Best Cryptocurrency Trading Strategies | IFCM UAE
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The best trading strategies often come from 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, here are a few obvious but important steps that should not be skipped.

If and when you decide to trade crypto, start by having strategies, for God's sake. Manage risk, set the limits on how much you invest in particular cryptocurrency and don’t forget to use stop-loss orders. Diversify crypto portfolio; don’t put all your eggs in one basket.

Consider long term investment (crypto market is not going to disappear, it’s here). Leaving your money in the crypto market for months at a time could offer you the best rewards. That’s enough for the basics. Now let’s check out the crypto trading strategies.

KEY TAKEAWAYS

  • Having a well-designed and proven strategy when trading cryptocurrencies is a very important thing to make a profit in the crypto market.
  • Cryptocurrency day trading strategy involves entering and exiting a position in the market within the same day.
  • If you are more interested in stable and regular daily profits from cryptocurrency trading, then automated trading may suit you.

Crypto Trading Strategies

If you are here because you are thinking that investing in cryptocurrency is a shortcut to wealth, don’t, it’s much harder than you think.

Having a well-designed and proven strategy when trading cryptocurrencies is a very important thing to make a 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 with crypto trading is about making correct predictions about price fluctuations in the market. For this, a strict set of rules and principles can be a good help.

Crypto Day Trading

Cryptocurrency day trading strategy involves entering and exiting a position in the market within the same day. It is also referred to as "intraday trading", reflecting the fact that trades are typically opened and closed within the same day.

Day trading in the cryptocurrency market is especially profitable as cryptocurrencies are quite volatile. Day trading strategy, of course, goes beyond mere guesswork.

You must have the right cryptocurrency day trading strategy and 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 determine entry and exit opportunities for investment decisions. They also keep an eye on fundamental news and other developer-related updates that could affect digital asset prices, especially in the short term.

Here are strategies that may help you increase your profits from day trading in the market:

1. Scalping Crypto Strategy

Scalping is a cryptocurrency intraday trading strategy in which traders seek to capitalize on increased trading volume. They can exit trades a few minutes after entering, while making a small profit.

Ideally, the scalper is aimed at making small profits. They scalp the market looking for small opportunities. Scalpers need huge capital to make a profit because the profit from this strategy is usually very small.

2. Arbitrage Crypto Strategy

Arbitrage is one of the most popular strategies on 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 generate small profits. Thus, the larger your order size, the more profit you can make.

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Crypto Range Trading

In many cases, the cryptocurrency will trade in a certain range for a long time. In some cases, big players will systematically manipulate the price of a coin up and down to make range profits. If you notice these patterns, you can also take advantage of them. Thus, you should pay attention to the overbought and oversold zones.

To sum up

Overbought means that buyers have satisfied their needs and the stock is likely to sell; oversold means the opposite. Charting 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.

Cryptocurrency day trading can be quite lucrative, especially for short-term traders. If you have the right cryptocurrency day trading strategy, you should have no problem. Remember about technical and fundamental analysis, with an emphasis on technical analysis, since historical price analysis can tell a lot about when to enter and exit a position.

Smart Trading

This one is quite popular too, it’s a mix of different smart orders such as Stop-Limit and Trailing Stop-Loss. This strategy offers a good risk and return control, helps to better plan positions you’re entering and exiting. 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 given conditions. You can also combine multiple take profits with stop losses which are used to take your strategy to the next level.

When you use 2 or more take profits, you can spread the risk of trading, which will maximize your chances of making good profits. 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 one of these strategies are working for you.

Automated Trading

If you are more interested in stable and regular daily profits from cryptocurrency trading, then automated trading may suit you. There are many cryptocurrency trading robots available on the market.

Cryptocurrency trading robots are able to analyze the market 24/7 and look for the best trading opportunities.

It is also possible to enable smart trading orders, which will further increase its efficiency. This one will help you easily invest in the cryptocurrency market. This way, you can go on with your day and let the robot make profits for you.

HODL

HODL is used daily by many crypto traders. With this strategy, both the risks and the possibilities are endless. With this strategy, you can end up losing everything or making huge profits. One of the best things about HOLD is that all you need to do is simply buy digital currencies without setting the take profit or stop-loss.

This trading strategy can either make or break you, because of which, it is very important to really think about the risks before deciding to use it. Let’s say that you buy BTC, and the price of it increases 15 percent on the second or third day after buying.

You will be making good profits even in this little time. But if the price falls drastically then, you’ll be losing. But, the majority of the crypto traders using the HODL strategy are investing when the price is very low and take their profits once the price increases drastically.

Because it is so risky, it is very important for traders to have a special mindset while trading. Basically, you are required to be able to trust your instincts and decisions, otherwise, it will be hard to make good profits with this strategy.

Note: invest the amount of money that you can afford to lose when using the HODL strategy.

With this strategy you will be able to avoid the volatility of the market and survive the short-term price movements in crypto trading.

While all these strategies are really good, they all have their advantages and disadvantages. For best results, it would be better to use all of these strategies once you have gained enough experience.

Diversification is a very important step towards success in any market, and crypto trading is no exception. You can allocate funds to each strategy according to your personal preferences.

Crypto FAQs

What is Cryptocurrency Trading?

Cryptocurrency trading is the exchange of digital currency between traders. The fluctuations caused by supply and demand allow traders to profit from it. Cryptocurrency trading is both risky and rewarding due to its volatility.

How to Trade Cryptocurrencies?

You’ll need to open an account with a crypto brokerage company. The next step is to choose a trading platform. After that choose crypto to invest in and strategy to trade with. Final step is to store your cryptocurrency.

Can you Trade Crypto 24/7?

Yes. Cryptocurrency markets are open 24 hours a day, 7 days a week all year round. Traders have the opportunity to buy and sell without restrictions as the cryptocurrency markets do not close.

What are Most Traded Cryptos?

These are the 5 most traded cryptos all over the world

  • Bitcoin - Market cap over $846 billion
  • Ethereum - Market cap over $361 billion
  • Tether - Market cap - over $79 billion
  • Binance Coin - Market cap - over $68 billion
  • XRP - Market cap - over $37 billion

What is Cryptocurrency Market?

Cryptocurrency is a form of decentralized currency and It's a completely digital asset. At its core, cryptocurrency uses blockchain technology to generate code segments that are unique for each transaction, just like serial numbers. Every time cryptocurrencies exchange hands, code segments are written to a decentralized ledger.

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Author
Marisha Movsesyan
Publish date
18/09/23
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