Day traders often spend a lot of time looking for the best cryptocurrency to day trade. They need to find a coin that has low volatility, high liquidity, and also one that is suitable for their trading strategy. For instance, if you want to buy cheap and sell it at a higher price, then you need a digital currency that is ideal for day trading. This type of trading requires frequent small buys and sells of the same cryptocurrency in hope of earning more money than you spent on buying the digital currency. However, finding the best cryptocurrency to day trade on Bitcoin Smarter can be a challenge if you don’t know what you are looking for. Check out some pointers below:
Coins with low volatility
One of the important aspects of day trading Cryptocurrencies is the volatility of the coins. Volatility is the rate at which a coin’s price changes over time. If you buy a coin for $1 and sell it for $2, earnings would be $2 profit. However, if the price of the coin goes up to $3, your $2 profit is now cut to $0 because the coin’s price increased by $2.
When you are day trading, you don’t want the price of the coin to change too drastically. You would rather buy the coin at $1 and sell it at $2 with a small profit. This way, you would earn small profits consistently. If a coin has low volatility, you can hope that it stays at $1 for a long time. It is also important to check the coin’s historical volatility.
High liquidity and volume
Day trading Cryptocurrencies are all about making small buys and sells. To make these buys, you need to have a large supply of the coin. The best way to do this is to buy large amounts of coins. Some coins can be bought in large amounts by miners while other coins can be bought in small amounts by investors. If a coin has high liquidity, it means that its trading volume is high. The trading volume is the amount traded in a specific period.
If a coin has a high trading volume, it means that there are more buyers and sellers of the coin. You should also check if the coin has low transaction fees. If the transaction fees are low, it would be easier for you to buy the coin in large amounts. You should also look for a coin that has good trading volumes and high liquidity.
Decentralized coins
Another factor that you should consider when choosing the best cryptocurrency to day trade is the decentralized nature of the coin. If the coin is decentralized, the supply is distributed among all the holders. This means that a holder of the coin does not have the power to freeze or control the coin. Decentralized coins are ideal for day trading because they have low volatility.
Unlike Bitcoin or Ethereum, which have high volatility because of the supply, decentralized coins are less volatile. So, when you buy and sell these coins, they don’t change a lot of money because they are held by many people. Decentralized coins are also great for day trading because they don’t have a single entity controlling them. This means that if the value of the coin goes down, the market has more control over the price change. So, decentralized coins are the best for day trading.
High Liquidity Coins
When looking for the best cryptocurrency to day trade, you should also consider high liquidity coins. The liquidity of a coin determines if it is a good day trading coin. The higher the liquidity, the easier it is for traders to buy and sell the coin. Some coins with high liquidity include Bitcoin and Ethereum. However, the highest liquidity of all is found in coins such as a tether. High liquidity coins are ideal for day trading because it allows you to buy and sell them easily.
You can also keep track of the price of these coins and be ready to buy at a low price and sell them at a high price. Another important aspect of a coin with high liquidity is the trading volume. You should look for a coin with high trading volumes so that you can buy and sell it easily.
Final Words
Day trading is a fun and profitable way to make money. However, to be successful at this, you need to find the best cryptocurrency to day trade. This will depend on the factors mentioned above. You can also try trading altcoins. However, if you are going to day trade, you should stick with the best cryptocurrency to day trade.