Day trading is one among many strategies by which investors in crypto can navigate the market. Unlike long term holding or swing trading, day trading is about entering and exiting positions on the same day.
The goal is of course to earn a profit from price movements – when you day trade the futures market, this can mean alternating between long and short positions to take advantage of volatility.
Rather than delving too deeply into a crypto asset’s background and the fundamentals of a project, day traders will typically rely on a good dose of technical analysis, looking at key indicators to get a sense of where the price might head in the short term.
In the process, day traders often keep a close eye on the news as well, to anticipate big price movements such as the one experienced by XRP recently, following the news around Ripple’s partnership with Flare.
Quick Reminder: What is liquidity?
For liquidity on bitcoin futures, AAX currently ranks in the top 10 globally on TokenInsight, with a liquidity score of 57.47, and charting a volume of more than $100 million per day.
To further support liquidity, AAX is the only crypto exchange to be powered by LSEG Technology, the same matching engine that powers London Stock Exchange. This technology is capable of processing orders with ultra-low latency, making AAX’s futures market suitable for high-frequency API traders.
Day Trading Strategies
Scalping is one of the most common day trading strategies. It’s about taking advantage of small price movements in short timeframes. Unless using a trading bot, this requires traders to pay close attention to the market and respond fast to sudden movements. Especially when trading futures contracts with high leverage, traders can realize 100%+ profits in minutes, but can also see their margins liquidated if they do not place a stop loss.
What is leverage? Learn more here.
Range trading is based on paying close attention to support and resistance levels and entering and exiting the market accordingly. This strategy assumes that prices will continue to trade within a certain band or at least that it is significantly bound by historical price events. It is important to realize, however, that the more times a price touches a support or resistance level, the more likely it becomes that there will be a breakthrough – down or up. Again, placing a stop loss is crucial.
High-frequency trading is a type of algorithmic trading strategy. It involves developing algorithms and trading bots that can quickly enter and exit many positions over a short amount of time – we’re talking milliseconds here. Some traders are able to develop their own algorithms and connect to AAX via API, but we also see traders on platforms like Quadency engage our markets with trading bots. This is the easier way to automate your trades. Professional HFT-traders also engage in lots of back testing, monitoring, and tweaking code to adopt to changing market conditions.
What’s your strategy?
AAX accommodates all types of traders, from long term holders that wish to place their assets in a savings account to earn an interest, to high frequency traders that scalp the markets.
AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance.