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Trading is not only directed towards amounts in various currencies, but it also concerns cryptocurrencies.
These have become widely used around the world and are traded on the stock market.
However, and in investment, it is quite complicated to buy and sell cryptocurrencies, except if we set up cryptocurrency trading strategies…
What is a Cryptocurrency Trading Strategy?
Cryptocurrency trading strategy is a group of actions that will aim to create interest in the virtual currency market. You will not have 100% guaranteed income, but the cryptocurrency trading strategy will guarantee you not to fail.
However, there are strategies to put in place to know when to sell and when to buy!
Trading cryptocurrencies is very different from trading stocks, which are sold on the best exchanges in the world. If you happen to sell stocks on NASDAQ or otherwise, the indices will never change in a single day, unlike those of cryptocurrencies which can change by 100% or more.
You should also know that Bitcoin is the first cryptocurrency created, therefore the price of other cryptocurrencies will closely follow the trend. If you want to trade Eretheum or any other currency, you will need to use a strategy that relies on Bitcoin verification.
Cryptocurrency trading is based on several strategies which are:
- Buy&Hold, which allows you to buy assets and hold them, following prices and charts;
- Swing trading, which uses correction when a trend is formed;
- Day trading, which allows you to trade on the market during a trading session, during the day;
- And finally, Scalping, which consists of a trader opening positions from 1 to 15 min.
To this you will have to develop other cryptocurrency trading principles, such as following the political situation very closely, but also the economic situation at the world level. Thus, a war, or otherwise, will see a rise or fall in cryptocurrencies.
What are the best cryptocurrency trading strategies?
After reviewing the main precepts of cryptocurrency trading, it would be wise to know the best strategies to put in place to trade this virtual currency.
You should know that each of them has already proven itself before, but will also present a risk management, as well as a balance in the benefits quite unique.
You can then choose the strategy that best suits to your trading objectives, depending on your risk tolerance, but also, depending on your final trading goals.
Here are the 3 most used cryptocurrency trading strategies to help you:
- Smart trade;
- Automated trading;
- And HODL.
These strategies must be used well in order to have non-negligible profits, at the risk of experiencing losses.
How to set up cryptocurrency trading strategies?
The smart trading strategy uses the Stop-limit as well as the Trailing Stop-Loss. The trader will have good risk control here, but also returns. There are several combinations, one of which is to mix Take Profit with Stop-Loss. This strategy will allow you to place only two orders. The stop-loss being used in order to limit the losses, and the take-profit is used in order to obtain profits, and this, each time the market will have reached the conditions which will have been targeted.
Automated trading allows you to have daily and regular returns on the market, you can have several robots at your disposal, such as Bitsgap.
The advantage of robots is that they can analyze the cryptocurrency market, day and night and 7 days a week, so they can find the best trading opportunities.
If you want, you can also enable smart trade orders, in order to see the increased efficiency.
And finally, the HODL, which is the most effective strategy in the cryptocurrency market. With this strategy, you will be able to see unlimited risks and possibilities, for example, losing everything, or even winning a lot.
Here you will only have to buy cryptocurrency without setting Take-profit or Stop-Loss. You will need to think carefully before implementing this crypto trading strategy. This is mainly used when prices are very low and traders will take their profits as soon as the price increases significantly.