A breakout occurs when a rapid price movement goes above the resistance level or below the support levels. Breakout strategies are best used by advanced traders because a slight mistake in identifying the entry and exit points can lead to losses.
Since breakouts are the starting points of any significant price moves, traders need to determine the current price patterns, resistance, and support levels in order to pick entry and exit points correctly.
Learn everything about the daily breakout strategy and how it works in this guide.
What Is Daily Breakout Strategy?
Day breakouts involve entering and exiting the market on the same day. A daily breakout strategy identifies points when the crypto prices move outside the expected resistance and support levels in high volume. Usually, a breakout trader will enter a long position if crypto prices go above the resistance and a short position if prices go below the support levels.
Breakouts often happen toward the end of patterns and they signal attempts by traders to reverse a trend. Usually, prices will keep moving toward the direction of the break, but in some cases, it could be a fake signal.
Daily breakout strategies play with the emotions of traders who also fear missing out on a trend. When prices of a certain coin are moving in the anticipated direction, every investor wants to jump in on the trend. The massive waves create the signals for a breakout.
As a day trader, you need to have technical analysis skills, and to monitor charts accurately and follow crypto news to learn about the trends.
Is It Possible to Automate Daily Breakout Strategies?
While some traders may decide to sit on their computers and manually monitor and make trades, it is also possible to automate daily breakout strategies at Crypto.com. Notably, there are three main strategies you can apply for day trading. These are arbitrage, range, and scalping strategies.
Crypto.com allows you to automate processes in several ways. The first one is the Dollar Cost Averaging (DCA) strategy which helps you set aside a certain amount of capital for a specific asset. With DCA, you also specify the schedule you want to make the trades, which can be daily, weekly, or monthly. In this case, you will choose a daily amount to transact.
The other method of automating trades at Crypto.com is through grid trading. Gridding allows traders to set preferred price levels that they want to exit the market. Once these triggers are hit, the bots will execute the trade.
Do Daily Breakout Bots Work?
Day trading bots can work on crypto but not always. The efficacy of a bot depends on how well it is designed. However, most bots sold around are actually scams, except for a few, such as Bitsgap, Pionex, and Coinrule.
Before using a bot, it’s crucial to do your due diligence so that you don’t fall for scams like Immediate Edge bluff, which has so much contradictory information on its website and is a textbook representative of crypto trading bot scams.
In addition, you should not trust anyone when it comes to trading crypto. Take lessons from the most recent crypto scandal documented on Netflix in a crypto crime movie. The documentary narrates how the Quadriga investors got scammed by the Canadian investor Gerry Cotten who fled with the investors’ money. This is not to say that day trading bots don’t work; just, be diligent.
Is Daily Breakout Strategy Profitable?
Yes, daily breakout strategy is one of the most profitable strategies because it takes advantage of the volatile crypto market to find opportunities for profit-making. Due to the volatility of crypto coins, investors can identify many small price moves in a single day.
As much as it’s easy to earn profits, you need to take into account the transaction costs you’ll incur per trade. If you want to make any significant profits, you should be ready to make significant capital investments as well.
The profitability of intraday strategies also depends on your willingness to study the market and follow set triggers. Therefore, you need to perform technical analysis, monitor charts, and remain updated on crypto news.
How Much Does a Daily Breakout Bot Cost?
You can choose to use a free daily breakout bot or buy a paid version, depending on the features you’re looking for in a trading robot. Some free bots are better than paid ones, but it all depends on your perception in the end. At the same time, there are many scams that you should be aware of.
One of the best free day trading bots is Pionex. The platform has 16 free bots and it also allows you to customize your trading rules with the ‘Set Myself’ feature. With a mobile and desktop version available, Pionex gives you the convenience to make your day trades, and receive notifications seamlessly. It’s important to note that you will incur a 0.05% fee on all transactions with Pionex.
HaasOnline is another bot you can utilize for your day trades. It has three paid options perfect for different levels of traders. The lowest plan goes for 0.047 BTC, while the highest plan goes for 0.135 BTC.
Bitsgap is hands down one of the best day trading bots. The platform supports more than 25 exchanges, giving you more opportunities for arbitrage. Other than trading, Bitsgap will also manage your portfolio, making it a one-stop shop for everything. The icing on the cake is that you also get a free demo account valid for 14 days so that you can test the waters before committing.
You can go for the basic plan at $23 per month, the advanced package at $55 per month, or the pro version at $119 per month.
Daily breakout strategies are very profitable if applied correctly. To become an expert day trader, you need to stick to your strategies without deviation. You also need to act on time to set triggers because once you miss an opportunity, you cannot recover it back. Finally, automating your daily trades is a surefire way to maximize efficiency by eliminating emotions.