Top Trading Strategies in Cryptocurrency

They’ve been around for several years now and have consistently maintained a pole position as the world’s two most valuable crypto assets. It’s also worth noting there are no physical crypto coins that you can hand over to a cashier in a retail store. Instead, cryptos are online-only assets that are normally kept in digital wallets. But to keep cryptocurrency networks secure and transparent, balances are recorded on public ledgers that everybody in the world can access. Cryptocurrency has become increasingly popular among investors over the past several years, and it’s easy to see why. Cryptocurrency feels more exciting than many of the traditional assets on the market.

• Most digital currency trading platforms are open 24 hours a day, 365 days a year.
• An investor-formulated trading strategy in cryptocurrency trading is an algorithm that defines a set of established rules for buying and selling digital assets on cryptocurrency marketplaces.
• If you’re just starting out trading crypto, your first step has to be to choose a trading platform.
• Other perks to holders of some cryptocurrencies include restricted ownership and voting rights.
• We wishes to empower the community to choose which assets they want to list.
• The point of day trading cryptocurrency is to profit from tiny market movements and volatile bear and bull market activities.

With a primary focus on growth and profitability, HTX is providing users worldwide with professional services and a diverse product lineup, including PrimeVote, Flexi Max, Shark Fin, and more. HTX will also strategically partner with public chains like TRON, cross-chain protocols like the BitTorrent Chain, as well as stablecoin projects such as TrueUSD. HTX will continue to expand partnerships with different projects, public chains, stablecoins, and foster a multi-dimensional business ecosystem through collaborative efforts. You should put a stop loss whenever you open a position and move it up slowly (in case the price is moving in your favor) and bring it to a break-even point.

Fundamental Analysis (or FA)

RSI is calculated based on the ratio of the average gains to average losses over a specified period, typically 14 days. Your crypto trading strategy is a fixed plan that you design to achieve profitable returns when buying or selling in the crypto markets. This plan employs various analytical tools to identify predefined market conditions and price levels, including important resistance and support areas. Also called trend trading or following the trend, this strategy involves long-term investing in assets. A trader/investor will typically buy or invest in an asset when the price is low and sell when the price is high, not unlike the other strategies.

• It’s important to research and understand each strategy before implementing it in your own trading.
• Account owners assume all investment risk, including the potential loss of principal.
• Divergences work across all time frames as well, but we have found them to be most effective on the 4-hour and daily charts.
• However, it can be important to look at the current price, circulating supply, market capitalization, and trading volume before jumping in, so let’s look at these now.

Currently, there are more than 20,000 cryptocurrencies listed on CoinMarketCap, a leading data aggregator for the cryptocurrency market. All in all, we recommend experimenting with the different indicators, learning more about them, and determining which one works well for you. When you decide on which strategies you will use, it is important to not get overly fixated on one strategy.

A Beginner’s Guide to Cryptocurrency Trading Strategies

Unfortunately, there is no one single answer but some of the best strategies are scalping, automated trading bots, and using manual technical analysis. High volatility microcoins can gain price multiples in 1 day, providing exponential returns – to lucky investors. High volatility also means those coins can move in the wrong direction just as quickly. Luckily, this doesn’t happen often because of the kind of options the pool uses are all very short-term and far-out-of-the-money.

• Scalping entails purchasing a cryptocurrency, monitoring it throughout the day, and then selling it when the price rises above the initial buying price.
• This way, you can go on with your day and let the robot make profits foryou.
• When scalping, all you’ve got to do is take out a crypto position and then sell that position back onto the exchange based on small price movements.
• On the contrary, arbitrage trading takes advantage of small price differences across exchanges.

To backtest trading strategies, one will require historical crypto price data. Fortunately, the process of acquiring and implementing aggregated crypto price data for trading strategies is simplified by the public CoinGecko API. This derivative is popular because it allows traders to utilize leverage, as some exchanges offer perps with extremely high leverage possibilities. They can be extremely risky, given their lack of regulation and potential for high significant fees.

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US-based traders can use only domestically regulated crypto-trading platforms, so this is a major factor to consider when researching the right platform. It entails taking the time to learn how the crypto markets work and how financial trading works. However, anyone motivated enough can learn how to trade the crypto markets successfully. Conducting demo trading before you make an actual trade is always a good idea. This option has zero risk and helps beginners to practice trading without using real money.

Similarly, you should set multiple take-profit orders to book small profits after small intervals. Passive investment is particularly smart if you’re trying to build a nest egg for loved ones over a long period of time. Once you’re immediate edge ready, you can use your exchange account to buy crypto and start trading. Alternatively, if you’re planning on investing in crypto as a way to support your child, consider giving them their own digital wallet with EarlyBird Crypto.

Crypto Day Trading

An experienced trader usually deals with the rise and falls of multiple coin assets at one time to maximize earnings, making this quite a hectic option. A trader planning to use scalping as a method of gleaning profits of the market also needs to have a defined exit strategy. This is to avoid a large loss that could eat up small profits painstakingly earned so far. However, like scalping, day trading is a time-consuming and risky strategy more suitable for advanced traders. Swing trading might be the most convenient active trading strategy for beginners.

• Many of the best crypto exchanges offer built-in tutorials and allow users to create demo accounts to practice trading without risking real cash.
• Similarly, cryptocurrency gains are taxed at different rates – either as income or capital gains.
• Keep a journal where you record the results of your trades to easily determine which ones are truly successful and which ones are not.

Similarly, cryptocurrency gains are taxed at different rates – either as income or capital gains. In this section, we will discuss some of the most common crypto trading strategies. Although keep in mind that you can always create your personal strategy that works for you.

How do I start trading Cryptocurrency?

Crypto trading bots can streamline the process of looking at price movements, exchange fees, and opportunities to make short-term profits on trades. For decades, bot trading software has been a staple of brokerages trading on stock exchanges. Traders with an understanding of software programming and APIs should definitely consider using this to their advantage as a day trader. For prospective day traders, certain websites allow users to track and copy the most successful traders on the platform. Below are some of the most popular trading strategies in the crypto day trading game. Recently, the crypto markets have become an increasingly popular destination for day traders.

• To reiterate, we will generate our signals by adding a new ‘Signal’ series to our dataframe, where 1 implies a long signal and -1 a short.
• Since the positions are smaller with scalping, traders can evaluate the gains or losses at the end of a day instead of long-term investing.
• Then, regardless of the market movement, you keep investing until you attain your goal.
• Regardless of whether you are new or experienced, we hope these insights will help you navigate crypto trading with confidence.
• It entails taking the time to learn how the crypto markets work and how financial trading works.
• It is also referred to as “intraday trading”,reflecting the fact that trades are typically opened and closed within the same day.

Check out this EarlyBird guide to find out about the best trading strategies. But you also need motivation, commitment, and a good understanding of the – crypto market, trading, and strategies. You can choose established and large-cap coins like BTC and ETH or higher-risk medium or small-cap altcoins.

Why trade cryptocurrencies?

Traders can practice spot trading on OKX by going to the “Demo trading” page. Once you have bought an asset, you need to sell it higher than you bought it to make a profit. Consider using the scalping trading strategy to monitor and identify a selling opportunity. For instance, an AI-based crypto trading bot like Cryptohopper utilises machine learning algorithms to analyse vast amounts of data and generate trading signals. This allows users to take advantage of market opportunities with precision and efficiency.

• They register accounts on exchanges with a significant price discrepancy for the cryptocurrency they’re trading to take advantage of this opportunity.
• Of course, given their expertise and the profitability of their trades, it’s natural that they’ll charge for VIP access to their strategies.
• But to keep cryptocurrency networks secure and transparent, balances are recorded on public ledgers that everybody in the world can access.
• The percentage profit targets tend to be smaller, so trading larger positions makes more sense.
• Since there are many different trading strategies, we’ll cover some of the most common ones.

You buy a crypto asset, put it into storage, and let it sit in your wallet for a long period of time. The idea here is that your asset will increase in value over time without you having to take any action. As a result, the overall value of your investment portfolio will go up alongside those asset values. In practice, that means buying a crypto like Bitcoin through one exchange and then almost immediately reselling your new asset onto a different exchange for more money. You’re not going to make a huge profit doing this — but if you’re fast and know what you’re doing, it is possible to make a quick buck with this strategy. On the one hand, active trading strategies provide a level of excitement that many investors crave.

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Given that cryptocurrencies seem to have more negatives against the stock market but not enough positives, why would you want to trade digital assets? They are only similar to the extent that the end goal is the same – gaining profit from your activities. They are different in that results from trading activities are generally expected within a short to medium-term period.

Usually, the most accurate crypto signal providers will charge a fee before allowing you to join their channel. Of course, given their expertise and the profitability of their trades, it’s natural that they’ll charge for VIP access to their strategies. When you exit the trade you must of course give back that $900, but any profits you get to keep. So if Bitcoin went up 10% for example, your $100 worth of Bitcoin would only be worth $110, but a 10x leveraged position with $1000 worth would now be worth $1100. This can be a bit riskier, but many exchanges allow for it and it is the way people can actually make impressive profits even when an asset tanks.

Crypto Leverage Trading

Usually, the exchanges with margin trading options offer a leverage up to 100x, which is a hazardous ‘game’ and not recommended for beginners. Fundamental analysis for cryptocurrency involves evaluating two important factors – on-chain and off-chain metrics. On-chain metrics include network hash rate, wallet addresses (active and dormant), network applications, token/coin issuance rate (inflation/deflation), network fees, and transactions.

• “Buy and hold” is a passive investment strategy where traders buy an asset intending to hold it for a long time, regardless of market fluctuations.
• Commonly, they’re artificial intelligence software able to predict the rise and fall of cryptocurrencies and make relevant trades.
• Keep in mind an exchange will never let you lose its money in a position, and if you ever do find an exchange that does, it won’t be open for very long.
• This article will discuss how to trade crypto that you own rather than derivatives since it is easier to do so.
• For example, the range of Bitcoin remained $8,602.40 to $10,211 for a whole month-long period.
• Given this gap, traders use other strategies like options trading, to mitigate risk.

Scalpers may exit a trade seconds after entering, and many use automated bots to increase the frequency of their trading cycles. Ideally, scalpers want to exit a trade before any news item or short-term fluctuation has a chance to change the market’s sentiment on a coin. If you want to practice, some exchanges offer “dummy” accounts where you can trade fake cryptocurrency against real-world market data, so that you can learn the ropes with literally no risk. Telegram’s choice as the haven for crypto trading is primarily due to the density of the cryptocurrency trading community on the trading platform. It’s proven itself as the best medium for broadcasting messages to a large audience, especially due to the ever-changing nature of Cryptocurrency prices.