One of the most common trading strategies in financial markets is short-term trading such as day trading.
During this strategy, the trader makes a profit by opening and closing a trading position in short periods of time during one or more days and depending on the price fluctuation.
The most important element of success in short term trading is finding tokens that have the most price fluctuations.
Key points
- Short-term trading is one of the popular strategies in the stock and forex markets.
- The high volatility of the crypto market has also provided a suitable space for this type of transactions such as day trading.
- Paying attention to price changes, examining changes in open interest index (OI), paying attention to the status of future trading positions, etc. are among the important points to find profitable tokens in this strategy.
- Using indicators such as momentum and moving average will also be effective to find the convergence and divergence of the token price.
If you want to learn about the most important strategies for finding profitable tokens in short-term trading, continue reading this article including:
- How to find profitable tokens in short-term trading?
- 1 – Attention to price changes
- 2 – Monitor changes in open interest
- 3 – Attention to the status of positions
- 4 – Attention to the funding rate situation
- 5 – Enable alerts based on indicators
- Frequently asked questions on short term trading
How to find profitable tokens in short-term trading?
The day trading strategy and other short-term trading strategies have many fans in the stock and forex markets. The volatile nature of the digital currency market has also created a suitable space for short-term traders.
Traders can profit from price fluctuations in the market by repeatedly buying and selling a digital currency throughout the day. You can find more profitable tokens for short-term trading with the help of the following strategies:
1 – Attention to price changes
The profit of short-term traders is due to the fluctuation of the price of digital currencies. Higher volatility means higher profits. So, find the cryptocurrencies that have the most price movement.
2 – Monitor changes in open interest
The open interest index indicates the amount of active positions (and net position changes) in a futures contract.
- An excessive increase in open interest can be due to factors such as advertising and speculation, early release of news about possible future events, rush of users to take advantage of breakout or breakdown opportunities, and even creating a position in a narrow swing range. and similar cases.
- The excessive reduction of the OI index may also be caused by the closing of a large number of positions voluntarily or due to the fear of liquidation.
3 – Attention to the status of positions
Monitoring the status of positions is also an important strategy for finding profitable tokens. Because liquidation of positions leads to attractive movement of prices.
In such a situation, market transactions are carried out in a price range that would never have been realized otherwise.
Obligatory sellers (traders who have liquidated long positions) and compulsive buyers (traders who have liquidated short positions) are fearful of their position and settle for trading at the lowest prices.
4 – Attention to the funding rate situation
Funding rate is an index for convergence and price adjustment between perpetual and spot contracts. The negative funding rate may be caused by abnormal market behavior. In this case, you should ask yourself why the status of permanent contracts does not converge with spot contracts?
Perps Aggressive/Spot Passive and Spot Aggressive/Perps Passive contracts, whose funding rate is negative, are included in this group.
5 – Enable alerts based on indicators
Another way to find profitable tokens in short-term trading is to check the momentum indicator (a tool that shows overbought and oversold) and trendline indicator tools, such as the moving average (MA) indicator to find convergences and divergences.
You can also use the trading volume indicator and CVD (to monitor the trading volume of whales) and Metatrader software (to find popular currencies).
Frequently asked questions on short term trading
Are short term trades applicable in the crypto market?
The high volatility of the digital currency market has made this market a suitable space for short-term trading.
How to find profitable tokens in short term trading strategy?
Paying attention to price changes, checking open profit index changes, the status of futures positions, the status of funding rates and activating notifications related to indicators are all ways to find profitable tokens in this strategy.
Short-term trading is a popular trading method to profit from cryptocurrency price fluctuations. In order for the trader to make more profit, he needs to find tokens that have higher volatility in a short time frame (for example, one or several days).
Excessive decrease or increase of open interest index and negative funding rate is a warning signal for the formation of price movement.
Liquidation of positions is also a good opportunity for short-term trading traders and investing in the best market prices. The last strategy to find profitable tokens in short-term trading is to use various indicators such as momentum, moving average, trading volume, CVD and Metatrader software.
What is your suggestion to earn more profit in short term trading? How do you find profitable tokens for short term trading?