Selecting a Crypto Trading Strategy
When trading crypto, the risk associated with it is much higher than some other investments. Conversely, the profits you can make from crypto trading is also quite high. As such, to make profitable trades you need a plan in place to prevent yourself from losing invested capital.
As it stands, there is no one-size-fits-all cryptocurrency trading strategy. There are, however, multiple strategies you can incorporate to gain profits from crypto. As a beginner, you need to practice these crypto investing strategies to be successful. You also need to make use of tools such as zignaly.com to ensure you’re on the right path.
What is a strategy for crypto trading?
A trading strategy is a plan that you create for all your activities. It is a comprehensive framework that will help navigate the waters of the trading world. With a plan in place, you can minimize the risks of crypto trading. If you don’t know what you are doing, it is easy to quickly lose all the money you were investing. This is why a good strategy will stop you from making uninformed and hasty decisions that lead to losses.
Why do you need a trading plan as a beginner?
- It gives you direction – If you don’t know what to do or are confused, the plan will tell you how to move forward. For example, letting you know when, how, and why you should pursue a trade.
- It forces you to do proper research – To create a plan that works for you, you need to do your research. During this time, you will learn of all the pitfalls and risks associated with cryptocurrencies. Else, you won’t know these risks until you experience them yourself.
- It teaches you to stay calm – Your emotions can affect the way you trade cryptocurrencies. Since price fluctuations are common, it is easy to make decisions simply based on how you feel about the price change. However, the best trades are only made through logic and informed decisions, not emotions.
4 Best Crypto Strategies
1. Day Trading
Using this strategy, you can take advantage of how volatile the cryptocurrency price fluctuations are. It involves entering and exiting trades at optimal points on the same day. You will be making small profit gains on these trades multiple times a day.
Day trading is one of the most common forms of strategies. However, there is a common misconception that all active traders are day traders. It is simply just one form of crypto trading.
These traders analyze the market on a daily basis and use trends and predictions to make decisions. This method can be highly profitable, but there is a lot of risks involved as well. A single bad trade can wipe out all the good trades for the day.
2. Range Trading
Range trading involves knowing the range inside which a particular cryptocurrency will rise and fall. The highest price point that is perceived by analysts is called Resistance. The lowest price point is called Support. Experienced trading analysts publish these ranges which you can use to make your trades.
Knowing when to buy or sell inside this range is crucial to being successful with these trades. The biggest risk with range trading is maintaining perfect timing during your trades.
3. Position Trading
This strategy of trading is similar to others in the sense that you buy when the price is low and sell when it is high. However, the difference here is in the time period between buying and selling. This trading is also called “trend trading” because you are essentially following a trend to invest in long-term assets.
These trades can take anywhere between a few months to years. While the profits aren’t as high or quick as other methods, it is much safer and takes less work. This is a good strategy for you if you prefer to simply watch and wait.
4. Copy Trading
This is one of the more recent, popular beginner crypto strategies. There are certain platforms that allow users to simply copy the trades of seasoned traders. This allows less-experienced traders to know when to buy and sell profitably. Since you’re following another person’s footsteps, you essentially have the work done for you already. But, while the risk is slightly minimized since you are following an experienced trader, there are risks still involved.
Finally – Stay calm
Cryptocurrency trading or investment is a psychological struggle with yourself. Stock market traders often say that investing in traditional markets requires a lot of mental discipline – when the market is volatile, it’s very important to keep your composure, don’t do anything stupid, and stick to your chosen strategy.
Always soberly assess the situation and constantly analyze what you did wrong. It is wise to take this experience and use it in your next investment, which will definitely be better because you understand how the system works much more than you did before. Moscow was not built right away, and professional traders were once beginners.
If trading requires huge discipline, then crypto requires inhumanly huge. To beat the market, built on emotions, you need to get rid of emotions yourself.
While these rules are by no means the only lessons you need, they are definitely a great starting point for newbies to trade cryptocurrencies on an exchange. However, sometimes it’s easier said than done. For example, watching your portfolio drop in value and still have an iron will not to push the sell buttons. One of the best solutions in situations like this is to join a community of like-minded people. Investors, experienced crypto traders, and members of the community will support your intelligent efforts and will not leave you in difficult times.
Trust your strategy and remember – trading without a strategy is just playing roulette.