As you can see, this sheet tracks the asset, entry point, stop price, indicator (if applicable), and outcome (BTC is the base pair for these trades; if you trade multiple base pairs you need a column indicating the underlying asset). The color of the row indicates whether or not the trade was successful. It would be easy to add information (such as date/time of trade, average closing price, and figured profit/loss). It’s up to you to create a sheet with the metrics you find useful. If you are skilled at data visualization, you may want to add more data points to have more information to process later.

Exchange Basics

There are many crypto exchanges currently operating, with varying benefits and drawbacks. It is indeed a topic you should research for yourself and beyond the scope of this guide to cover all of them. We will focus on Binance, primarily, as it has the most liquidity and real trading occurring daily:

Binance — The largest exchange by volume currently operating. It offers several base pairs, long trades, and, most of all — liquidity, and accepts U.S. traders. (Now only for level 1 accounts)

Binance offers most standard order types, and importantly, is easily extensible via its API functionality. Please take the time to download and install the desktop app. The order execution on desktop apps is almost always smoother, especially at times of high activity.

Binance is a centralized exchange, although they will be launching a DEX later this year. Centralized exchanges are targets for hackers, and in the past, have lost user funds in attacks. They also offer the most trading and best execution currently. Use your best judgment in how much you are willing to put onto an exchange to trade.

I do not put my entire BTC holdings on at any time. I leave enough to trade my positions and take out the extra periodically to cold storage. Never put anything on to an exchange you are not willing to lose. In crypto, you are the boss and must manage the security of your assets. With great empowerment comes great responsibility and self-discipline. If you do not hold the private key, you can never be sure the coins are yours.

Make sure to pay attention to notifications of service outage, security problems, new listings, and important dates for the exchange. Platforms often have contests and other initiatives worth it to keep abreast of their daily information releases. I would also like to make clear — Outside of my referral link, I am not paid by or in any way affiliated with Binance, nor do I possess particular affection for it. It has good and bad elements. I am only interested in where we can secure profit.

Most of the profitable crypto traders I know feel that Binance is the only game in town. Bitfinex, Bitmex, and Poloniex may be great, but I cannot set up an account as a U.S. resident. It may be tempting to scam a non-U.S. exchange with a VPN, but be aware that if caught, your account will be closed for violating TOS. I have personally known people who have lost funds in precisely this way.

As noted in recent articles — most of the volume on the major crypto exchanges is fake. It is nearly impossible to trade effectively or take profit out of exchanges where wash trading is 90%+ of the volume. Kraken offers some useful tools and has a good selection of pairs, but these pairs often trade at a low volume forcing you to buy up or sell down the order book. If this situation changes, I will update this guide to reflect places where it is possible to trade effectively outside of Binance.

Here are a few of the other honorable mentions, that may become more viable options in the future:

Kraken — Although not as large as Binance, offers margin accounts with leverage trading for several pairs, and the opportunity to short trade many of the assets. To the best knowledge of the authors, it is the only exchange actively accepting U.S. traders that offers margin and leverage trading.

Bitmex — Does not accept U.S. traders, but offers leverage up to 100x on a large number of pairs, futures contracts, and limited options products. People have also noted some shady practices.

Another honorable mention is Derebit. They offer more reputable options trading than Bitmex, but once again are not open to U.S. traders.

Stop-Loss Orders

Before moving on to advanced order types, we need to take a moment to address the usage of stop-loss orders on a functionality level. In later sections of this guide, we will discuss their placement (both for slippage and on the books).

If you do not skip one section, it should be this one. Stop-loss orders have easily saved me more in loss than the total profit I have taken out of the market. When used correctly, stop-loss orders are a top tool for lowering risk and mitigating loss.

The stop-loss order is your protection, and someone engaged in momentum day trading should be using one at all times. Consider what you would like your base asset to be. Some may prefer a stable coin, such as TUSD or DAI, others may choose BTC. The base value of your account in your preferred asset is your skin in the game. It is your empire, and you must defend it all costs or risk ruin. Cryptocurrency is not a guaranteed value proposition — coins are routinely delisted if their markets fall apart; some have lost nearly 95% or, in some cases, more value from their all-time high. That being the case, you should never leave your positions un-stopped without a specific reason and a watchful eye. In the case of long-hold investments, you may want a very liberal stop (perhaps 30%). You should determine the percentage you use day trading by finding the risk:reward ratio of each trade on an individual basis.

One of the people who trained me to trade, whom I respect very much, and who works as a hedge fund manager on Wall St. told me point blank, “If I see a trader on my floor working a position without a stop-loss order, I fire him on the spot. He’s risking the assets of the fund.” The quote stuck with me and has single-handedly saved me more money than any other piece of advice. During a sideways month, I made over 300 trades, most of which hit my stop-loss orders. What could have been a disastrous month, ending my trading career, put me down 2–5% of my overall funds. In the meantime, I examined and reformulated my strategy, allowing me to rebound stronger than ever with more knowledge, and nearly the same amount of BTC.

Use a stop-loss on all trades except those you have assessed as a long hold, and even then make a plan for the maximum loss you will tolerate in every position you place.

Key Concepts, Pitfalls and Workflow

If you do not know how to place orders on these platforms, these tutorials for Binance, Kraken (allows short positions, some leverage), and Bitmex (non-U.S. crypto futures and options), will get you up to speed on basic order types and the nuts and bolts functionality of the platforms. Although this guide focuses on Binance, hopefully, in the future other exchanges will catch up in allowing U.S. traders and increase their liquidity. It is essential to be aware of them as major players in the field, and also for non-U.S. readers.

Let’s take a moment to talk about advanced order types, proper stop-loss placement, and slippage as the concept relates to crypto orders. You should, at this point, know how to place a stop-limit order on the Binance application. A stop-loss order is merely the use of a stop-limit order to protect a trade. Always use desktop apps when possible to trade. The orders execute better than from a web interface. What you might not know, is how to place a stop-loss order correctly, or why your orders sometimes get skipped when you have a perfectly good stop order!

The reason for this, is slippage. Investopedia defines slippage as —

The difference between the expected price of a trade and the price at which the trade is actually executed. Slippage often occurs during periods of higher volatility when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade.

What this means in practical terms is that when a market is moving with strong momentum in one direction or another, skips in the price can occur as people buy up or down the books. You will see this in the chart sometimes as an actual gap in the candles. If your limit order falls in one of these gaps, it may not execute. If the trend continues, you get left behind with a dangling order, one of the most aggravating problems for traders of all asset classes.

Proper stop placement prevents slippage from occurring. To properly place a stop-limit order, you should always place your limit several satoshis below the stop price when selling, or above when buying, this ensures your order executes slightly ahead of the books. How large of a gap to use depends on the type of jumps the asset is making. A two or three sat gap is reasonable for an asset with everyday movement (not a flag directly up or down). A particularly volatile asset may require five, six, or even 100 satoshis between the stop and the limit to execute. You have to watch the order flow and chart to see how large the jumps in price are. For BTC to USDT, a gap of several cents up to several dollars may be worth it if all other signs justify the position. Use your chart skills and ATR indicator to get a feel for volatility and help with stop placement. The main thing to avoid: do not place your stop and limit orders at the same level, use the stop to trigger an order ahead of the books in the direction you are trading.

This guide assumes you are familiar with the basic order types on Binance — Limit, Stop-Limit, and Market (Kraken has a built-in stop-loss function, but no OCO order at this time). If you are not, take some time now to read and understand their purpose. Each exchange will have its own flow for orders, but the concepts remain the same. Basic orders are standard across exchanges. These are the same basic order types available on traditional asset trading platforms.

There are additional, more advanced order types borrowed from the world of standard asset trading. Let’s talk briefly about three of these advanced order types, which are invaluable to any trader — the OCO order, trailing stop/dynamic take-profit order, and conditional orders. Binance does not offer these order types natively. To use them, you must get a service that extends the API through a desktop app or web service. In my estimation, it is well worth thesmall investment of time and money to do so.

The OCO order is probably the most useful tool for helping a heavy trader lead a successful life. OCO stands for One Cancels Other, and has been an order type on standard asset platforms for a long time. You place an order with an upper limit sale (the target) and a lower limit sale (the stop-loss point); this allows you to cover yourself regardless of how the market moves. It also cancels the order on the opposing side once the price hits or moves past your stop-loss or take profit target. It allows you to step away from trading when you have a goal in mind, instead of constantly watching for an exit point or a sell-off. If you are wondering how to know where to set these values, we will discuss it more in the next section.

The trailing stop order is also useful for capturing profits. A trailing stop is a stop-limit or market order that will engage when the asset falls by a certain amount from the entry price or follow the asset price if it moves up. For example, if you buy BNB at 0.0020 BTC, and you set a trailing stop at 0.0019, the stop will follow the asset up at the same ratio as was set initially, i.e., if BNB moves sharply upwards, say to 0.0023 BTC, but never dips a full 0.001 BTC, then the stop will follow the price upwards, trailing it at the same 0.001 increment, and be placed at 0.0022 BTC. It allows you to capture profit and leave a trade unattended without fear of unanticipated movement.

The dynamic take profit order is similar in function to the trailing stop. The dynamic take profit is engaged when the asset hits a new maximum price. As the asset moves, the dynamic take profit conditionally inserts a stop order if the asset moves down x% from the maximum level it reaches in the time of the trade. Either one is functionally useful for capturing profit from an asset moving in a steady upward trend.

Conditional Orders are available on SmartBinance. They allow you to set up strings of logic to create orders, such as orders that trigger when other orders send or fail due to changes in price, volume, etc. Experiment with the options, they are all available from the rules drop-down menu on the SmartBinance order page.

OCO orders are available in Maker, or on SmartBinance. Trailing stop orders are available only in Maker, while dynamic take profit and conditional orders are native to SmartBinance. Access to these advanced order types makes a considerable difference in the amount of profit you can capture in a given trade. It also assists with discipline in trading. A stop or target system helps you to have a plan of when to enter and exit a trade, and in fact, will automatically execute the plan. It can help remove some of the emotion from trading, and get you away from the charts so you can manage the rest of your life.

Two other concepts you need in your repertoire for basic proficiency on exchanges are an understanding of the order books, and the idea of buy/sell walls. The orders on the books, as well as the depth chart, should always be regarded with an incredulous attitude (troll boxes as well). That said, they can give useful information. I look for “sticky” orders — ones that seem on the books for real, placed by a person making an actual order, and not someone manipulating a position, or at least not doing so in an obvious way.

You must understand that people are manipulating these assets on a level far higher than the average trader, and that individuals trading on that level use manipulation of the books to drive the market in the direction they prefer. It is worth paying close attention to what happens with the books during times of wild trade volume. Look at the orders that move and compare these to the ones that stay — how these orders change as volume or other conditions change, how behavior differs from asset to asset. It’s up to you to use your skills in analytics and observation with the books. Using the information wisely will give you a valuable edge in the market. Following the books blindly will nearly always lead to disaster.

This definition is from a Reddit user, and it gives a good idea of the psychology at play. Not all large orders stem from this sort of manipulation, but enough do that you should be aware of it:

From the link above. Keep in mind buy walls are the same thing operating in reverse:

What is a sell wall? A sell wall is a tool used by a wealthy entity or individuals, to manipulate the price of a stock/coin downwards. A large sell order is set at a specific price by the whale(s) to prevent higher sell orders from executing. How does it work? Let me explain sell walls with an example: A wealthy person, we will call him Richard, tells a group of his wealthy friends that he wants to make money on a particular stock/coin. This could be for a number of reasons such as: The stock/coin has a lot of room to grow The stock/coin has a low enough volume and market cap to allow easy manipulation. The stock/coin has the potential to get big in the near future. Richard and his friends decide that it’s a good idea. They all want 1 million of X stock/coin. Unfortunately, in the cryptocurrency market, Richard and his friends can’t execute all the buy orders at once, or the prices will skyrocket! To achieve 1 million obtained goal, they decide to set up a sell wall and manipulate the price downwards. They do this in steps: They accumulate together. Perhaps they acquire 250,000 of X crypto each. In their specific market, this didn’t affect the price that much. Great! They now set a specific price they feel is low enough for them to reach their 1m X crypto goal. For this particular crypto, they decide to all sell their obtained crypto at $2.40. Between Richard and the group, there is >1 million dollars worth of X crypto selling for @2.40 on the market, a seemingly undervalued price. There is SO much sell volume in the market, buying pressure cannot eat through that wall in a reasonable time frame — it would take a very high buying pressure to do so. What also happens next is the key: nobody else can sell above that sell wall price until it’s gone. The result? People need to sell lower than the sell wall to liquefy their stock; this drives the price downwards. Richard and his friends can now safely all get to their 1m X crypto mark without raising the price exponentially! When they decide to liquidate their sell wall, the price moves up accordingly!

The last topic I want to address here briefly is laddered orders and sales. You may find it worthwhile to scale into, or out of, an asset you are trading. The idea is to purchase downward in % increments of your whole order, capture the value of a falling asset, and sell-off in % increments at different price levels to maximize profits on sale. Some traders use ladders extensively; some don’t. The choice is up to you. The tutorial in the link above has a more in-depth explanation. I prefer to buy in at a flat level and capture profits with a trailing stop.

How to do an Asset Scan

An asset scan (either by screener or manually) is how people find crypto assets to trade in a day trade situation. What exactly do I mean? Hopefully, you have been working diligently and are now be able to read a chart. You should have a feeling for what indicators you find helpful in TradingView. If you have been predicting on Cindicator and looking at assets daily, you should start to have a feel for the charts, and some idea of how they are going to move. We are going to take that a step further, beyond observing how they move — and become a part of the why assets move: by selling or purchasing at the desired price.

When doing an asset scan manually, always do it on an exchange. You need to see the price and volume action on the exchange where you will be trading. The first thing to do is to arrange the asset list by volume. Clicking above volume, change, or pair on Binance will sort the asset list using that value.

Part of successful day trading crypto by momentum is not getting stuck in trades. You are much more likely to find yourself in a position with coins and no one to buy them at a profitable price in a market with no buyers. If you have been trading crypto for a while, you might know this scenario — you purchase a relatively unknown coin, perhaps on a pump signal (SAY NO TO PUMPS), on an illiquid exchange. You can buy it easily at the start of the pump, and the asset goes up rapidly as people FOMO into the action of the market. For a moment, there is liquidity.

The people running the pump sell out their coins at the end of the price spike, dumping the market and leaving…. No one. No one to buy your tokens at any price, and you holding the bag, like an even less fun game of musical chairs. You can avoid this by trading on exchanges that have healthy (and real) liquidity, and sticking to coins with a large ( >100 BTC daily ) volume. Different people have different preferences, although a minimum of 100 BTC/daily is a good starting point for many day traders.

Sometimes, sorting by volume reveals a surprise. A highly unlikely coin topping the list is always a likely candidate for a trade. As you trade and develop your strategy, you will find conditions that you like for trades. If you are tracking the conditions of the trades closely in your sheets, you can pull metrics for the trades, find out if your analysis was correct, and which of the strategies you have employed are most profitable.

There are a lot of elements vying for your attention. For the remainder of the section, I will switch to the first person, as I think learning by example is going to be the easiest. I cannot tell you what to look for in your trades, but I can give you an example of what I am looking for in a trade.

First, I sort by volume. I check for an outlier that should not be at the top and start scrolling down. If nothing jumps out, I move to price. What I am looking for is assets that have either fallen or risen by +/- 0.01 to 3%, .i.e., the start of a trend. So I re-sort the list by price and start at 0%, working my way out in either direction. If I see an asset above the 150 BTC volume mark in this range, I make a note of it as a maybe. After I have my list of possible assets, perhaps 20, I immediately narrow it down to the assets I am comfortable trading — the ones I have traded profitably in the recent past — that I have been watching, and possess an understanding of the motion. On a high volatility market day, this usually leaves me with between 5 and 7 assets to analyze further.

Now it is time to analyze the charts. I open each one of the interesting assets and begin to look. My favorite indicators at the moment are volume, MACD, STORSI, OBV, ATR, and several moving averages on the chart itself. I would prefer an opening MACD cross in the positive direction, an increasing OBV, a STORSI cycle at the bottom, and preferably good volume and ATR range.

I would also prefer to open long positions in an asset showing a stable upward trend on the 1D chart, although I usually have the time frame at 30m or 1H for the trade. The overall trend in the 1D chart is quite significant. It’s much easier to trade with an overall trend than against it. If nothing is moving in an upward direction, I consider a short trade instead.

If I have found something that satisfies my other criteria, I then move on to check the books. I would like to see sticky orders with massive support, hopefully, a 2:1 or higher buy/sell ratio. I watch these orders to see if they are moving around, flickering on and off, or seem like real orders. On the 30M/1H frame, I would like to see clear upward motion, hopefully in confirmation of retracement after a recent drop. These, to me, are the ideal conditions I am looking for a quick percentage gain scalp trade, although it is rare to see such a “perfect setup.”

Developing a Plan

Now that you are aware of the method, it is time to develop a plan. At this point, the accuracy you have trained yourself for using Cindicator will come to fruition. If you can maintain a 70% accuracy rating on Cindicator, if you can look at a bull/bear question for a closely watched asset and make a decision on the platform, you can do it for yourself on the open market. But merely having proper tools, knowing the full spectrum of orders to use, and having analytical skills is not the end. We have to put all of these elements to use in a cohesive plan to direct our trades.

You should never enter a trade without seven compelling reasons why you think the asset will move in a way that justifies the entry. You should always enter a trade with a plan — for both entry and exit. You should always enter a trade with consideration of the plan for your total assets. These are hard and fast rules, but they have served me well. A list of compelling reasons to open positions might include: A release date of some kind, continued volume increase, sudden increase in price or volume, an upward trend, an opening MACD cross, rising OBV, bottom or top of STORSI for buy/sell respectively, listing on a new exchange, coin burn, books with solid buy:sell ratio or strong support on the books on whichever side you are trading — the list goes on.

There should be an overwhelming convergence of factors that you can identify, and that indicates the movement will occur that will make your trade profitable. If you cannot clearly and keenly see the analytical narrative of the position you wish to open, you should not open it at all. Now that you are getting a better handle on when to buy and why to buy let’s talk about how to buy and how to decide position size.

Two topics you need to become very familiar with are risk and money management. Have you ever seen a professional at a blackjack table? They do not play like a sucker, waiting for two kings and betting 60% of their stack when they get it. A professional gambler knows that they are good at blackjack. They know that they will succeed in a favorable enough ratio to make their play worth it. To mitigate risk, they use managed positions. A player will place equal bets between hands, folding those not to his advantage, and pressing forward with those that work. A good player will know when to push their advantage to the fullest to maximize their payouts. A good day trader works in the same way.

Let’s say you have $1,000 worth of BTC, and you see an asset with movement that intrigues you. After further inspection, you decide a position is warranted. How much should you buy? It depends on your individual risk tolerance. This amount should be low enough for you to watch it go to zero and not have a heart palpitation. Let’s work with a starting point of 5%. In the example above, this would work out to $50 if that doesn’t seem like a lot — good. The amount in an individual position should feel like a small amount in relation to your overall bankroll.

At 5%, you can have 20 positions open at any given time. If you are boasting a 70% win rate on your predictions, the way to monetize with momentum trading works like this: Out of every ten positions, seven hit your profit target, and three go to stop. Let’s say that the seven that hit your target gain 5% each (a $2.50 increase in each position), and the ones that go to stop lose 5% each (a $2.50 loss). You have only placed $25.50 of your funds at risk over the trading day with stop-loss usage. 50% of your assets were in play — $500. On that $500, you’ve made $10, a 2% gain overall on the capital used.

The gain was achieved in an extremely defensive way, risking very little of the overall stack at any given time. The effort required to place ten positions in crypto trading is relatively minimal and becomes less so with every step you can automate. It doesn’t seem like much initially, but if you consistently reinvest and manage a 70% ratio (without even including the trades that do much better than 1:1) — at the end of 10 days you have $1,218.99, an overall increase of approximately 22%, or $218. A starting point of $10,000 would yield $2,189 in the same period with the same performance.

During the whole day of trading, only $25.50 was ever at risk in total, or about $2.50 per position. Naturally, as your capital base expands, so does the order size. Remember, place your positions with a consistent size in % relation to total holdings. The best risk % and managed position sizes are going to differ from person to person and changes with experience and available capital. You might also consider varying your position size based on various indicators, such as ATR.

Another important note: You will almost always miss your first 3–5 trades after an increase in risk %. Keep track and see. Also bear in mind the example above is highly simplified. In real life, you will have good and bad days. The key is discipline, consistent performance, and knowing when not to trade, to minimize loss. As long as you manage incremental profit and manage not to lose it before re-investment, you will see progress.

For the first target of a trade, it is common to use a 1:1 risk:reward ratio. By target, I mean, “price at which you will execute your sale,” this is how we decide the initial target. Although trades with a greater ratio are better, I usually start at 1:1 and work my way up with stops. Let’s take a look at an entry from the trade sheet to break it down: