Crypto Trading Strategies You Need to Know

With renewed interest in cryptocurrencies amid higher regulatory glamor and mainstream media coverage, crypto trading has become more than just an attractive money-making gig.

According to a recent report, more than 10 million Indians own cryptocurrencies. The number, in all likelihood, could increase further during this festive season.

However, like stock and commodity trading, crypto trading is fraught with pitfalls and risks. In order to gain long-term benefits from crypto trading, market enthusiasts must develop strategies that can make trading fun and safe at the same time. Let’s start by reviewing the strategies that can help you achieve favorable returns.

Trades of the day
This trading strategy involves taking positions and exiting them on the same day. A trader’s goal when adopting such a trade is to make profits amid intraday price movements in a cryptocurrency of their choice. For a successful trade, investors often rely on technical indicators to determine entry and exit points for a particular crypto.

range trade
Market participants also rely on experienced analysts, who daily give support and resistance levels. “Resistance” refers to the point where the price can rise and therefore a resistance level is a price higher than the current price. In contrast, “support” is a level below which a crypto price is not expected to fall, therefore, a support level is always below the current price.

scalp
This trading strategy involves using increased trading volumes to earn profits. Although there is a risk, a smart trader takes care of the margin requirement and other important rules to avoid bad trading experiences. Scalpers analyze the crypto asset, past trends, volumes and choose an entry and exit point within the day.

High Frequency Trading (HFT)
HFT is a kind of algorithmic trading strategy used by quantitative traders. It involves developing algorithms and trading bots that help to get in and out of a crypto asset quickly. The development of such robots requires an understanding of complex market concepts and a solid knowledge of mathematics and computer science. Therefore, it is more suitable for advanced traders than beginners.

Recurring purchases by fixed sums
When it comes to finding the perfect entry and exit point in a crypto market, it’s best to assume that timing the market is near impossible. So, a rather sound way to invest in cryptos is “dollar cost averaging” (DCA). DCA refers to investing a fixed amount at regular intervals. This strategy helps investors break free from the daunting task of timing the markets and building long-term wealth. However, the exit strategy could also be tricky in DCA style. This requires studying the market trend and understanding the market cycle. Reading technical charts can also help you get out when the time is right. Crypto investors should watch oversold and overbought regions before taking a call. You can refer to WazirX live charts for a better understanding of technical charts of various cryptos.

Build a balanced portfolio
Crypto trading is still in an evolutionary stage. While several countries welcome crypto trading, some are still skeptical about it. Central banks around the world are working on better ways to regulate digital currencies, and as a result, trading cryptos is often risky business. However, there are strategies that can help investors avoid extreme volatility. Building a balanced portfolio that includes a variety of cryptocurrencies like Bitcoin, Dogecoin, and Ethereum could go a long way in beating volatility. Furthermore, investors can also maintain a fixed amount of regular investments in different cryptos. This will systematically increase risk appetite and help your portfolio generate favorable long-term returns.

Avoid making sales calls based on hype
Relying on social media for information about cryptocurrencies is one of the mistakes that new investors tend to make. Investment decisions should never be based on the hype created on social media. Since digital currency is such a hot topic, misinformation on this subject tends to travel very quickly.

Primary research
One of the most important trading strategies is to do primary research. You don’t need to be an expert in trading to do primary research on the value of the asset you want to buy. This involves being updated with all the news feeds regarding the crypto industry. WazirX helps you do this quickly by gathering all the news you need to read before your day starts.

Also, you should assess your own finances and set an investment goal well before placing a bet on a volatile asset class such as crypto. You can search Bitcoin, Ethereum, Tron, Ripple, Litecoin, etc. and start investing WazirX .

Arbitration
Arbitrage refers to the strategy whereby a trader buys crypto in one market and sells it in another. The difference between the buy price and the sell price is known as the “spread”. Due to the difference in liquidity and trading volume, traders may find an opportunity to make profits. To grab this opportunity, you need to open accounts on exchanges that show a big difference between the prices of the crypto you are trading on.

Betting on Bitcoin Volatility
It is no news that Crypto is among the most volatile asset classes currently traded. Recently, Bitcoin prices had fluctuated almost 30% in a single session. You can bet on volatility by trading Bitcoin futures. The way to do this is to buy a call and put option at the same instance. The strike price and expiration date should also be similar. To exit, when crypto prices are falling or rising vigorously, you must also sell the call and put option at the same time.

Sources:
https://timesofindia.indiatimes.com/business/cryptocurrency/bitcoin/over-10-crore-indians-own-cryptocurrency-highest-in-the-world-report/articleshow/86962167.cms

https://www.ndtv.com/business/invest-in-cryptocurrency-with-the-help-of-these-strategies-2508173

https://tradingstrategyguides.com/best-bitcoin-trading-strategy/

https://zerodha.com/varsity/chapter/support-resistance/

https://academy.binance.com/en/articles/a-beginners-guide-to-day-trading-cryptocurrency”

https://www.benzinga.com/money/best-crypto-day-trading-strategies/


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