Crypto trading is an activity where you buy and sell assets in the crypto market with various mature strategies. For those of you who don’t know the strategy for trading Cryptocurrency, here are some trading strategies that might help you to make a profit.
This trading strategy involves taking a position and exiting it on the same day. A trader’s goal when adopting such a trade is to profit amid intraday price movements in the cryptocurrency of his choice. For successful trades, investors often rely on technical indicators to figure out entry and exit points for a particular cryptocurrency.
Range trading usually relies on market analysis based on Fibbonaci, which provides daily support and resistance levels. ‘Resistance’ refers to the point where the price can rise and therefore a resistance level is the price above the current price. On the other hand, ‘Support’ is a level below the price of a cryptocurrency that should not fall, therefore the support level is always below the current price.
This automate trading strategy involves using increased trading volumes for profit. While there is risk involved, savvy traders usually pay attention to margin and other important rules to avoid a bad trading experience. Scalpers analyze crypto assets, past trends, volume and select entry and exit points of the day.
High-Frequency Trading (HFT)
HFT is a type of algorithmic trading strategy used by professional traders. It involves developing algorithms and trading bots that help quickly buy and sell crypto assets. Developing such a bot requires an understanding of complex market concepts and good knowledge of mathematics and computer science. Therefore, it is more suitable for advanced traders than beginners.
A pretty good strategy for investing in crypto is ‘Dollar Cost Averaging’ (DCA). DCA refers to investing a fixed amount at regular intervals. This strategy helps investors get rid of the tricky problem of timing the market and build wealth in the long run.
However, an out sell strategy can also be tricky in DCA style. This requires the study of market trends and an understanding of market cycles. Reading technical charts can also help you to sell at the right time. Crypto investors should monitor oversold and overbought positions before trading. You can refer to the charts on Tradingview for a better understanding of the technical charts of various cryptocurrencies.
Build a balanced portfolio
Building a balanced portfolio that includes various cryptocurrencies such as Bitcoin, Dogecoin and Ethereum can go a long way in beating volatility.
Apart from that, investors can also maintain a fixed amount of regular investments in various cryptocurrencies. This will systematically improve your risk appetite and will help your portfolio generate profitable returns in the long run.
Avoid trading based on hype
Relying on social media for news about cryptocurrencies is one of the mistakes new investors tend to make. Investment decisions should not be based on the hype created on social media. Since digital currency is such a hot topic, false information on this topic tends to spread very quickly.
One of the most important trading strategies is to do primary research. You do not need to be an expert in trading to do major research on the value of the asset you want to buy. This involves an update with all the news streams about the crypto industry. WazirX helps you do it quickly by gathering all the news items you need to read before starting your day.
In addition, you should evaluate your own finances and set investment goals well before placing a bet on a volatile asset class such as crypto. You can research Bitcoin, Ethereum, Tron, Ripple, Litecoin, etc. and start investing in WazirX .
Arbitrage refers to a strategy in which a trader buys crypto in one market and sells it in another. The difference between the purchase price and the selling price is known as the ‘spread’. Due to the difference in liquidity and trading volume, traders can find opportunities to book profits. To adopt this opportunity, you will need to open an account on an exchange that shows a large difference between the prices for the crypto you are trading.
Betting on Bitcoin Volatility
It is no news that crypto is one of the most volatile asset classes traded today. You can bet on volatility by trading in Bitcoin futures. The way to do this is to buy call and put options at the same time. The deal price and expiration date should also be the same. In order to exit, when the price of the crypto is falling or rising strongly, you have to sell the call and put options at the same time as well.