When it comes to day trading some cryptocurrencies are better than others. Although there are lists of best day trading coins out there, you can go beyond that by learning how to determine if a cryptocurrency is worthy of the day trading platform or not.
There are roughly 5 factors that determine a crypto token’s eligibility.
Contents
Development
Cryptocurrencies are bits of code that may have different functions. Developers are often the creators, along with their team.
Development will largely depend on how active the creators are. Every announcement can have an effect of a crypto coin’s value, which means more potential to have a successful day trade.
News
Much like development, news coming from the team or other sources can positively or negatively affect a cryptocurrency’s value.
In this case, the more popular a token the more news you can expect from that on a regular basis. While you can’t control whether it’s good or not, at least you’ll see it reflected (and thus make the necessary day trading options).
In some instances you won’t need to check the news regularly. A bitcoin compass login can unlock your knowledge and give you points on how to manage your assets successfully.
Crypto Exchange
Believe it or not, sometimes the factor can be outside the cryptocurrency itself. It may depend on the crypto exchange, the platform where traders complete actions such as buying or selling.
The most obvious factor is usually this- is the crypto exchange able to run a day trading process? Also, is the platform’s security enough to support large volume exchanges happening in a daily basis?
Then, drill down to the cryptocurrencies supported on the site. Do you have what you want there? Last but not least, the platform must have reasonable or low transaction fees since you’ll be doing them several times daily.
If all those things point to yes then it’s a good idea to sign up for an account. If you’re still unsure then check online reviews and see how many people participate in the platform.
Volatility
Volatility is a term used in trading, and means how frequent the asset appreciates and depreciates.
While most investors frown at the mention of ‘high volatility’, it could be a boon in the crypto trading industry. The reason behind this is simple- you can complete an action at the right time and the moment a cryptocurrency rises up to your preferred value. From there, you rinse and repeat until you’ve made a profit.
Volume
Lastly, we have volume. This means how many coins are in circulation at a given time. The greater the volume produced in a particular cryptocurrency the more action you can take.
To become viable for day trading a cryptocurrency must have a high volume at any given time. It must also have garnered enough attention that a lot of people are buying or selling the token.
Also, notice how much is being traded every day. If it’s vigorous then it’s a sign of a healthy micro-economy. If not, then you’ll want to move onto something else.