The best trading strategies are often based on years of experience investing in the cryptocurrency market, and in this article we will introduce you to the most proven crypto trading strategies.
Before we get started, follow a few obvious but important steps that should not be skipped.
If and when you decide to trade cryptocurrency, for heaven’s sake, start with strategies. Manage your risks, set limits on the amount you invest in a particular cryptocurrency, and don’t forget to use stop loss orders. Diversify your crypto portfolio; don’t put all your eggs in one basket.
Think about long-term investments (the crypto market isn’t going anywhere, it’s here and it’s not going anywhere, at least not for the foreseeable future). If you leave your money in the crypto market for a few months, it may bring you more profit. That’s enough for the basics. Now let’s look at cryptocurrency trading strategies.
The key points are
- Having a well thought out and proven strategy when trading cryptocurrencies is very important to profit in the cryptocurrency market.
- Cryptocurrency day trading strategy involves entering and exiting a position in the market during the same day.
- If you are more interested in stable and regular daily profits from cryptocurrency trading, then automatic trading may be right for you.
Cryptocurrency trading strategies
If you are here because you think that investing in cryptocurrency is a shortcut to riches, don’t do it, it is much harder than you think.
Having a well thought out and proven strategy when trading cryptocurrencies is very important to profit in the cryptocurrency market.
Depending on your risk tolerance and ultimate trading goals, you can choose the strategy that best suits your trading ventures and goals. Profiting from crypto trading is all about correctly predicting price fluctuations in the market. A strict set of rules and principles can be a good help in this.
Cryptocurrency day trading
Intraday cryptocurrency trading strategy involves entering and exiting a market position on the same day. It is also referred to as “intraday trading,” reflecting the fact that trades usually open and close on the same day.
Day trading in the cryptocurrency market is especially profitable because cryptocurrencies are quite volatile. A day trading strategy, of course, goes beyond mere guesswork.
You must have the right intraday cryptocurrency trading strategy and an understanding of fundamental and technical analysis. Most intraday traders rely on technical analysis to build the right trading ideas.
They use price action, volumes, chart patterns and other indicators to identify entry and exit opportunities to make investment decisions. They also monitor fundamental news and other developer-related updates that can affect digital asset prices, especially in the short term.
Here are strategies that can help you increase your profits from day trading in the market:
- Scalping on Cryptocurrency.
Scalping is an intraday cryptocurrency trading strategy in which traders seek to capitalize on increased trading volume. They may exit trades a few minutes after entering, making a small profit.
Ideally, a scalper aims to make small profits. They scalp the market looking for small opportunities. Scalpers need huge capital to make a profit because the profits from this strategy are usually very small.
- cryptocurrency arbitrage.
Arbitrage is one of the most popular strategies in the market. It involves buying a coin on one platform and selling it on another, using the difference in price between the two platforms. Like scalping, arbitrage tends to make small profits. Thus, the larger your order size, the more profit you can make.
Range Trading Crypto
In many cases, cryptocurrency will trade in a certain range for a long time. In some cases, big players will systematically manipulate the price of the coin up and down to profit in a range. If you notice these patterns, you can also take advantage of them. Thus, you should pay attention to overbought and oversold zones.
To summarize
Overbought means that buyers have met their needs and the stock is likely to be sold; oversold means the opposite. The chart indicators included in any reputable charting program can help you find these zones. Common indicators used for this purpose include the stochastic oscillator and the relative strength index.
Day trading cryptocurrency can be very profitable, especially for short-term traders. If you have the right cryptocurrency day trading strategy, you should have no problem. Keep in mind technical and fundamental analysis with an emphasis on technical analysis, as historical price analysis can tell you a lot about when to open and close a position.
Smart Trading
This one is also quite popular, it is a mix of different smart orders such as Stop-Limit and Trailing Stop-Loss. This strategy offers good control over risk and return and helps you better plan the positions you open and close. With this strategy, you only need to place 2 orders. Stop-Loss is used to limit losses if something goes wrong.
On the other hand, take profit is used to make sure that you make a profit whenever the market reaches the set conditions. You can also combine multiple take profits with stop losses to take your strategy to the next level.
When you use 2 or more take profits, you can spread the risk of the trade, which maximizes your chances of making a good profit. Although it is very similar to the previous method, it just simplifies everything and makes it less risky.
You will need to test them out and see which of these strategies works for you.
Automated Trading
If you’re more interested in stable and regular daily profits from trading cryptocurrency, then automated trading might work for you. There are many cryptocurrency trading robots available in the market.
Cryptocurrency trading robots can analyze the market around the clock and look for the best trading opportunities.
You can also enable smart trading orders, which will further increase its efficiency. This will help you invest in the cryptocurrency market with ease. This way, you can get on with your day and let the robot profit for you.
HODL Strategy
HODL is used daily by many crypto traders. With this strategy, both the risks and opportunities are limitless. You can lose everything or make huge profits with this strategy. One of the best things about HOLD is that all you have to do is just buy digital currency without setting a take profit or stop loss.
This trading strategy can either help or break you, so it’s important to really think about the risks before you decide to use it. Let’s say you buy a BTC and its price goes up 15 percent on the second or third day after you buy it.
You will make a good profit even in that short time. But if the price falls sharply, you will lose. But most crypto traders who use the HODL strategy invest when the price is very low and profit as soon as the price rises sharply.
Since this is very risky, it is very important for traders to have a specific mindset when trading. Essentially, you must be able to trust your instincts and decisions, otherwise it will be difficult to make good profits with this strategy.
Note: Invest an amount of money that you can afford to lose when using the HODL strategy.
With this strategy, you can avoid market volatility and survive short-term price fluctuations when trading cryptocurrencies.
While all of these strategies are really good, they all have their advantages and disadvantages. For best results, it would be better to use all these strategies once you gain enough experience.
Diversification is a very important step to success in any market, and cryptocurrency trading is no exception. You can allocate funds to each strategy according to your personal preferences.
