1 December, 2022 seen 5,248Selling covered calls are one of my favorite income-generating strategies in the stock market. For a time being, I've…
Hey traders and crypto enthusiasts!
It seemed I have tried it all in the crypto world - from buying and holding, actually mining, lending, flipping, and swing trading. But for about the last month I have decided to try my luck as a crypto daytrader, and to my surprise, I can be profitable.
In today's article, I will share my findings on trading crypto and try to answer a question - how to make at least $1 per day trading crypto and how much actually capital is required.
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
Disclosure: This article contains affiliate links to the deribit.com bitcoin futures trading website, by clicking on links on this page and by investing with deribit, I will earn affiliate income at no cost to you. Also, I'm not a financial advisor and I don't give you any advice, I'm just sharing my own experience. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
First things first - when talking about day trading crypto, I actually mean scalping/day trading bitcoin or Ethereum futures on Deribit platform.
When trading futures on Deribit 50x margin is offered, which is both great and risky at a time. It's great because we can multiply our gains much faster, and it is risky as we can lose our funds even faster.
Before showing any progress I actually lost about $250 trading Bitcoin futures on Deribit, and I feel happy I lost just them, not $25,000 or $250,000 to learn my lesson.
Risk management is the core - not overtrading and not overleveraging. In total, I blew my account 3 times before returning on growing my account. And I started with just $4 on Deribit account.
I would say $5 is enough capital to trade $1 per day. That's about 20% daily gain. I know it sounds just not true, and I guess as long as you won't learn some basic trading techniques, it won't hold true.
For the ages I just didn't get the day trading, like take a look on this screenshot:
So what can you see there above? Some price movement? But how to know when it will go up or will go down (shortselling).
I guess a seasoned trader could tell you from the price movement only what happens next, but deffiently not me (well, I already start to notice some pattern, though)
To stop guessing, but trading we need some little help and here comes indicators
Now, we are looking on the same chart, but with some indicators that will help us to make the right decision, or will give us an advantage.
In the above example I'm using EMA 9 /14/21/55 crossovers to place my trades. I guess learning moving averages and crossovers are a good point to start exploring.
Lets look just on two lines - yellow and white. These represent 21/55 crossover. Once the yellow line goes above the white line we have a nice buy signal. Which means we could buy at that point and sell on the next crossover or whatever is our risk appetite.
At the moment I prefer trading 1-min candle chart using 4 EMAS and MACD for entering (confirming enter) trades.
At my fourth attempt and 89 trades in 8 days I'm able to report 157.02% gain, 77.52% win ratio and $7.01 value gain.
I started with about $4.17 in trading capital and placed trades which took about 1/5 from my total buying power, using 50x margin 1$ equals 50$, also the gains or loses multiplies (to avoid heavy losses it would be smart to use stop loses, but during this stage, I'm not using stop loses, instead in a losing trade I'm doubling up)
Instead of aiming at big gains, I look for small gains - taking 0.1-0.2% per trade, additionally every day I increase my buying power by an additional 10$. My goal is to take $1 per day before I feel confident enough to raise my goal to $2, $5, $10, $100, or $1,000 per day.
On average right now it takes me 6-7 successful trades per day to take that $1 per day. With increasing my daily buying power I'm also decreasing the total trades counts I need to reach my $1 per day. For example, a $50 would give us $2,500 in buying power, using just 1/5 from the buying power and placing high probability trade we would use $500 and would need just 1 successful trade with at least 0.2% gain to make that one dollar.
Risk management and not overtrading are your best friends when trading crypto.
If you decided to give it a try, here is my affiliate link to Deribit.