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How I Day Trade Bitcoin on Tastyworks For a Profit

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A few weeks ago Tastyworks enabled crypto trading on their platform and I started day trading it. Its a world of difference from the crypto exchanges, in all positive ways.

I'm going to tell you my exact workflow for generating profits.

There are two primary reasons I prefer using Tastyworks over one of the cryptocurrency platforms like Coinbase or Kraken. I've used Coinbase extensively in the past, and my two biggest complaints are:

  • Fill Prices
  • Fees

Tastyworks excels at both.

Fill Prices

Tastyworks excels at both. They use Zero Hash as a digital settlement service and coin custody, and I don't know what it is about their platform that rocks, but I get excellent fill prices.

What I mean by fill prices is that let's say Bitcoin is trading at $45,000. On Coinbase if I placed a buy order and the market price is $45,000, I would get a fill around $45,050, meaning I don't get a good market price.

The reason for that is because Coinbase charges .5% on the bid and the ask as arbitrage on every single trade. Sometimes on Coinbase Pro they charge even more.

When I place a similar trade on Tastyworks, I get a fill around $44,998. And when you're making a lot of smaller day trades, these fill prices can make a huge difference as to if you can make a profitable trade or not.

Tastyworks charges nothing on the bid and ask.

Trade Fees

Coinbase charges a 4% base fee for cryptocurrency transactions, on both ends – the buy and the sell. This is highway robbery. If you use cash already in your Coinbase wallet or fund the transaction from your bank account, the fee changes to 1.49%, on both the buy and the sell.

Since I always fund my trades with cash in my wallet or in my bank, I'll assume 1.49%.

So let's say you're trading .3 of a Bitcoin as a day trade and Bitcoin is trading at $45,000. Your buy order is for $13,500 of Bitcoin plus a fee of $201.12. You'll pay a similar amount when you close the trade, for a total of $201.12 or similar, depending on your closing price.

Ouch.

On Tastyworks, however, you pay 1% for the buy and the sell, with a max of $10. So the most you will every pay for a round-trip cryptocurrency trade on Tastyworks is $20. Essentially, I obliterated my trade fees by switching to Tastyworks.

Knowing that I can move in and out of trades without losing a fortune to trade fees enables me to make the quick choice to get out of a position when its going against me.

Now let's move on to workflow.

Tastyworks vs. Coinbase Pro

Coinbase Pro has much lower fees than regular Coinbase. However, because of the hidden fees on the fills, the transparent Tastyworks pricing is easy to estimate. If you are trading Bitcoin, you are going to pay $20 for each round trip trade. Period. End of story.

With Coinbase Pro, it depends on how much of a hidden fee they slap onto the market price. I don't know about you, but I like to know exactly what I'm paying so I know how much profit I need to clear my fees.

My Day Trade Workflow

The first order of business is to open my Tastyworks platform – and I use the web platform because its available on all my computers.

Then I open Tradingview, my charting software of choice. Its free, but you get some extra features when you subscribe. I finally subscribed recently, and the new features are helping me make better buy and sell choices.

I open a 1 minute chart next to a 5 minute chart using the Full Featured Chart function on the Tradingview platform. I set the charts to the candlesticks format, and I turn on All Candlestick Indicators under the Indicators drop-down menu. It looks something like this:

Tradingview Bitcoin Charts

The indicators have been a game-changer for me. When there's a Bullish Engulfing Candle (the BE in blue indicator), I buy. When there's a Bearish Engulfing Candle (the BE in red indicator), I sell.

Its that simple.

The one-minute chart is great for quick moves, and the 5-minute chart indicates trends that will last a little longer – hours instead of minutes.

When I see the Bullish Engulfing I typically buy .3 bitcoins, which at $45,000 costs around $13,500.

When I see the Bearish Engulfing, I sell .3 of my bitcoins and close the trade.

My target for each trade is around $210, or a move of around $700 in Bitcoin. My net gain in that scenario is $190. Do that five times a day for around $1k. This is just a benchmark, and it really depends on the price movement of the coin on that day as to how much you can squeeze out of each trade.

After some practice, I will increase my positions to half a Bitcoin per trade.

The breakeven in this scenario is a $67 move in Bitcoin. ($67 / .3 = $20 or equal to trade fees)

Placing a Bitcoin Trade

Placing a Bitcoin trade on the Tastyworks platform is simple. Its just like buying stocks. I use the web platform, and this is what it looks like:

Buying Bitcoin on Tastyworks

If you want to buy a fractional share of Bitcoin, enter it as a decimal. In the image above, I'm placing a trade for 30% of a Bitcoin, so I enter .3 for the quantity. By using the unlocked limit price, I've experienced very good fill prices without the backend conversion fees like the ones charged by Coinbase.

You click Review and Send, and the next screen looks like this:

Once you click the “Send Order” button, the trade executes.

After the trade executes, I immediately look at my activity tab and see what the fill price was. I write that down and track against that exact price.

Tastyworks_Activity_Fill_Price
Tastyworks Activity – Filled Trades

Relative Strength Index or RSI

I recently started using the RSI indicator, which you can add to any chart on Tradingview, as another indicator of what direction Bitcoin is heading. When RSI is low, it means the stock or coin may begin moving up in the near future. When RSI is at the very top, beware, it may pull back soon.

The purple area shows the RSI trend of Bitcoin on a 15-min candle chart

From my experience, RSI works better on the longer time-frame charts, and not so well on the 1-minute chart. I use it the most when looking at the 15-minute chart.

Some Things to Note – Tips & Advice

  1. Not every day is a great day for trading. If the trends keep working against you, take a break and wait for a more bullish day.
  2. Be patient. Wait for the indicators to make your trades. I know its hard, but this is probably THE most important tip I can give you for day trading.
  3. Write yourself out a list of trading rules that defines your exact approach, and follow it exactly. If you find its not working, tweak the rules. Always be methodical, or you can't really judge the approach accurately if it seems to not be working.
  4. Do some research and develop your own strategy that works for you and your style of trading. My way of trading will not work for everyone, and may not even work for me long term. Its just what's working right now.
  5. Try not to focus too much on the money you're making. Focus instead on executing profitable trades, staying small in your account, and managing your risk. The money will come.
    1. Don't leave a day trade on and go golfing. That could end very ugly for you.
    2. Don't bet your whole chunk of cash on one trade. Decide what size makes sense and stick with that. “Trade small, trade often” is the best advice.
    3. Most importantly – have fun! Trading is a rewarding and energizing activity, when risk is managed appropriately.

The Bottom Line

Day trading Bitcoin is easier now more than ever, as it has gained institutional support over the last few months. This means its more liquid, and trading in higher volumes than ever before. It can be a rewarding experience, but also frustrating at times.

Be patient, follow your own trading rules, and you just might find a nice groove. If you're eager to try a new trading method, the one explained in this post is just one of many that can be used to day trade Bitcoin.

I'd love to hear your feedback on how I day trade Bitcoin, and hear about your experiences as well. Add a comment below to join the conversation!

This post is not intended to provide investment advice. Trading cryptocurrencies is risky and should be done only at the trader's discretion. This post is provided for education purposes only.

How I Day Trade Bitcoin on Tastyworks For a Profit

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