A Beginner’s Guide to Cryptocurrency Trading Strategies

To find out what is really working and what is not, you should follow and track each trading strategy – without breaking the rules you set. It’s also helpful to create a trading journal or sheet so you can analyze each strategy’s performance. As the world’s leading virtual assets exchange, Huobi launches a refreshed branding strategy on September 13, 2023, where “Huobi” will be rebranded as “HTX”, our new global brand. The FTX bankruptcy estate holds large amounts of cryptocurrencies, which may get sold in the near future. With EarlyBird Crypto, you can build a nest egg for your child by investing in Bitcoin or Ethereum alongside a balanced UGMA portfolio using an EarlyBird account. As a result, cryptos tend to be treated more like commodities than regular currencies.

This only happens when there’s a subtle shift in buying or selling volume and is a tell-tale sign that momentum is in the early stages of reversing.
When a price is oversold, the price may reverse and the same if the price is overbought.
For direct investing in crypto coins, you can buy cryptocurrency using a crypto exchange or through certain broker-dealers.
If you are more interested in stable and regular daily profits from cryptocurrency trading, then automated trading may suit you.
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.

Just like with crypto exchange fees, if tax is not accounted for, it can lower your profits. As you learn how to buy and trade cryptocurrencies, you must differentiate between crypto trading and investing. And, how do you take advantage of this distinction to effectively make your trades?

Passive investment strategies

Moving averages, projected trend lines, and technical indicators can be additional indexes that can assist on this front. The best crypto trading strategy spread is actually a combination of effective trading methods. A lot of these strategies are derived from methods used in forex and stock exchange, with a few tweaks to make them suitable for use in crypto markets. There are active strategies, which involve aggressive buying and selling patterns, and passive strategies, which require less time and effort from the trader’s end.

Remember that there are no financial governing bodies for cryptocurrencies, so it is highly recommended you trade with a reputable company, such as the above.
This can be quite useful, seeing as the crypto markets are notoriously volatile.
This works well because scaling in over time smooths out the volatility of a market.
Many online crypto exchanges provide trading options, and it is best to trade with a reputable company.

So, before making a purchase, you should check the available trading pairs on the exchange to identify the pair that contains the digital currency of your choice. After identity verification, deposit fiat to your account or connect your bank account (if that’s an option) to purchase the cryptocurrency you want to trade. Alternatively, you can transfer crypto to the exchange if you already own some. Think of long-term holding as planting a seed and waiting for it to grow into a strong tree. It requires patience and the ability to withstand short-term volatility while focusing on the long-term vision. If you’re interested in decentralised finance (DeFi), DefiLlama is a specialised tool that offers comprehensive data and analytics on multiple blockchain networks and DeFi protocols.

Beginner Crypto Trading Strategies Worth Exploring

Cryptocurrency technical analysis can work for any trading timeline, from scalping and day trading to long-term investments. This content is for informational purposes only and should not be construed as investment advice. Nothing mentioned in this article constitutes any type of solicitation, recommendation, offer or endorsement to buy and sell any crypto asset. Trading in any financial market involves risk and can result in loss of funds. Before investing any money, one should always conduct thorough research and seek professional advice. While this system alone can be used as a simple crypto trading strategy, it can sometimes give false results.

The prices of cryptocurrencies in the future could also be affected by regulatory changes, with the worst-case possibility that cryptocurrency becomes illegal and therefore worthless. As a trader, you might employ different trading strategies simultaneously, meaning you are actively trading while at the same time swing trading and/or position trading. When trading crypto, it is crucial to remember that you also have to pay fees to crypto exchanges. But, on top of the crypto exchange fees, it is essential to know that crypto tax comes on top of the trading platform fees.

Best for Leverage Trading With Many Instruments: IFC Markets

It’s worth noting that this crypto trading method is most effective in a highly volatile market (when prices are rising or falling sharply). When the market moves sideways, however, it can trigger multiple buy and sell signals as the two moving average lines converge and diverge more frequently. This usually happens when there is a lot of uncertainty in the market and there’s an equal number of bearish and bullish traders. This is the only problem with the trading strategy, but the average gains tend to outweigh any losses incurred from periods of low volatility. Again, this is a long-term strategy and works best over a period of at least 18 months and can be combined with other indicators to deliver better results.

But, how different or similar is it from or to the nascent cryptocurrency market?
If there is an exodus of Bitcoin miners out of a specific country, for example, the price could tank due to miners dumping coins.
TA provides traders with a science to find opportunities to trade and earn profits.
Conversely a bearish signal is generated once the price action crosses from above to below the 20-day SMA.
In the volatile world of crypto, you will need nerves of steel, a winning game plan and an intuitive trading platform if you want to win.
On the other hand, swing traders will leave their trades open for a period that can range from a few days to several weeks or even months.

It’s a framework you create to guide you in all your trading endeavors. Crypto-exposed stocks gapped up in Tuesday morning trading as bitcoin (BTC-USD) rebounded from a correction to the lowest level since mid-June. 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. In this guide, we’ll be using CoinGecko’s Public API to fetch historical crypto price data via Python. Mostly, a token/coin tends to move for a longer period inside a certain range. For example, the range of Bitcoin remained $8,602.40 to $10,211 for a whole month-long period.

Day Trading Cryptocurrencies Strategy

Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor’s financial circumstances. Become familiar with a handful of cryptos with good liquidity and map out zones on the charts where the price may reverse or take off with momentum.

Various metrics can form areas of support and resistance, and these act as places where price action tends to get stuck or turn around.
Crypto trading offers lucrative opportunities, but it also comes with its fair share of risks.
Trading cryptocurrencies may be one of the most challenging things you ever do.
Given the riskiness of cryptocurrency as an asset class, it’s especially important not to invest more money in crypto than you can afford to lose.
This approach would be repeated until you believe Bitcoin will no longer trade in this range.

The RSI divergence strategy is more advanced than this and can be used to identify when the price trend will change direction before it happens. It works by looking for discrepancies between the price and the RSI indicator. Normally, both the price and the RSI move in roughly the same direction. However, there are times when the price is falling but the RSI is rising, and vice versa. This only happens when there’s a subtle shift in buying or selling volume and is a tell-tale sign that momentum is in the early stages of reversing. RSI stands for “Relative Strength Index,” which is a chart indicator that measures momentum by calculating the average number of gains and losses over a 14-day period.

Range trading

For the best results, you should research and understand all the potential strategies and tactfully choose the most suitable one. If you rely on your preferences, allocate your funds using at least three of the above-listed strategies. Choosing the lowest risk strategy will be more favorable for – you to adapt. Notably, a smart trading strategy offers two types of trading options, i.e. short and long. It is highly advised to keep on booking small profits instead of waiting for a huge chunk to build up. Download EarlyBird today to add cryptocurrency to your child’s investment strategy.

If you have some experience trading cryptocurrencies, you might consider swing trading. It takes patience and a level of skill, but if you wait for the right moment, crypto swing trading can produce excellent returns. Crypto prices can change rapidly, so scalpers have to watch for an increase in trading volume and be prepared, knowing exact exit points before entering the trade. Crypto asset investing is highly volatile and unregulated in some EU countries.

Understanding cryptocurrency trading

Day trading crypto doesn’t require a subscription to a brokerage or margin account, making the ability to indulge in short-term trades more accessible than the stock markets. The strategy of crypto day trading entails entering and exiting a position in the market on the same day within crypto trading hours. It’s also known as intraday trading because trades are typically started and concluded within a single day. Yes, day trading BTC is like playing with Bitcoin volatility throughout the day. 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.

Luckily, with cryptocurrency, most of the networks are public such as Bitcoin and Ethereum making access to these on-chain factors easy.
This way, they can bet on privacy coins as a sector while eliminating the risk of betting on a single coin.
“I’d suggest starting off with what is called paper trading,” says Shaun Heng, VP of operations at CoinMarketCap.
The best crypto signals groups are popular because it gives investors and traders the opportunity to benefit from proven track records and trading experience.
A diversified portfolio reduces exposure to any single asset and spreads risk across different cryptocurrencies.
Volatility trades are ideally directionless, meaning there is a possibility of making money whether Bitcoin goes up or down.

The emergence of cryptocurrencies has created a thriving crypto asset market. Both professional as well as novice traders are looking to benefit from the market’s volatility. And how do you make sure you are trading carefully, safely, and securely? Learn how to trade cryptocurrency in this how-to guide for new crypto traders.

The Rise of Bot Trading in Cryptocurrency Markets

Many investors are nonetheless attracted to the potential upside of investing in crypto. If you decide to invest, it’s important to carefully research any digital coin before buying it. Pay attention to transaction fees when making crypto purchases because these fees can vary widely among currencies. Coinbase is a suitable cryptocurrency exchange for beginners who want to prioritize security and convenience.

There is a more advanced version of DCA in which it is combined with other strategies, including the ones below, so that you still make regular purchases but only when certain conditions are met.
But, consider your risk management because if you risk 1% on each trade, that’s $2, which doesn’t give you much scope for growing your cryptocurrency account.
Before investing any money, one should always conduct thorough research and seek professional advice.
That’s why tax authorities like the Internal Revenue Service (IRS) tax crypto-like an asset class — but we’ll cover taxes more in a minute.
The step-by-step process below on how to trade cryptocurrency uses Kraken as an example.

Recognized as the trading strategy with the fastest turnaround, scalpers leverage large amounts of liquidity to seize on small price movements. The entire point of day trading cryptocurrency is to profit from tiny market movements. Because cryptocurrencies are volatile, day trading in the crypto market may be pretty rewarding.

What is cryptocurrency?

The difference between those prices is slippage, and in the crypto markets, a few minutes can mean the difference between a big profit or a big loss. Although crypto is a new and exciting industry, it has its risks for those who are interested in investing in it. Quant traders utilize HFT, which is an algorithmic trading approach to benefit from bid-ask price discrepancy to sell/buy assets in microseconds what is immediate edge? using latency. However, short-term price differences are spotted by trading following momentum strategies to act on anticipated reactions to the volatile crypto market. Demo trading is a great way to learn cryptocurrency trading with zero risk. The use of virtual money (not real crypto) removes the stress of losing funds, allowing traders to hone their skills and test various scenarios.

The Fisher Transformation highlights when prices have moved to an extreme, based on recent data. It converts prices into a Gaussian Normal Distribution, highlighting peak – swings and making price reversals easier to identify. This tool is an example of a leading indicator because it identifies potential price reversals before they occur.