As mentioned above, day trading is focused on intraday market movements. How to Measure Liquidity. Liquidity refers to how easily one can enter and exit a position. In other words, it is a measure of how many buyers and sellers a specific market has. To profitably capture these short-term moves, traders must familiarise themselves with concepts such as liquidity, volatility, Supreme Court and trading volume. Use It to Make Trading Decisions? It’s an absolute necessity for day traders to choose assets with enough liquidity to easily allow for the many operations they will perform each day.

Volatility refers to how rapidly the price changes within a specified time frame. Are therefore ideal for day trading. Assets with higher trading volume have more activity. Trading volumes measure how much or how often assets are sold or traded within a specified time. Financial instruments with high daily volatility will offer day traders the most opportunities to make quick profits from small movements. The best crypto exchange to day trade Bitcoin or any other cryptocurrencies is one with a good reputation, security, trading volume, and liquidity.

Crypto Trade Xplore

Only refine your system after you’ve diligently recorded your results. For more information and useful trading knowledge, follow Phemex Academy. Because day trading involves multiple transactions a day, perhaps the most critical thing to learn first is proper risk management techniques. Never risk more than what you can afford to lose. It is impossible to predict the markets with 100% accuracy, and even the best of traders will experience losses.

Old-fashioned Crypto Trading Signals

If an asset is posting a succession of higher highs i.e., the overall direction is up; the trader will take a long/buy position, hoping to ride the upward trend as much as possible. This strategy is not exclusive to day trading as it can be used to keep a position open for an extended period, especially if the trend continues for weeks and months. Nevertheless, day traders may still opt to close their positions within a single day to minimize their overnight risks. Another alternative is to set take profit or stop loss instructions to automate decisions when the trader is sleeping.

For example, suppose a trader identifies a short-term ranging pattern. Trend trading is a strategy used to capture gains from an asset’s price momentum in a particular direction. In that case, they may choose to long at support levels and close their positions even before reaching the resistance level (or vice versa) to minimize risk and maximize the potential of at least a small profit. A trader must ensure that their small profits will exceed the fees being paid with every transaction in the long run. Because crypto markets are extremely volatile, scalping requires a strict exit strategy while also considering all transaction and funding fees.