Most Used Cryptocurrency Trading Strategies

Crypto Trading

The crypto world is so volatile that you must have nerves of steel to survive. You also need an intuitive trading platform such as PrimeXBT, which invests heavily in research to succeed. PrimeXBT allows members to benefit from their research and have the upper hand in placing trades. Of course, lucky newbies start their cryptocurrency journey by winning. In contrast, some start with several losses before they start winning. The trouble is that you need working trading strategies to win consistently.

The best way to trade cryptos is to determine appropriate cryptocurrency trading strategies, depending on your time zone. Among the strategies you may adopt include range trading, scalping, and day trading. Others use high-frequency trading, dollar trading, and dollar-cost averaging strategy.

Whichever strategy you choose, it should give you more wins than losses. Here are the most commonly used strategies.

The Range Trading Strategy

This strategy is based on the fact that a cryptocurrency may trade for a longer time within a certain range. Note that the crypto market caps are not so huge, so they easily get manipulated by big crypto traders. The traders manipulate the prices upward or downward within a certain range. So if you can identify the pattern, you can develop a strategy to help you gain when the prices are moving up and when they move down. Typically, range traders will pay attention to oversold or overbought zones. When the crypto is oversold, it has traded at the lowest possible price, and so it is likely to start rising. It will attract speculators who buy assets at a lower price and hope to gain when it rises. The opposite is true for overbought cryptos. Therefore, knowing the overbought or oversold ranges can allow you to take appropriate actions to gain.

Scalping

The strategy takes advantage of the enhanced trading volume. They get into a trade and exit a few minutes later. In some cases, they use automated bots to increase the frequency of trading cycles. They can get into the trade and exit before a news announcement is made. It ensures that a short-term fluctuation does not change the market sentiment. So the small gains they make in trades finally add up to become substantial payment.

Day Trading

The strategy requires that you take a certain position on a certain day and exit at the end of the day. It allows you to make gains from intraday price movements. Technical indicators can help you figure out the crypto’s entry and exit points.

High-frequency Trading

It is an algorithmic trading strategy that is popular among quant traders. It entails developing bots to help a trader quickly enter and exit an asset. The bots must be able to understand the complex crypto market and should be knowledgeable in computer science.

Dollar-cost Averaging

The strategy is based on finding a perfect exit, and entry points are difficult. So the trader needs to invest a fixed amount of money at a regular interval on a continued basis. It eliminates the need to keep an eye on the market for entry and exit. The trader only needs to understand the crypto market cycle and the trend. Also, they may rely on technical charts to decide when to exit the market. Such traders will only take a call after monitoring the overbought and oversold cryptos.

Building A Balanced Portfolio

Since trading cryptos is a risky affair, building a balanced portfolio where you trade in various cryptos such as bitcoin, Ethereum and Dogecoin can cushion you against volatility. It helps the trader to maintain regular investment in the cryptos. Furthermore, it helps the portfolio to yield favorable returns.

Of course, there are other strategies you may adopt to help you trade cryptos successfully. They include researching the asset’s value and behavior, not placing trades based on hype and using arbitrage strategy- where one buys crypto in one market and sells them in another market.

 

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