Day trading is an investing strategy that relies on frequent trades of one or more securities throughout the day to turn a profit. While traditional buy-and-hold investors are concerned with the long-term performance of a company, day traders seek to take advantage of more immediate profit-making opportunities.
Successful day traders rely on a number of resources and tools to be successful — such as stock screening or trading simulator software — to capitalize on short-term price movements of stocks, bonds, and other commodities and currencies.
This process of trying to profit off of price discrepancies and movements within a short window of time can be very difficult, and the risk associated with day trading is high.
#1 Which dTokens should you create?
The crucial thing here is to observe the situation on Monday, December 6, right at the beginning when Liquidity Mining rewards are introduced. By creating dTokens using your Vault, you enjoy a high degree of flexibility, and can quickly jump into the highest Liquidity Mining pools to either liquidity mine, or simply swap from one token to another one.
Nevertheless, you should always try to diversify your capital and shouldn’t put all your eggs into just a single Liquidity Pool. It would make sense, though, to go into at least one or two liquidity pools with high volatility to maximize your returns.
#2 Diversify by using several Liquidity Pools
You should not go all in on every available Liquidity Pool. Entering too many Liquidity Pools at once risks distracting you from focusing on entering into the most lucrative pools. But after all, it all boils down to your risk appetite. If you are risk averse, then less volatile Liquidity Pools, like the DFI-DUSD pool, may be the most attractive option for you; riskier options are the smaller, more volatile pools where returns should be even higher.
#3 Profit by arbitraging
Instead of minting dTokens and jumping from Liquidity Pool to Liquidity Pool, you could instead buy/swap them on the DEX and use them to arbitrage the Liquidity Pools (which effectively helps to balance them out). Why does this happen, and why is there such an opportunity in the first place? Well, the price on the DEX is all about supply and demand and as such if there is more demand for DUSD than there is supply, then the price tilts, and you are able to take advantage of that.
#4 Should you create dTokens just with one or many Vaults?
Similar to creating dTokens, you shouldn’t open too many Vaults at once and should also not take out multiple dTokens as a loan from your Vault(s). The reason is simple: it can be overwhelming to handle so many Vaults and so many Liquidity Pools at once, especially when the market crashes and your collateral decreases in terms of USD value.
#5 Buy up Vaults in liquidation
This tactic does not have to do anything with creating Vaults or Liquidity Mining. This tactic is all about buying up Vaults that are being liquidated due to insufficient collateralization value. All you need for this strategy to work out is some basic coding experience, since it can only be done via the command line using the DeFiChain desktop wallet.