5 crypto trading strategies for beginners
Having enough funds to trade is only one aspect of being a successful cryptocurrency trader. The other important aspect is to develop a mastery of the most important cryptocurrency trading strategies.
Of course, there is a lot of information on the internet that explains how to become a successful trader. You might end up being confused due to disparities in information.
That’s why we’ve put together this guide to help you master the strategies that are important to beginners in the world of crypto. Ready to start? Read more here in CoinList to learn everything you need to start crypto trading on the right foot.
What is a trading strategy?
A trading strategy is a framework or the extensive plans that you have for your cryptocurrency trading activities.
These trading strategies are usually developed to help traders to have a defined goal for trading, as well as to define the steps to achieve that goal.
The 5 best cryptocurrency trading strategies
Different cryptocurrency traders have different strategies that guide them when trading. While some prefer to “short” the market, others prefer “long”. Some other traders choose to take little profit in the process of scalping.
The key is to find the right trading strategy for you. Below are the five (5) best trading strategies you should start using today:
It starts with choosing an active trading strategy
It is true that “the cryptocurrency market never sleeps” because the market is open 24/7. For this reason, traders who want to stay on top of their games should be actively involved in the market, follow trends and adjust their positions.
You don’t have all the time in the world to do this, even though cryptocurrency trading is a full-time job for you.
That is why you should choose an active trading strategy. Strategy shouldn’t just give you time to take care of other things. It should also have the potential to make you a profit over time.
Here are some of the active trading strategies worth considering:
It is one of the most popular trading strategies. It is invented in the traditional financial markets where the trading room is only open a few hours a day.
In day trading, the cryptocurrency trader tries to take little gain or profit by trading for a few hours. The trader also plans to spread the risk by trading multiple coins and taking little gains which consist of a large profit at the end of the day.
We should also mention that day trading is very risky because you only trade for a few hours. You could lose more money than you earn, especially as a beginner.
It’s riskier than day trading. Unlike day trading which focuses on hourly time frames, scalping is mostly done in a matter of minutes.
To achieve this, consider using technical analysis (TA) and price actions to formulate profitable trading ideas.
Exchange of positions
Also called Trend Trading, Position Trading involves holding a position for a few months.
The key to being successful as a Position Trader is to identify trends and assess how long the trends will last. At the time of writing, the crypto market trend is based on the optimism of cryptocurrencies in the Solana and Decentralized Finance (DeFi) ecosystems.
Find out how long the trend is likely to last so you can enter on time and Hold on Dear Life (HODL) until you make a profit.
Swing Trading is considered an advanced trading strategy that beats both Day Trading and Scalping strategies. Unlike the latter which requires opening and closing multiple positions in a day, Swing Trading allows you to keep a position or trade open for several days or weeks until it ends.
All you have to do here is buy your favorite crypto assets with every negative price movement drop. Keep accumulating as much as you can so that when the cryptoassets rise, you make huge profits.
A thorough mastery and application of Fundamental Analysis (FA) and Technical Analysis (TA) will help you make profits as a Swing Trader.
Which is better: technical analysis or fundamental analysis?
Technical analysis (TA) and fundamental analysis (FA) are two of the most important cryptocurrency trading techniques.
The most successful traders combine the two. But as a beginner, you want to choose the one that suits your current level of exposure in the crypto market.
On the one hand, fundamental analysis involves formulating trading ideas using financial and news factors to determine the future value of a crypto asset. As a fundamental analyst, you can predict this by evaluating government regulations, coin issuance rate, exchange listings, and the crypto asset’s network hash rate.
On the other hand, being a technical analyst requires the use of trend lines, historical price actions, chart patterns, moving averages (MA), and trading volume to predict the future valuation of a cryptographic asset.
A combination of different trading strategies will help you become a better trader. Consider trying some of these strategies, taking note of your successes and mistakes.
Ultimately, you will find the one that not only suits your personality style, but also increases your chances of making a profit in the crypto market.