Can You Day Trade Crypto on Robinhood

Can You Day Trade Crypto on Robinhood

Robinhood is one of the widely popular crypto trading platforms. With the growing interest in Crypto trading and people looking to cash in on the daily volatility of cryptocurrencies, day trading is becoming a major go-to strategy. Therefore, as one of the top choices, is it possible to day trade Crypto on Robinhood? 

On the Robinhood platform, you can day trade crypto. However, there are only seven crypto coins that you can day trade on the Robinhood platform. 

Since Robinhood was introduced, the goal has always been to give traders an outlet that is free and easy to use when it comes to trading crypto and other markets. If you are already familiar with Robinhood, you can attest that the interface is simple and straightforward, even for a complete beginner. As you continue to read this article, you will get to know if day trading crypto is possible on Robinhood. 

Can you day trade Crypto on Robinhood?

Day trading is the practice of buying and selling securities in one trading day. Although it is possible in any marketplace, it is most popular in the stock and forex markets. One of the common attributes of day traders is that they are properly funded and educated.

In most cases, day traders use large amounts of leverage as well as short-term trading strategies in a bid to capitalize on every price movement that happens in highly liquid currencies or stocks. Day traders are aware of events that can cause short-term moves in the market. Some of the popular techniques include trading based on news and scheduled announcements like corporate earnings, economic statistics, and others. 

There are other popular strategies currently used by day traders and they are highlighted below

  1. Scalping – this is an attempt to make as many small profits on small price changes during a trading day.
  2. Range trading – this is the use of support and resistance to determine buy and sell decisions.
  3. High-frequency trading – this is the use of powerful algorithms to exploit short-term market inefficiencies.  

On Robinhood, you can day trade crypto and you will have access to crypto-related news, scheduled announcements, and other insightful resources that can help you when you day trade crypto. Additionally, you can access each coin’s performance chart over a certain period. With that, you can create a personal day trading strategy.

How often can you day trade Crypto on Robinhood?

Can You Day Trade Crypto on Robinhood

Day trading Crypto on Robinhood is quite easy and unlike trading stock, you do not need to have up to $25,000 before you can make 5 or more day trades in one week. Therefore, you can day trade crypto as many times as you want. Aside from that, you can also trade any day of the week as the crypto market never closes.

When you decide to trade Crypto on Robinhood, you should note that you do not own the coin you choose to trade. All you are doing is placing bets on the price of cryptocurrencies and it is perfect if you are looking to just invest in crypto. As you trade, your investment’s value can grow just like when you buy it directly.

However, if you want full control of the coin, it requires a bit of a complex process. To do this, you will have to convert directly to fiat on Robinhood and then, withdraw the fiat directly from the platform. But, this could involve a waiting period, fees, and even risk the coin’s value changing.

Should you day trade cryptocurrency on Robinhood?

There is no right or wrong when it comes to day trading cryptocurrency on Robinhood. The reason for this is that there are different benefits and disadvantages of day trading of any kind of security. Therefore, before you go on to decide whether you should day trade cryptocurrency on Robinhood, there are a few things that you need to know. 

The high volatility nature of cryptocurrencies has made the crypto market a roller coaster. Therefore, it is a perfect environment for day trading as there are a lot of activities during the day. With the multiple upward and downward movements, it is possible to make decent profits as you day trade.

However, because cryptocurrencies are highly volatile, day trading is not recommended, especially if you are new to online trading and cryptocurrencies. Additionally, day trading crypto is considered to be a risky investment strategy, and it also takes a huge amount of time and effort. Other than that, it can cost money as some jurisdictions tax every trade’s capital gains, and hence, it can become a huge amount in tax debt at the end of the year.

For example, if you choose to day trade Bitcoin on Robinhood and you have a strategy to close your position once it gains more than 10% of the price you bought it. When Bitcoin hits this range and you stick to the strategy to sell, there is a possibility of the price going upwards and hence, you will miss out on getting more profit because of day trading.  

Before you decide to day trade crypto, you need to stick to the strategy, even if it means missing out on potential profits. Once you think you are ready, you should day trade crypto on Robinhood as it offers a commission-free trading platform. Additionally, there are interesting features that can help you make better buying and selling decisions as you trade.

Do day trading rules apply to Cryptocurrency?

Can You Day Trade Crypto on Robinhood

Fortunately, the day trading rules do not apply to cryptocurrencies. In that case, you do not need to have up to $25,000 before you can day trade up to four times on Robinhood. This is because the FINRA – Financial Industry Regulatory Authority restriction does not apply to cryptocurrency trading. 

Therefore, you are free to day-trade crypto as many times as you would like and any day you want because the crypto market has no closing day. However, when you decide to day trade crypto, you need to know that there are a lot of risks attached because of the volatility of the various cryptocurrencies. In that case, you need to fully put in the effort to understand the market and invest your time in following the various news and happenings in the crypto world.

What happens if you day trade 4 times on Robinhood? 

Aside from day trading crypto, when you day trade other securities like options and stocks 4 times or more on Robinhood, you will be flagged as a pattern day trader. According to Robinhood, the pattern day trading rules were put in place by one of its regulators, FINRA. Therefore, the platform is required to enforce the regulation and also flag down defaulters.

If you have less than $25,000 in portfolio value aside from any cryptocurrency positions you hold, you are generally limited to not more than 3-day trades in one week – a 5 trading day period. In simple terms, this means that after you have placed 3-day trades in 5 trading days and you decide to place the 4th-day trade, you automatically become a pattern day trader. To continue trading, you need to have at least a $25,000 portfolio value, which is the total of your stocks, cash, and options.

You need to understand that only the previous trading day balance is taken into account. Therefore, if your portfolio value goes above $25,000 during the trading day, it does not count unless it stays that way until the end of the day. When you are marked as a pattern day trader, your account will be restricted for 90 calendar days – approximately 3 months.

However, if you decide to keep day trading while your account is marked and you have less than $25,000 portfolio value, your account will be further restricted. You will not be able to buy stocks, options, and even cryptocurrency on the Robinhood platform. Fortunately, Robinhood has a day trading counter, which can help you track your day trading activities within a 5 trading day period.

Pros and cons of day trading cryptocurrency

Can You Day Trade Crypto on Robinhood

As cryptocurrencies continue to remain relevant and, in a bid, to get a piece of the glorious pie and with the hopes of gaining financial freedom, people continue to trade crypto. With day trading providing traders with the chance to ride the wave, is it worth the risk? Well, these are a few pros and cons of day trading cryptocurrencies to give you some perspective. 

As we have mentioned in the article, unlike the forex or stock market, the crypto market is open 24/7 and because of that, you can trade from anywhere and at any time.Since cryptocurrencies are relatively new, the market is vulnerable to criminal activity. In some cases, crypto trading platforms have been hacked with users’ capital and details stolen with no trace.
In the crypto market, almost all of the pairs can easily be traded, unlike the forex market where some exotic pairs are not as liquid.The fact that the market is always open is also a disadvantage because you might need to stare at your screen for a longer period.
With crypto, you do not need a huge amount to start trading. You can start with less than $100, which is good for a beginner.Another issue is volatility. In some cases, there can be massive price swings in minutes, which can lead to massive losses. 
Unlike other markets, crypto patterns take a little longer to play out, and therefore, you will have more time to analyze and process the data, which will help you make better trading decisions.


  • Tristan

    Tristan has a strong interest in the intersection of artificial intelligence and creative expression. He has a background in computer science, and he enjoys exploring the ways in which AI can enhance and augment human creativity. In his writing, he often delves into the ways in which AI is being used to generate original works of fiction and poetry, as well as to analyze and understand patterns in existing texts.