How Do You Pick a Cryptocurrency for Day Trading

For a long time now, the growing popularity of cryptocurrency markets has been on everyone’s lips. More than 300 million people either use or own cryptocurrencies as of 2022. The huge variety of cryptocurrencies makes it difficult for beginners to choose the right one. That is why in this article, you will find tips and tricks for picking the most suitable cryptocurrency for your crypto wallet app.

What Is Day Trading?

Day trading is a short-term investment strategy that is based on constant transactions with both one and several securities at once in order to make a profit. However, these transactions all take place over the course of a single day.

Despite the high risks associated with such trading, day traders prefer immediate profit opportunities. Specialists in this type of cryptocurrency trading have a deeper knowledge and own blockchain technologies and therefore achieve success.

Where to Begin

Before choosing an investment object, a number of indicators should be taken into account: asset liquidity, volatility, and trading volume.

Asset Liquidity

The first gives investors an opportunity to assess how easily an asset can be converted into cash without affecting the price. The change in the price of a crypto asset can be influenced by the trader making a deal and the execution of the order by the exchange. The ability to slip in time during the difference between these prices makes it possible to make large profits in the cryptocurrency market.

If assets cease to be so liquid, then the risk of a collapse in the cryptocurrency market will increase. You can’t be completely sure about the stability of the market because instantaneous failures happen, for example, when the best buy offers in the order book are crowded out by a large market sell order. In such a situation, participants try to get out of their position as fast as possible. It gives rise to a lack of buy orders, which leads to a sharp drop in the price of the asset.


The next indicator is volatility. Its understanding and accounting are the trump cards of the intraday trader. Many mistakenly believe that Bitcoin and Ether have the highest volatility due to their fame and popularity, but in fact, small-cap altcoins have higher volatility.

The unpredictability of cryptocurrency price movements is closely related to market volatility. So, reports on various studies, a news cycle, or certain economic data (indicators) can affect not only the volatility of the markets but also certain crypto assets.

Volume of Trades

The volume of trades must not be forgotten. It represents the total amount of cryptocurrency that has been sold over a certain period. This indicator reflects the general market interest.

The cryptocurrency market is considered to be very liquid and volatile, which is why the cryptocurrencies on it are different. For instance, in March 2022, there were more than 9,500 cryptocurrencies. More often than not, a cryptocurrency with a high trading volume has high liquidity, which in turn is accompanied by a higher price.

That is why one of the important abilities of a day trader is to monitor the trading volume of an asset carefully. This is essential for assessing the ability to sell an asset quickly and at a higher price than it was originally purchased.

Despite the uniqueness of the blockchain technology underlying the cryptocurrency and, accordingly, the cryptocurrency market, there are problems that are not typical for other markets and financial systems. This is because blockchains are not completely protected from external threats, for example, from hacking smart contracts (special computer programs that track and ensure the fulfillment of obligations) to web attacks.

Topping It Off

High profit implies high risk. It should be remembered that a successful and profitable investment in cryptocurrency requires knowledge, experience, and technical analysis. You should develop your day strategy, which will serve as a compass in your trading activities.

Please note that there are rules and regulations related to the taxation of profits derived from cryptocurrencies. Therefore, your crypto profits must be included as part of your income in order to avoid tax problems.

Day trading is just one of the ways to make a profit in the world of cryptocurrencies, as the capitalization of the global cryptocurrency market at the beginning of August 2022 reached $1.06 trillion.

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