typically on a 24-hour basis.
• The amount of capital readily available in a particular market is called liquidity.

A pair’s liquidity level increases with the volume it receives. Most significantly, you will find it simple to enter and exit positions at appropriate levels while trading extremely liquid pairings.

• For instance, if you trade large-cap cryptocurrencies like Bitcoin, Ethereum, Cardano, or BNB, you’ll never have trouble finding a buyer when it comes time to withdraw.
• As a result, market spreads will be much more competitive, allowing you to close out your position without having to accept a disadvantageous price.

On the other hand, you will observe that trade volumes are much lower when you focus on cryptocurrencies with smaller market caps. Low liquidity levels are the effect of this.

And as a result, when you choose to close your day trading position, you can have trouble finding a suitable buyer.

If this is the case, you could have to settle for a significantly lower price when trying to cash out, frequently resulting in the loss of profits from the relevant position.

Volatility

The volatility of each pair is the next factor to consider when selecting the best cryptocurrency to day trade. Cryptocurrencies are much more volatile than conventional stock markets.

But as was already mentioned, some projects are significantly more unstable than others. The usual rule of thumb is that the more volatile a cryptocurrency is, the smaller its market capitalization.

This is because little trading activity can produce a significant price movement.

For instance:

• According to CoinMarketCap, Bitcoin reached a top of $38,359 and a low of $36,488 in the previous 24 hours. A volatility spread of just about 5% results from this.
• Anchor Protocol, on the other hand, has had a 24-hour high and low of $3.04 and $2.38, respectively. This results in a volatility spread that is roughly 25% bigger.

Your proficiency in the day trading crypto arena will ultimately determine whether or not you should aim for markets with higher volatility levels.

As a result of frequent opportunities to acquire and exit winning positions, experienced traders will actively seek volatility. But if you’re a beginner, you might want to begin with less volatile crypto markets.

Tight Spreads

Finding marketplaces for digital currencies with narrow spreads is crucial for day traders in the cryptocurrency market. The percentage difference between the bid and ask prices of the cryptocurrency pair you are trading is referred to as the spread, as we discussed briefly.

Additionally, it would help if you achieved profits bigger than the spread when trading cryptocurrency to benefit. For example, if the spread on BTC/USD is 0.75%, your position must increase by at least this amount for you to profit.

In addition to the particular digital asset you choose to trade on, your chosen cryptocurrency trading platform will also affect your pay spread.

Typically, you’ll gain from tighter spreads if you trade highly liquid pairs like BTC/USD or ETH/USD. However, a significant spread will make it difficult to join and exit a transaction with winnings if trading less liquid markets with low daily volumes.

Conclusion

Everything you need to know to start your investment journey off on the right foot has been covered in this article on how to day trade cryptocurrencies. We’ve discussed the most acceptable crypto day trading tactics, potential hazards, and target digital currency pairs.

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