The Best Cryptocurrencies for Day Trading

There are a lot of coins in the crypto market, but which one is the best cryptocurrency for day trading?

Should you consider cryptocurrencies for day trading? The high volatility of cryptocurrency has intrigued people to invest in this market. However, due to this nature, some traders find it challenging to gain profit. We can't ignore the fact that trading in a market with high volatility is risky. But, isn't that what makes it more suitable for day trading?

Using cryptocurrency for day trading can be promising since this strategy is usable in the crypto market. The basic of day trading is to purchase and selling an asset within a single trading day. It is a very common method in forex and stock markets. However, there are no rules to use this strategy in the crypto market.

Before you apply day trading for cryptocurrency, there is some information you need to know. Day trading is usually done by well-funded and well-educated traders. So, if you're new in the trading world, make sure you gain enough experience before applying this strategy in the crypto market.

That being said, there is no harm in learning the best cryptocurrency for day trading. 

Best Cryptocurrency for Day Trading 

There are so many coins to choose from in the crypto market, and not all of them are fit for day traders. So there are some considerations when choosing the best cryptocurrency for day trading. These are some examples of coins you can try to day trade:

1. Bitcoin

When people talk about cryptocurrency, the first coin that comes to mind is Bitcoin. The name Bitcoin itself is synonymous with cryptocurrency. It was firstly created in January 2009 by the mysterious Satoshi Nakamoto. This new currency offers lower transaction fees compared to traditional online payment and is operated by a decentralized authority. Bitcoin was the first digital currencies to use peer-to-peer technology to facilitate instant payment.

Bitcoin can be a great choice if you want to try cryptocurrencies for day trading. Despite new coins coming out, Bitcoin remains the most popular and has the highest demand in the market. This is especially considering Bitcoin only has around 3 million coins in the mine.

2. Ethereum

Ethereum is a blockchain platform with its own cryptocurrency called Ether or ETH. Being the largest cryptocurrency after Bitcoin, this Altcoin is said to be the 'rival' of bitcoin. Ethereum or ETH gains high popularity among business people since it integrates smart contract protocols into its blockchain. 

When COVID-19 hit the crypto market, Ethereum managed to stabilize itself from the market crash. In fact, in 2020, this coin surpassed Bitcoin by having a 75% rise. Ethereum also shows signs of high volatility which is great for day trading.

3. Tether 

Tether is a blockchain-based cryptocurrency that is backed by traditional fiat currencies such as the US Dollar. It's also a stablecoin which means it's used by crypto investors who want to avoid the risk of extreme volatility commonly associated with other cryptocurrencies. It means this coin has fewer fluctuations compared to other coins.

There are some reasons why Tether is considered one of the best cryptocurrencies in the market. Tether is known to have the highest 24-hour trading volume. This is the perfect cryptocurrency for day trading. It is also the reason why more traders are getting inclined towards it.

4. Tron 

Tron or TRX is a blockchain-based decentralized digital platform with its own cryptocurrency. It was founded in Singapore around 2017 by the Tron Foundation. Tron was initially marketed primarily in Asia, but now this coin had gone global. In fact, this is one of the most favorable cryptocurrencies for day trading. The structure of Tron is often compared to Ethereum since it's using the same basic building blocks. 

Tron was created as a challenge to the media industry such as Netflix and Amazon. Their slogan 'decentralize the web' aims to reject the corporate middleman in the process of consuming media. As a cryptocurrency, this coin is highly volatile.

5. EOS 

EOS is a blockchain-based platform that enables the development of business applications or DApps. They also support secure access, authentications, permissioning, data hosting, and communications within DApps and the internet. In fact, because of the security, EOS is often compared with Ethereum. 

EOS growth as a cryptocurrency is remarkable. The developers managed to raise billions of dollars, making its value soared several times, thus creating an elevated level of unpredictability. Although this might seem risky, it is a great condition for day trading since the coin's volatility is high. EOS has active support teams available in most exchanges across the world, making these coins more popular among traders.

6. Binance Coin 

Binance coin or BNB is a popular crypto asset introduced by Binance exchange. Initially, BNB was Ethereum based, but it is now using its own blockchain which is the Binance chain. Formerly created as a utility token, BNB is currently a token to pay exchange fees and for paying some services or tools. 

A lot of investors choose BNB since it's a product of Binance, a household name among the top cryptocurrency exchanges in the world. Therefore, this coin is supported by mainstream exchanges and wallet companies, making it a good coin to be considered for day trading. Right now Binance Coin has a market cap of more than $57 billion and ranks behind Bitcoin, Ethereum, and USD Tether.

See also: Top 10 Cryptocurrencies by Market Cap

7. Ripple 

Ripple or XRP is a technology that acts as a cryptocurrency and digital payment network for financial transactions. It was first released in 2012, co-founded by Chris Larsen and Jed McCaleb. The main process of Ripple is a payment settlement asset exchange. Ripple operates on an open-source and peer-to-peer decentralized platform. 

Right now, Ripple is considered one of the largest cryptocurrencies for day trading. There are many reasons why XRP gains popularity, one of them is its function as an intermediary for accelerated transaction-processing time and cross-border partnerships. So, it is possible to transfer money in any form such as Yen, Euros, or other cryptocurrencies.

8. LiteCoin 

Litecoin was created two years after Bitcoin. Litecoin also has a faster transaction speed compared to Bitcoin. It is also the world's first open-source P2P Altcoin. Due to this nature, Litecoin can be a good cryptocurrency for day trading. However, Bitcoin and Litcoin differences can be seen in their market cap; while Litcoin has a total value of $12 billion, while Bitcoin has reached around $1 trillion.

9. IOTA 

IOTA or MIOTA is a cryptocurrency created for the Internet of Things or IoT. It's a network of physical objects that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data. The IOTA foundations that created the coin have linked agreements with large corporates such as Bosch and Volkswagen. 

IOTA as cryptocurrency is an open-source digital asset that centers around secure payments and exchanges. This coin has flourished due to the increased number of IoT internet-empowered devices. They replace its blockchain with Tangle, a system of nodes in which a new transaction confirms two previous transactions. The aim is to solve key scalability and performance issues that Bitcoin has. The IOTA market cap went down from its 2017 high, but later showed improvements since late 2020.

How to Be a Successful Day Trader

Understanding what is the best cryptocurrencies for day trading isn't enough to start using this strategy successfully. Due to the fast nature of day trading, it's important that you have the characteristic of a good day trader. What are those?

1. Understanding Marketplace

If you want to be a day trader, you need to understand the market. Those who attempt to day trade without having knowledge and experience would end up losing money. You need to understand technical analysis and chart reading in order to understand the price movement. But that does not mean you can ignore market fundamentals. Knowing the market you're in, and the asset that exists in the market will give you an in-depth understanding of what you're trading with.

2. Capital

It's important to know how much you're willing to risk for day trading. A large amount of capital is necessary in order to capitalize effectively on intraday price movement, but good day traders only risk capital which they can afford to lose. This means you need good risk management skills. Not only does this protect you from financial ruin, but it also helps you to control your emotions in trading.

3. Discipline

Discipline is a must if you want to try day trading in the crypto market. Great strategies and huge capital are useless if you keep slacking off. In fact, a lot of traders failed because they don't have enough discipline. Create a trading plan to help you understand what's going on, and keep studying the market until you feel ready.

4. Strategy

A good day trader needs to have a great strategy to minimize the risk and maximize the profit. There are several strategies in day trading you can use. Some of them are:

• Range Trading
  Range trading refers to the difference between high and low prices. If you can notice these patterns, you can take advantage of them. You want to pay attention to overbought and oversold zones. That's why oscillator indicators such as CCI or RSI are necessary.
  
  
• Scalping
  Scalping is the most common strategy in day trading. Scalpers usually take advantage of increased trading volume to profit from. They might exit a trade minutes after entering the market. Ideally, scalpers want to exit a trade before any news release or short-term fluctuation has a chance to change the market sentiment. To do this you need to have quick decisions making since you only have a few minutes to think.
  
  
• Arbitrage
  This strategy involves buying cryptocurrency in one exchange and selling it in another exchange at a higher price. The difference in the buy and sell price of the asset is called the 'spread'. However, this can lead to major differences in the spread because of the differences in asset liquidity and trading volume in exchanges. If you want to start doing this, you need really good portfolio and management skills to keep track of what you're trading and at what price they're executed.

After Words

Trading in a highly volatile market such as cryptocurrency sounds very challenging. Day trading is a great method to apply in crypto trading. Since there are a lot of crypto coins in the market, you need to choose the best cryptocurrency for day trading. After choosing your coins, make sure you have a solid strategy to help you gain profit. Use a demo account to practice strategies until you feel comfortable using them in the real market. Although it sounds easy, day trading is not for novice traders as it requires knowledge and experience.

Besides day trading, there are other cryptocurrency strategies you can use such as swing trading, trend trading, and many more. A good variety of them can be found in 5 Cryptocurrency Trading Strategies for Beginners.