Cryptocurrency trading carries a high amount of risk but also an excellent level of return. Crypto trading, just like everything else, is not a guaranteed win, and anyone who tells you differently should be avoided at all costs.
There are no perfect trading strategies for newcomers or ambitious investors. Anyone considering using crypto trading strategies should view several variables. This comprises not only the investment aim and volume but also personal experience with cryptocurrency trading. To identify an appropriate strategy, investors need to be honest with themselves before adopting one. However, many people earn a livelihood trading cryptocurrencies, and it may not be ideal for everyone.
Clear guidelines are essential to apply crypto trading strategies appropriately. It is critical to understand the conditions in which the chosen crypto trading strategies can be effective. This guide will walk you through the most effective trading strategies that you may use right away in your trading journey.
Crypto trading strategy – why is it important?
Why does a crypto strategy make sense? Investors who wish to invest in cryptocurrencies or other financial assets on exchanges must have a sound plan in place. Those who support solely in their gut sentiments and lack market expertise and thorough chart analysis are unlikely to succeed. With the unpredictable nature of Bitcoin and other cryptocurrencies, it’s critical to pick the perfect moment to begin trading.
Technical Analysis (TA)
If you want to delve into crypto trading, you need to grasp the fundamentals of technical analysis at the very least. While looking at charts, drawing lines, and finding significant price levels may appear ridiculous at first, it is one of the most valuable tools at your disposal, and it is undoubtedly preferable to having nothing.
When paired with the suitable TA approaches, Crypto trading may lead to a plethora of very lucrative possibilities. You’re more likely to have a pleasurable and lucrative voyage if you’re thoughtful and careful about your trade and strategy.
You can use the following tools to aid your decision-making process:
- Tradingview (Charts and technical analysis)
- Predicoin (Market sentiment analysis service)
- Coinpaprika (Coin index and research site)
- Coinmarketcal (Calendar of upcoming crypto events)
- Delta (Portfolio tracking app)
Cryptocurrency Trading Strategies
HODL
For any newbie, HODL is one of the fundamental long-term crypto trading strategies. It involves the slightest amount of trading knowledge and expertise, and anyone can do it.
The name HODL is derived from the misspelling word “hold.” It was coined in December 2013 in response to a post on Bitcointalk.org by Game Kyuubi.
The HODL crypto trading strategy’s main idea is to acquire a cryptocurrency with potential and keep it safe for an extended period in the hopes of selling it for a higher price later. After a year, a couple of years, or even a decade, you may decide to sell.
Swing Trading
This is where technical analysis (TA) and charts come into play. You must have a basic grasp of technical analysis to be adequate in swing trading. It will aid in market observation and the development of the sixth sense for substantial price movement.
Swing trading is all about taking the appropriate action at the appropriate moment. The idea is simple: make as much money as possible amid the crypto market’s ups and downs. Whether prices are rising or falling, you constantly attempt to grab a portion of a prospective price change.
Successful swing traders strive to capture part of the predicted volatility before moving on to the next chance, although this might mean they only trade a few times per week.
The trick is to create specified entry points, stop losses, take gains before each trade and stick to them. Aiming for a profit of $100-200 for every move is OK if the long-term benefits exceed the hazards. The market can sometimes signal $1000 changes, but they are challenging to spot with 100% precision. As a result, ineffective swing trading and protecting earnings by increasing your stop losses should be essential.
Daytrading
Day traders are cryptocurrency traders that earn a livelihood off of it and spend most of their time doing it. They make a dozen different deals every day in the hopes of capturing favorable market swings, whether it’s buying or selling assets, trading on margins, or swapping perpetual contracts. The benefits might be enormous, but they can also be difficult for newcomers, especially if they are unfamiliar with technical and fundamental analysis or have little market experience. It can be months or even years of losses before you become a profitable day trader.
Day trading is all about making rapid, decisive judgments to reduce your risk and increase your rewards. Of course, no trader is 100% correct all of the time, so be prepared to close positions even if you lose a lot of money. Learn how to identify possible levels of support and resistance, when to enter and exit trades, how to create goals and tight stop-losses, and you’ll graduate from the Crypto Day Trading University sooner or later.
These are the most common cryptocurrency trading strategies. They all differ in the level of involvement, experience required, TA skills, fundamental analysis, ability to make quick decisions and mitigate risk. Regardless, if you are ready to put enough time and effort into crypto trading, you can gain all of these abilities.
