Five Bitcoin Day Trading Setups to Help You Make Money

November 29, 2022
Reading Time: 7 min
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Day Trading is trading that moves fast. It involves making multiple trades in a market on a single day, quickly reacting to price fluctuations to make lots of small margins of profit which eventually add up. Traders have to be quick on the draw, and they have to be vigilant, knowing when to enter and exit the market to maximize profits in a short space of time.

Bitcoin trading has become big business in recent years as people have realised that the new and emerging market place is one that has the potential to offer impressive gains. Bitcoin trading has many faces, but one of the more popular ones, in this volatile and fast moving market, is Day Trading 

Because Bitcoin’s market price has been known to fluctuate by double digit percentages in a matter of hours, it makes it a perfect market to Day Trade in, but the difficulty in the market is timing those entries and exits, and this is where getting a solid Day Trading Setup can be a real game changer for Bitcoin Day Traders

What Is a Day Trading Setup?

A Day Trading Setup is also known as an entry strategy, and as that name suggests, it is a strategy that traders use to try and identify good times to enter the Bitcoin market in order to time a price rally so that they can soon cash out and collect quick and efficient profit. It is also linked to trading psychology in order to lead with the head, over the heart

Using a Day Trading Setup means having an eye very closely glued to the Bitcoin chart to identify what is happening on the market in real time so that a trade can be made when the strategy suggests. It means trying to identify different patterns on the charts that are showing what is about to happen so that the Day Trader can enter the market and take profit off the perceived next market movement. 

Many day trading psychology  strategies have been developed over time, and many of them come from other markets and securities as Day Traders like to utilize these strategies across the different markets in order to make profit. These same strategies can easily be transposed to the Bitcoin Market, and in fact can be better used because of the potentially higher volatility and bigger moves. 

Why do I need to use Day Trading Setup?

The strategies in a  Day Trading Setup may sound, to some, like extra work in an already fast-paced and busy world of Bitcoin trading, But, the use of a Day Trading set up can offer a lot of certainty and structure to an already established Day Trading Strategy, and it can help point out different opportunities to make quick profits. 

A Day Trading Setup is not even that complicated as it is a pretty straight forward way of thinking that we use everyday anyway.For example,  we use historical data to recognize patterns and make predictions in our everyday lives like if you are driving to work, you know what time to leave to hit the least amount of traffic based on past traffic situations and experiences you may have had. The same logic holds true for day trading.

Most good Day Traders already have a strategy for their trading anyway, so to have a Day Trading Setup can simply be an addition to that to make the entry and exit of the market that much more certain and efficient. 

5 Favorite Day Trading Setups

Below are five of the more popular Day Trading Setups that have been effective for traders for a long time, and across different markets. You will note they all have different nuances, and different uses, but primarily thay are intended to help Day Traders profit

Setup #1: Day Trading Breakout

One thing that is always notable, and one thing that causes excitement for traders is breakouts. In the Bitcoin space this is especially magnified with the level of volatility, and they play in well with the first Setup — Day Trading Breakout. 

A breakout is defined when a stock gaps up or down on high volume first thing on the open.  These types of moves are almost always related to a news event. Day traders move into the market once they see that the price breaks beyond flat range. After this breakout, the trader closes the trade above resistance level. This is known as “support and resistance.”

Once this is established traders can buy when the market breaks above a failed resistance level, and sell when the market breaks below a failed support level.

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Setup #2: Trading Ranges Setup

When it comes to a Trading Ranges Setup the goal here is to look for sideways price action that is oscillating  back and forth between two prices — setting up a range — and picking up on them as they are about to stop following a certain trend. 

This trading setup is looking to take advantage of a percentage of a market that is non-trending. This means that when the market is trending 20 percent, there is a large chunk of 80 percent of the Bitcoin market left to experiment with. 

To get this setup right, a trader should confirm the price range by ensuring it is not breaking out of the resistance or dropping below the floor of the range set out on highs and lows. at least two similar highs and lows need to have occurred in this price oscillation for it to be considered a range-bound setup.

Once the range is set up, there are a number of strategies that can come into play here, but the easiest one is to buy near the support level and sell at resistance. This gives you a riding wave to follow once you are sure of the range and a few chances at entering and exiting with profit. 

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Setup #3: Trading the Flag

This Day Trading Setup involves identifying what are known as flags in the charts of the Bitcoin market — these flags are quite easy to spot and this provides a relatively simple and straightforward strategy,  and is often seen as part of a forex trading psychology.

Flag helps traders identify trends as the ‘flag’ that is created will point in the direction of the trend, it also shows that Bitocin is currently going through a strong uptrend. The flag shape formation is a result of a stock that made a strong move upward, on high volume (forming the pole shape), and then consolidating at the top of the pole, on lighter volume, where the flag is formed.

The secret in Trading the Flag is to identify a flag that has a pattern with less than a 23.6 percent retracement — this will be a strongly trending flag

This is one of the best Day Trading Setup for new traders for a number of reasons. They are easy to understand, and it does not take long to identify them or to get good at noticing them, and they are generally small chart patterns, which means they tend to carry less risk than other day trading setups and can yield sometimes pretty good results.

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Setup #4: Triangle Setup

This is a very profitable Day Trading Setup for the Bitcoin market as it is one that world well with the more volatile markets. The aim here is to catch the pause in the market before the next break out and it usually comes at the point of a triangle.

Triangles occur in the Bitcoin charts when there are at least two swing highs, and two swing lows that have a connection with trendlines that head right. The triangles are also linked to the flags that help create more bullish moves

With the triangle setup, you buy below the most recent swing low and sell above the most recent swing high.

This method is quite a risky and potentially highly profitable one as it deals better with volatility which in the end is harder to chart and react to. But, because Bitcoin has such volatility there are often times where this Day Trading Setup crops up and offers good potential for returns. 

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Setup #5: Fade the Breakout

This Trading Setup is a good one to use to try and maximize profits from potential breakouts. Too many traders get sucked into trying to profit off of every break out that they come across, but there are more often than not breakouts which are false or flimsy, and end up costing the trader. 

Fading is a strategy that exploits these blips in price. The fader bets against any move that takes the price out of a normal range. THis is not the same as trading against a trend, but rather it only happens when the trader decides to fade when the movement goes into uncharted territory. 

Because fading trends tend to have a high win rate, these explained fade traders can make profits quite often on this positive trading psychology, but it does not always yield the biggest returns.

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In the world of Bitcoin trading, there is the opportunity for profit, but there is also a big draw for traders because of the rush of trading — especially Day Trading. There is ample opportunity and volatility in the Bitcoin market, and a number of easy to use platforms to get going quickly, but having a little bit of a strategy makes it all that much better. 

Understanding how to read entries into the market and spotting them in the charts can provide an exhilarating rush for a trader to use their Day Trading strategy, and the Day Trading Setup, to make some money while keeping an eye on the charts.

Getting a good Day Trading Setup is also a good way to start Day Trading Bitcoin as it gives a literal and effective starting point. To begin on your journey of Day Trading, sign up for a free account in under 10 minutes on PrimeXBT.

Risk Disclaimer
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