The Risks and Rewards Of Day Trading in Cryptocurrency

Crypto day trading is also known as intraday trading and involves purchasing and selling cryptocurrencies within a day. The goal of a day trader is to earn a good profit amidst value fluctuations of cryptocurrencies.

Cryptocurrency day trading is slightly different from conventional day trading because it has specified overlapping hours of trading each day. Intraday trading, on the other hand, has no set time intervals within a day. It is easy to own cryptocurrencies in crypto day trading, while in-stock day trading, traders can only acquire full ownership through the right legal procedures.

This article will address the risks and rewards surrounding cryptocurrency day trading. The knowledge will help you weigh the pros and cons to decide if you are ready to invest in cryptocurrency day trading. 

Risks of Cryptocurrency Day Trading

Intraday trading comes with a variety of risks that often deter crypto traders. Knowing these risks is essential, especially if you think of day trading as an option for your crypto portfolio. Here are some of the significant risks that come with crypto intraday trading.  

  • Highly Volatile Crypto Market

The cryptocurrency market is highly volatile. Therefore, the value of cryptocurrency can easily change at any time. Volatility refers to how sudden the cost of assets can increase or decrease. When the price of cryptocurrencies falls, traders selling these coins can make significant losses. 

  • Risk of Your Exchange Getting Hacked

When you are day trading, you will probably keep your cryptocurrencies in a cryptocurrency exchange. The essence of storing crypto in an exchange is to reduce the disruptions when transferring cryptocurrencies during day trading. However, when coins are exchanged, they are at a high risk of getting stolen after the exchange gets hacked

  • Misleading Projects 

Projects with substandard business systems rise in price for a while and then suddenly fall in price. The peak of such projects may mislead a day trader into investing in them. Eventually, the value of the project drops, the trader who invested may suffer high losses. It is, therefore, wise to investigate particular projects before investing in them to avoid losses.

  • Day Trading Occurs Through Speculation

There is no assurance that a particular way of day trading will earn you money. A trader can make an illegal transaction, making them lose a lot of money. Day trading is, therefore, risky to some level.

Rewards of Crypto Day Trading

  • Global Access

One advantage of cryptocurrency day trading is that you can practice it anywhere as long as you have the right internet connection. It thus has benefits over conventional day trading, which has a location limit.

  • Potential for High Returns 

The volatile nature of cryptocurrency projects is not just a negative thing. When a trader invests in a cryptocurrency project which increases in value, he may gain enormous profits. Projects may increase their value by over 10% within a few hours. 

  • Low Fees and Low Taxes

Exchanges that facilitate day trading, such as BitMEX exchange, also charge low fees and low taxes. You cannot compare day trading exchanges with conventional exchanges because the latter charges its users high fees and high taxes. 

  • Crypto Day Trading Markets are Always Open

When it comes to crypto day trading, markets are open 24 hours a day. One can, therefore, get more hours to day trade, unlike when one is trading stocks. Therefore, Crypto day trading has benefits over conventional day trading because it has a trading time limit.

  • Favors Both Average and Large Investors

In crypto trading, both average and large investors are favored, unlike conventional trading, which is expensive for the average investor. The probability of success for both small and large investors is equal. Therefore, one does not need a long-term view to determine the potential success rate when crypto day trading. Investors should focus on the current cryptocurrency rates when day trading because they are uncertain of the future coin rates.

Final Thoughts

Day trading can earn you high profits or cost you significant losses. Therefore, it is wise to get yourself a stable trading strategy to avoid making these losses, especially if you are new to day trading.

Despite the risks associated with it, day trading is a great platform that will enable you to expand your cryptocurrency portfolio. Also, the high volatility nature of the cryptocurrencies trading market allows you to make significant earning.

Bitcoin live price
price change

Cryptocurrency day trading is available 24 hours each day. Therefore, you have more time to carry out your exchanges than conventional day trading, where you have limited hours in a day. In this case, you can make more profit because you have more time to trade. You can weigh the risks and rewards of day trading to get ready for this exciting cryptocurrency adventure!

Stay up to date with our latest articles

More posts

Real Yield: The Top DeFi Tokens for Generating Actual Revenue

This year’s brutal bear market has claimed a sizable batch of crypto startups and nascent coins. To weather the volatility, the long-term believers in decentralized finance (DeFi) are in search of one thing: “Real Yield.” The term has grown in popularity among those looking for hidden gems in the market for decentralized finance applications. More importantly, it marks an appetite for responsible crypto investment opportunities that can outlast a turbulent market cycle.  So what exactly is “real yield” in the…

Get Top Notch Smart Contract Audit and KYC Services for your Crypto Project with Solidproof

Solidproof is one of the top auditors in the crypto industry with an increasing offer of smart contract auditing, KYC, and marketing services. The German company has developed quickly since its inception in 2021, building a vast portfolio of prestigious and successful clients. The DeFi space is a nourishing environment for crypto and decentralized finance projects. However, it is also a breeding ground for scammers, multi-million hacks, fraud, and money laundering. Protocols running on faulty codes risk exposure to cybercriminal…

What Is an Iceberg Order in Crypto?

Iceberg orders allow traders to buy or sell a large quantity of cryptocurrency without tipping off the market. By splitting their orders into smaller chunks, traders can execute their trades without causing undue price movement.  This guide will explain what iceberg orders are and how to use them in your trading strategy. What Is an Iceberg Order in Crypto Trading? An iceberg order lets traders buy or sell a large number of assets without revealing their intentions to the market.…

Ultimate Beginner Guide to Bitcoin Improvement Proposals (BIPs)

Bitcoin Improvement Proposals (BIPs) are essential tools in the crypto community. They allow the Bitcoin community to propose and vote on changes to the Bitcoin Core software.  BIPs can also work for other wallets/services and have a process for development and implementation. This guide will explore what BIPs are, how they work, and some of their benefits and risks. What are Bitcoin Improvement Proposals (BIPs)? Bitcoin Improvement Proposals (BIPs) are proposals for changes to the Bitcoin protocol. Anyone can submit…

A Beginner’s Guide to Identifying and Avoiding a Crypto Bull Trap

Cryptocurrencies are a relatively new and exciting investment opportunity but are also highly volatile. Prices can swing rapidly, and it is easy to get caught up in the excitement of trading. However, the hype may arise without understanding the risks involved. This guide provides basic information on identifying and avoiding a crypto bull trap to safely invest in this exciting market. How to Identify a Crypto Bull Trap Crypto investors are always on the lookout for signs of a bull…

Why Do Some Crypto Projects Issue More than One Token?

In recent years, the popularity of cryptocurrency has exploded. As a result, more and more people are looking to invest in crypto projects. However, not all projects are equal, and it can be challenging to determine which ones are worth investing in. This guide aims to help investors make informed decisions about which crypto projects to invest in. It will explain multi-token models and why they have become so popular among crypto projects.  The guide will also outline the benefits…

Are Hardware Wallets Safer than Online Ones?

An online wallet is a software program that stores cryptographic keys. This technology allows users to make digital payments and secure their online presence. Over the last years, many users have started to trust hardware solutions to store their coins. In this guide, we will explore the pros and cons of using these two wallets. In particular, we will focus on a matter that is vital for crypto enthusiasts: the security of their funds. What Is an Online Crypto Wallet?…

Tips for Trading in a Volatile Crypto Market

Cryptocurrencies are a new and exciting investment opportunity but can also be highly volatile. This guide aims to teach you how to trade in a volatile crypto market to increase your success probability.  We will cover everything from identifying a volatile crypto market to managing risk when trading volatility. So whether you are a seasoned trader or just starting, this guide has something for you. Why Is the Crypto Market so Volatile? The crypto market is volatile because it is…

How to Spot a Crypto Project with Great Tokenomics?

In the cryptocurrency world, there are a lot of projects with amazing tokenomics. However, it can be challenging to determine which projects are worth investing in.  This guide will help you spot a project with great tokenomics. In this way, you can make a great decision about where to invest your money.  Before analyzing the technical components of tokenomics, there are other red flags you should be able to spot. Our guide will begin with this premise and then move…

A Guide to the Signs that a Crypto Project is About to Fail

Cryptocurrencies are digital assets and a payment system invented by Satoshi Nakamoto. They use cryptography to secure their transactions and control new units' creation. Cryptocurrencies are decentralized, not subject to government or financial institution control. Bitcoin, the first cryptocurrency, appeared in 2009. With the rise in popularity of cryptocurrencies, there has also been an increase in crypto projects that end up failing.  This guide will explore the signs that a crypto project will fail. By understanding these signs, you can…