A Beginner’s Guide to Day Trading Bitcoin

A Beginner’s Guide to Day Trading Bitcoin

If you want to earn money by day trading, you need to learn a few things to put yourself on the right path. This guide will give you a proper introduction into day trading Bitcoin – the technical and psychological aspects, what you should know in advance and how to maintain a stable income. Bitcoin Day Trading Bitcoin Day Trading Believe it or not, the Bitcoin network still has big unrealized potential – developers are continually working to improve its scalability, privacy-enhancing features, and add other functionalities. This is why it’s not too late to get into Bitcoin day trading. However, it will take a lot of preparation and effort on your part. In day trading, positions should be closed by the end of a working day and you’ll need a high degree of self-discipline and objectivity.

Steps to Take Before Day Trading Bitcoin

Reportedly, good day traders make one to two percent in profit per day. The statistical probability is slim but how can you beat the odds? Your chances of success depend on taking the right steps before you start trading:

  1. You need to understand better how blockchain itself works and what makes it different from the traditional model of transactions. Learn the basics through free educational content online. And then, gather a variety of opinions from people who know what they are talking about. 3commas hosts an entire community of professional traders so you can learn from firsthand experiences.
  2. Pay attention to all the aspects – positive as well as negative. Research impartial resources that will objectively highlight different peculiarities of this market. There is a lot to learn from blogs, books, online classes, documentaries, etc.
  3. Accept the inherent risks. In this risky market, things can go wrong at any time. For example, in late June 2019, the Bitcoin price fell by 15% after a violent sell-off. Interestingly, even seasoned traders were caught off guard.
  4. Determine how much you can invest. Considering the volatility of Bitcoin, you can expect a lot of ups and downs. Your existing capital, risk tolerance and financial goals are the main determinants.
  5. Catch up to speed with the recent industry updates. Various studies have shown that the media is the most important source of influence on the price of Bitcoin and other cryptocurrencies. Certain news spreads like wildfire and the price of Bitcoin gets impacted. For example, a simple declaration of a large company’s interest in Bitcoin may cause a sharp increase in the price.
  6. Get into politics. Political events also have an impact. During the Greek crisis in 2015, many Greek traders invested in cryptocurrency and affected it. Similarly, presidential elections or the Brexit will affect Bitcoin’s price before any other crypto.
  7. Find good software. If the software interacts directly with financial exchanges, it is a useful tool in such rapidly changing settings of daily trading. Based on the comprehensive interpretation of the market data, the 3commas trading program allows trades to be executed faster and more efficiently.

BTC Day Trading Strategies

Even though you can get deep into highly technical indicators, you should learn the basics of simple day trading strategies in the beginning. It does not necessarily have to be an intricate strategy that you can’t wrap your head around. When it comes to starting out, the more straightforward – the more effective. Basic questions you should be asking yourself when deciding on a strategy are:

  1. How much effort are you willing to put into the process? Can you manage sitting behind the computer for a long time or you want minimal involvement?
  2. What kind of expertise does the strategy require? With varying degrees of complexity, you need to find a suitable one for your skills.
  3. When do you want to see the first results? Do you expect to start earning as soon as possible or can you give it some time?
  4. What trading style would suit your personality best? Decide if you should stick with formula-like systems or follow a more creative and intuitive approach.
  5. Do you want to play it safe or make riskier but potentially more profitable trades?
  6. What are the regulations in your country? They can eliminate certain strategies. For example, the US regulations place limits on leverage and hedging.

In any case, day trading is a very particular kind of activity. Positions are based on short-term movements so you need to respond quickly. If there is relevant news that could affect the price or you see an emerging pattern, the window for any actions is very limited. After you master basic techniques, you could consider using a series of strategies.

Should I Use a Trading Bot?

There is no denying that computers can perform calculations much better than humans. It is crucial, especially when there is real money on the line. The success heavily depends on how the trader’s psychological state, whereas a bot is not subject to emotions. People often make mistakes by holding trades for additional gains even though it goes against their chosen strategies. Failure to stick to the plan can have significant ramifications. People lose existing profit just because they feel they can get more. Another human flaw to point out is not being able to react quickly enough. Trading bots never make erratic decisions because a predetermined algorithm dictates every action. Also, when it comes to day trading, timing is key. Bots can react to data and execute transactions in a matter of seconds. However, a trading bot is as good as the technology behind it. When you choose the automated trading platform by 3commas, you get a robust platform, with no downtime and technical hiccups. And considering you can share and learn strategies, indicators, and settings with other traders in the community, your trading improves even further.

How to Read Bitcoin Day Chart

All trading charts show data points for the past and current price movements. A Bitcoin day chart focuses on its price action for a specific day. You can also view changes within a specific timeframe, which helps traders make more informed decisions. Whilst there is no shortage of line and bar charts, one of the most valuable types is the candlestick chart. It offers plenty of valuable information in a concise form. Here is what the chart can tell you: Reading Bitcoin Day Chart

  • It shows what Bitcoin’s opening and closing prices were.
  • Shadows display the highest and lowest prices at which Bitcoin has traded that day.
red and green sticks
Red and Green Sticks
  • If the stick is red, then the closing price was lower than the opening one.
  • When it’s green, it signifies that it closed higher.
  • If you can tell that a chart is mostly red and heading downwards, it exhibits a downward trend.
  • If the opposite is true (green and upwards), it is an upward trend.

There is a lot more information to extract, which will hold significance in your trading. So, don’t rush into trades before you properly learn how to utilize charts.

How to Find a Trend

Trends show the momentum of Bitcoin price changes in a particular direction. You can identify these patterns on a chart and make decisions based on that data. It’s not hard to tell the price direction as it is indirectly represented on a chart through these invisible lines:

finding a trend
Finding a trend

However, it is obvious that prices don’t follow the lines precisely but rather move back and forth between an upper and a lower trend line.

a trend channel
A trend channel

Peaks in an uptrend and throughs in a downtrend form a trend channel, which is a commonly used concept in the technical price analysis. The channels show where Bitcoin is trading at a particular time and compares it to the overall direction.

Analyzing Bitcoin Day Chart

Price changes are not linear. That is why technical chart analysis utilizes levels of support and resistance – they showcase short-term trends within the overall trend. Resistance shows where an upward trend is expected to pause or rebound. That means that there are many buyers concentrated at that time. Resistance can be used as an exit point for a transaction. A level of support can be used to predict where a downward trend can pause or rebound. This can be used as an entry point.

levels of support
Levels of support

Limit Orders for Bitcoin Day Trade

Let’s examine limit orders by comparison to market orders. Market orders are the fastest way to enter or exit a trade at the best price available at the time. However, instant execution means that the price becomes secondary. When you place a limit order, it will only be triggered once Bitcoin reaches the price you set. Thus, you may get a better price if you are patient enough. Bear in mind that the price should be profitable for you but still realistic. For example, you want to buy three bitcoins for $9,000 per coin. The limit order will not be executed until there is a seller (or sellers) willing to accept the price that matches yours. Or you could be selling Bitcoin for $10,000 and no lower. If the market price is lower, it simply will not execute your order. Here are the benefits of limit orders:

  • Better prices for the trader’s orders;
  • Protection against drastic changes;
  • More freedom since the traders don’t have to actively watch the prices.

However, some aggressive trading techniques do not suit limit orders. In situations when fast execution is more important than the price difference, you should opt for market orders.

Best Exchanges for Day Trading Bitcoin

When you are day trading, the activity on the exchange occurs very sporadically. So, you need a reliable exchange that won’t let you down at the most crucial moment. Before you commit to any exchange, take your time to fully explore its functionality and thoroughly evaluate the drawbacks. Here are the best crypto exchanges for Bitcoin day trading:

  • Binance – vast functionality, basic and advanced exchange information, no lagging, on-the-go app.
  • BitMEX – high leverage, no Bitcoin deposit and withdrawal fees, solid security infrastructure, simple interface.
  • GDAX – advanced features, low transaction fees, funds are FDIC insured, intuitive design, suitable for beginners.
  • Bitfinex – margin trading feature, many order types, customized user interface, reliable security measures.
  • Kraken – an array of additional tools, suitable for all skill levels, account management services.
  • CEX.io – easy to use, suits individuals and institutions, useful mobile app.

The great news is that all of the exchanges, except for the last one, are supported by 3commas.

Physiological Factors in Day Trading

Many traders shared their experiences about their psychological struggles that have caused them losses. If you want to avoid quietly sabotaging your trading profits, adopt the right mindset:

  1. Don’t get greedy. You cannot get rich instantly so you shouldn’t try to – slow and steady wins the race.
  2. Take responsibility. If you constantly blame your losses on others, you don’t learn from your mistakes. See what you did incorrectly and make the necessary changes.
  3. Accept the risks. Fear can be detrimental to your ability to make the right decisions. Make peace with the fact that funds allocated for trading can be lost – then you can act rationally.
  4. Improve self-discipline. Making money on trading Bitcoin is not just a hobby that you can get in and out of whenever you want. Rearrange your schedule so that you can always find the time without making excuses.
  5. Develop a winning attitude. Even though the cryptocurrency market can be unpredictable, you need to maintain a sense of control. Stay reasonably confident and trust your knowledge and trading plan.

Dos and Don’ts of Day Trading Bitcoins

Trading cryptocurrency for profit is a difficult craft in itself. But when you add other layers – such as trading Bitcoin specifically and engaging in daytrade – traders can’t afford to neglect the rules.


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  • Having clear entry and exit rules;
  • Treating margin responsibly;
  • Closing all open positions in time;
  • Becoming fluent in technical analysis;
  • Using risk-management tools;
  • Sticking to the trading plan;
  • Continuous learning.
  • Trading with indispensable money;
  • Overtrading;
  • Hesitating and stalling;
  • Trading around the major news releases;
  • Buying just because the price is low;
  • Using ‘Get rich quickly’ strategies;
  • Neglecting local laws and regulations.


As you can see, future Bitcoin day traders have a lot of learning to do – from the technical aspect of this industry to controlling their emotions. Day trading may result in considerable profits as well as equally big losses. It is not for everyone. But if you take the trouble to research properly and utilize the right tools, such as Bitcoin day trading bot by 3commas, there is potential to make a great living.