If you have recently approached the world of cryptocurrencies and are just beginning to perceive the many opportunities to make money, you are in the right place. Can you be a full time crypto trader? Well, yes, many people do day trading with cryptocurrencies as their main job. Nevertheless, starting trading is not enough to obtain profits: Achieving good results consistently requires study, research, commitment, dedication, willingness to learn, acceptance of defeats, and perseverance. In fact, if it were that easy to make money, we would all be full-time crypto traders. Some people are more predisposed to trading because of their inherent solid rationality, but everyone can learn and become good traders with the right mindset.
Day Trading: Small Percentages Daily, Big Results In A Year
Day trading is probably the best strategy for those planning to make cryptocurrency investing their full-time job. In fact, with time and knowledge at hand, this strategy can bring the most crypto earnings in the medium term.
Start Avoiding the First Mistake of an Unexperienced Trader: Being Stingy
The first most common mistake beginner traders make is not knowing how to settle for a profit. If you are reading this article to find the strategy that makes you 30x in a day, then you are doing it all wrong. In fact, you should know that even a small percentage per day, as much as 0.5%, in a year can bring you huge profits.
Let's start with a capital of $1,000 and do some math:
A) If you make a profit of 0.1% every day for a year, at the end of the year, you will have $1,441 and a return of 44.2%.
B) If you make a profit of 0.5% every day for a year, at the end of the year, you will have $6,205 and a return of 520%.
C) If you make a profit of 1% every day for a year, at the end of the year, you will have $37,161 and a return of 3716%
D) If you make a profit of 5% every day for a year, at the end of the year, you will have $1,404,956 and a return of 140.395%.
Considering that the average indicative return of the S&P500 over the past 30 years is about 10%, option A (get a 0.1% return every day) also doesn't seem bad and would give you a return of 44.2%. We made these calculations for two reasons. First, you should not underestimate the impact of the long-term compounding effect: Even a small daily gain can make a difference and lead you to an exponential increase in capital over time. The second motivation is that you must not be stingy. We have mathematically shown you that you don't need to get a 500% return in a day. Instead, it would be best to be consistent and strategic in opening and closing your trades, with no need for substantial short-term gains.
Despite this, be aware that no one has been able to consistently earn 1 percent a day for an extended period. In fact, if, starting with $1,000, you earned 1% a day for 8 years, you would become the richest man on earth, with assets of about 4 trillion. This shows that, even if you aim for small daily gains, it is highly unlikely that you can maintain a daily profit rate of 1% for as long as years. That said, let's get into the nitty-gritty and find out together how best to day trade.
How to Make Profits With Day Trading?
We have ascertained that day trading can be very profitable. But can you be a full time crypto trader? How to get started? Let's get to the heart of our analysis with more specific advice.
Continuous Learning and Study
Cryptocurrency investing can be profitable, but only if you know what you are investing in. The first rule is to be humble and admit you don't know. Even if you have already studied the fundamentals of blockchain and cryptocurrencies, it is not enough to become a good trader. You will have to learn technical analysis to understand charts, trends, and patterns to try to understand the trend in the short term. In addition, you will have to study with fundamental analysis to understand if this specific cryptocurrency is indeed promising in the long term or if it is just in a speculative bubble. So, the first thing to do is to study.
Researching The Most Promising Coins: Fundamental Analysis
Fundamental analysis focuses on assessing a blockchain project's financial health and future prospects. It involves examining qualitative and quantitative factors to determine a cryptocurrency's real utility and long-term growth potential. The key factors of fundamental analysis for cryptocurrencies are:
- Technology: Analyze the project's underlying technology, its degree of innovation, and its ability to solve real problems. Evaluate the consensus used (Proof of Work, Proof of Stake, etc.) and its efficiency.
- Team: Examine the experience, reputation, and capabilities of the development team behind the project. A strong and dedicated team is critical to long-term success.
- Tokenomics: Understand the distribution of tokens, the issuance schedule, and the token's utility within the project ecosystem. A robust token economy incentivizes adoption and value growth.
- Roadmap and whitepaper: Carefully read the project whitepaper to understand its vision, goals, and roadmap. Assess the clarity, feasibility, and ambition of the project.
- Community and adoption: Analyze the size and activity of the community that supports the project. Strong support indicates interest and potential for growth.
- Use cases: Assess the actual use cases of the project and its ability to solve specific problems. A project with practical, concrete applications has a greater chance of success.
It's important to conduct thorough research from reliable sources. Always verify that the website you're visiting is official and refer to whitepapers, roadmaps, and updates from development teams. It's also helpful to participate in discussions, gather information from the project community, and read analyses from industry experts to gain different perspectives. Additionally, utilize platforms that offer metrics and data on various blockchain projects.
Analyze Charts and Patterns: Take Advantage of Technical Analysis
Technical analysis is a method for analyzing price charts and trading volumes to identify market trends and predict a cryptocurrency's future price movements. This method is based on the assumption that patterns in past price movements may repeat themselves in the future, offering clues to potential entry and exit points for investment. Technical analysis involves using a variety of indicators, which are mathematical tools that provide buy and sell signals. Common indicators include moving averages, MACD, RSI, Bollinger Bands, Fibonacci retracement, and support and resistance levels. Various types of indicators can be used in technical analysis.
Trend Indicators
- Moving averages: Identify the direction of the trend and provide dynamic support and resistance.
- MACD (Moving Average Convergence Divergence): Shows the strength of the trend and signals potential reversals.
- Parabolic SAR (Stop and Reverse): Indicates entry and exit points depending on the direction of the trend.
Momentum Indicators
- RSI (Relative Strength Index): Measures the trend's strength and identifies overbought or oversold.
- Stochastic: Reports overbought and oversold areas to identify potential reversals.
- Bollinger Bands: Display market volatility and help identify breakouts and areas of congestion.
Volume Indicators
- Trading Volume: Shows market interest in a cryptocurrency and confirms the trend's strength.
- OBV (On-Balance Volume): Combines price and volume to identify divergence and anticipate trend changes.
Support and Resistance Indicators
- Fibonacci retracement: Identifies retracement and projection levels based on Fibonacci numbers.
- Pivot Points: Calculates support and resistance levels based on opening, high, and low prices.
Pattern Indicators
- Japanese Candles: Different candle shapes provide clues to market psychology and future price movements.
- Graphical Patterns: Formations such as heads and shoulders, triangles, and flags signal potential reversals or trend continuations.
Tools for Technical Analysis
- Trading platforms: They offer advanced charts with technical indicators and analysis tools. But remember to check the price differences between various exchanges because the spread could impact your trading.
- Cryptocurrency analysis websites: They provide comprehensive data and charts for various cryptocurrencies, such as the PlasBit crypto history price calculator.
- Custom indicators: You can create custom indicators to fit your trading strategies on platforms like TradingView.
Although you may gain some confidence after understanding how technical and fundamental analysis works, remember that this is not enough to be a profitable trader. In fact, technical analysis is not an exact science and cannot guarantee sure results. It is also often influenced by factors outside the market, such as new news, manipulation, regulatory changes, and black swans. So, market instability is one of the causes that makes it difficult to make a consistent daily profit, however small. In addition, the human mind unconsciously tends to identify data as confirmation of its thoughts, even if they are not univocal. This is called confirmation bias. Confirmation bias occurs, for example, when a person confirms his or her beliefs based on data. Often, however, only data confirming one's thesis are read, or there is a tendency to justify any discrepancies to confirm one's beliefs. It leads to a distorted view of the market and makes it equally difficult to have a clear vision and make objective and rational decisions.
Remember that technical analysis is not an infallible science and is often contradicted by market trends. It should be used with other analyses, such as fundamental analysis, to get a holistic view of the situation and get as objective a picture as possible. Combine technical analysis with fundamental analysis for a comprehensive market view, use different indicators and techniques to confirm trading signals, and manage risk with stop-loss and take-profit orders.
Day Trading as a Full-Time Occupation
Having figured out how we can understand and trade the crypto markets, we can finally answer the big question. Can you be a full time crypto trader? Certainly, and a good portion of day traders get good returns and, most importantly, financial, space, and partial time freedom. What are the benefits in concrete terms? Let's delve into them.
The Potential for Financial Independence
Even by making a small percentage of daily profit, especially if you have a good amount of capital on hand, you can have large gains. If you are dedicated and rational, you can get much more than a salary from traditional work. It is not easy because you have to acquire the right competence and skills, accumulate experience, have patience, and accept some defeats, but if you overcome all that, you have won. Moreover, unlike traditional jobs, the earning opportunities are unlimited. You will not have a fixed salary but the flexibility and opportunity to capitalize on market fluctuations, potentially making big gains quickly. Nevertheless, good starting capital can benefit you and speed up the compound interest process.
Flexibility and Freedom: Ready to Be a Digital Nomad?
In this increasingly globalized and interconnected world, more and more people are deciding to become crypto digital nomads. In this way, they can live where they want, work and earn while traveling and residing in exotic places, have enviable hourly flexibility, and be accountable to no one. Why not you? I consider it more risky to lead a monotonous life, offering one's time and labor to an ungrateful and arrogant employer. You have the opportunity to work while traveling, in freedom and autonomy, something that 50 years ago could not even have been imagined. What are you waiting for? Study, research, learn, fail, insist: This is the path to follow before you gain profits and true financial freedom.
Lifestyle Considerations
Although this sounds more than exciting, there are some considerations to ponder. Indeed, this type of career has several downsides to bear, and this depends on your personality and inclinations. In fact, being a day trader is very mentally and emotionally demanding; you have to learn to manage your emotions and always act in a controlled and rational manner. You must not act on impulse, and you must not deviate from your studied strategy: this seems easy to say, much less to do. It is not easy to hold your position while the markets go wrong, it is not easy to sell at the right time, and it is not easy to never make mistakes. Even a small mistake, like forgetting to place a stop-loss, can lead to huge, irreparable losses and waste a lot of invested time. You have to be mentally strong and focused, maintaining discipline and resilience. Also, not having a steady paycheck can be mentally wrenching, especially if you have not had a positive trading period in the past few days or weeks. Adopt a sound risk management strategy.
Continuous Learning and Improvement
As mentioned earlier, the key to achieving success is study and research. One must be humble and accept that one does not know enough, always. Through continuous self-improvement, it is possible to achieve better and better results and, consequently, progressively greater profits. Often, novice traders jump into the market and make random investments without knowing blockchain technology, crypto market dynamics, and technical and fundamental analysis. This is precisely why most traders are not profitable and, indeed, lose money. This happens mainly because they lack patience and abound in stinginess. As demonstrated initially, a small but steady daily profit leads to exponential growth in profits. Be patient and persistent.
The Importance of Risk Management in Day Trading
We have come to the most important chapter of this PlasBit research. Risk management is essential to save you from losing money. As Warren Buffett once said: "The first rule of an investment is don't lose money. The second rule of an investment is not to forget the first rule. And that's all the rules there are.” Sounds easy and funny at the same time, but this is not so banal. In fact, to recover a 10% loss, it will not be enough to gain 10%; 11% will be needed. This is even more pronounced in the case of larger losses: If you lose 50%, you will need to earn back 100% of your halved investment thereafter to recover your initial money.
Always follow a Clear Strategy
If you set a goal to earn 0.5% every day, but the market is doing very well, and you think you can earn more today, stop. Think about your strategy and the fact that even if you earn 0.5% a day in one year, you can get a 520% ROI. Already, such a goal is very difficult; why should you presume to do better? Remember also that approximately between 70% and 90% of traders lose money: You only need to not lose money to do better than at least 70% of traders. First rule: Follow your strategy, and don't be stingy.
Implementing Stop-Loss Order and Do Not Use High Leverage
This is where many traders fail and give up. In fact, it only takes placing the stop loss correctly 364 days a year and making a mistake a single time to see all one's money go up in smoke. Doesn't sound pleasant, does it? This underscores the importance of having to be focused and concentrated at all times; all it takes is one small distraction to make big mistakes and lose a lot of money. Cautiously and thoughtfully place stop-losses so as to prevent large losses caused by sudden market swings. Also, be careful about using leverage; as attractive as it can be for multiplying gains, it can also greatly amplify the speed of your losses. Use leverage only when you are an experienced trader and have a good history of positive results, and make moderate use of it.
Be Aware of Scams and Hacks
Because it is not yet fully regulated, the cryptocurrency market carries a number of serious risks. Among them, the most common are the attempted scams analyzed in our research, including pump-and-dump, crypto romance scams, address poisoning attacks, fake ICOs, and many others. New scam methodologies arise every day due to users' inexperience in Web3, and scammers are always ready to take advantage of them. In addition, classic information attacks, such as malware, phishing attacks, and viruses, are also always lurking. If you are a long-term investor, keep your cryptocurrencies in cold wallets to increase security. If you are a day trader, use secure and reliable crypto exchanges to make your trades.
Can You Be A Full Time Crypto Trader?
Definitely, yes, you can do day trading and make it your full-time job. In addition, as you accumulate knowledge, experience, and capital, you can earn progressively more and more in less time. This kind of job is perfect for those who want to travel and be a crypto digital nomad, an attractive prospect for any young person who is enthusiastic about the world of cryptocurrencies. To conclude, let us give a brief recap of the key points:
- Discipline and Dedication: To be a successful and profitable trader, you must get it into your head that this will require sacrifice, discipline, and dedication. You will definitely encounter major obstacles and disappointments, but it's all about getting back up, learning the lessons, and doing better next time.
- Research and Analysis: Study, research, and analyze nonstop; this is the key to improving yourself and doing better and better in the crypto markets. Do not underestimate this factor, which is the most important.
- Risk Management: Don't lose money. Adopt preventative strategies and measures, such as stop-losses, that allow you to limit any losses and mitigate the risks inherent in the cryptocurrency market, such as high volatility, unregulated markets, and black swans.
In conclusion, in this PlasBit analysis, we have shown that everyone can become a profitable day trader and make it their full-time job. But the path to get there is not as trivial as it seems, and it requires patience, dedication, sacrifice, and resilience. If you aspire to a life as a digital nomad and are a crypto enthusiast, this is probably the job for you.
