The pros and cons of crypto day trading

Last Updated on August 18, 2022 by aicrypto

What are the biggest pros and cons of day trading with cryptocurrencies? Find out what you need to consider before you start.

The advantages of crypto day trading

  • You see results immediately

Day trading is generally very fast. Within a few minutes, you can already see if you are successful. This is logical, because when the value of assets increases, you make profit, and when the price decreases, you lose money.

At the end of the day, take stock. However, don’t be disappointed if you lost money one day. That’s just part of the life of a day trader. Tomorrow is another opportunity!

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  • You are not taking a big risk

Cryptocurrencies can be traded with small amounts, so you are not taking a big risk. This is definitely an advantage. Therefore, we recommend day trading with small amounts in the beginning.

Especially in the beginning, it is mainly about learning how to trade and not so much about making big profits. All the small profits together can add up to a large amount.

So in the long run, this could prove to be beneficial for you. When you trade small amounts, you lose less money in case of a failed trade. It’s all about the percentages and not so much about the penny amounts.

  • It provides an adrenaline rush

Is it impossible to earn hundreds or even thousands of euros in a few hours? Not at all if you are successful in crypto day trading.

The fact that you can sometimes make big profits within a short period of time undoubtedly provides an adrenaline rush and makes day trading or swing trading very exciting.

However, don’t get too carried away with emotions. It’s good to make profits, but you also need to know when to stop.

  • You do not have to think about it for a long time

Day traders act quickly and efficiently. This is logical, because there is simply no time to think long about a trade.

You often have to make a decision within a few seconds. The market really doesn’t take your pace into consideration!

In order to daytrade successfully, you need to be a bit opportunistic. Do you see an opportunity in the crypto market? Grab the opportunity with both hands.

What are the disadvantages of crypto day trading?

Of course, there are some disadvantages to day trading.

  • The market is often unpredictable.

Sometimes the crypto market feels like a roller coaster. The value of certain cryptocurrencies sometimes falls as fast as it rises.

You can consider this both an advantage and a disadvantage. The volatile market can lead to losses, but it also offers opportunities.

  • Day trading with little money leads to smaller profits

Earlier we wrote that you take a relatively small risk when day trading. At least if you trade with a small amount of money and you manage to limit your risk per trade.

However, this also means that you will make less profit. This might feel like a big disadvantage.

Of course, it’s fantastic when a coin goes up by 20 to 30 percent, but with an amount of, say, 100 euros, you won’t make that much profit.

On the other hand, you could also say that it’s a marathon, not a sprint, profit is profit. All the small gains will lead to a big gain in the long run!

  • It is very addictive

The adrenaline rush of day trading cryptocurrencies is fantastic. However, it also has a less pleasant side: the risk of addiction.

For some people, crypto trading has the same effect as gambling in a casino.

Unfortunately, it sometimes happens that someone loses hundreds or thousands of dollars because he or she is addicted to day trading and therefore can’t stop. They go beyond their limits, with all the consequences that entails.

So be careful. Do you feel that you are overdoing it with day trading? Then take a break to keep yourself fit.

  • You have little time to think

The fact that you have little time to think about a trade can be both positive and negative. Impulsiveness does not always lead to profits, as practice shows.

Unfortunately, there are many day traders who make decisions too quickly and make mistakes as a result. For example, they get carried away by the fear of missing out (FOMO) and get in too high.

Some cryptocurrencies rise sharply in value within a few hours. It’s great if you can jump on it, but it’s less fun if you get in at the peak and see the price drop afterwards.

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  • You trade too much because you want to recover losses (revenge trading).

Of course, you may lose money on one or more trades. This is just a part of the game.

However, do not try to “win back” your profits by impulsively investing in certain cryptocurrencies. Revenge trading has caused a lot of frustration and loss in the past. If you can’t manage to control your emotions you can also try trading bots