Trading strategies for crypto trading


Cryptocurrencies are an asset class to trade. Many cryptos have achieved absolutely phenomenal returns over the past few years. A good example is our look at the best cryptocurrencies to invest in, which have returned over 33,000% since 2017.

A strong cryptocurrency strategy is one that maximizes profit potential and at the same time minimizes risk. Trading cryptocurrencies can be riskier than trading conventional financial instruments like forex currency pairs. Cryptos are much more volatile than fiat currencies and are also less liquid.

As with any other asset class, a solid trading strategy is crucial for successful cryptocurrency trading.

When liquidity is low and volatility is high, stop orders can easily be rendered ineffective. Additionally, cryptocurrencies are a young asset class that still has a lot to prove to the world. Many cryptos have little intrinsic value and could be vulnerable to “crash and burn”.

While cryptocurrency trading has been relatively easy for many people so far (due to extremely powerful uptrends), it can certainly be difficult. Because cryptos are so volatile, individuals who trade them need to be armed with the right mindset and be prepared to deal with (and take advantage of) volatility as it arises.

Ripple, ether and bitcoin

Let’s take a look at some profitable cryptocurrency trading strategies and see how we can beat the market:

Cryptocurrency buying and holding strategy

Buy and hold cryptocurrency trading has certainly been one of the most profitable cryptocurrency trading strategies to date. This is not surprising as most of the major cryptocurrencies are not far from their all-time highs and many are reaching new highs right now. The guys who have bought and held these cryptos over the past few years so far have all been handsomely rewarded.

On the other hand, many traders who used other long trading strategies (buy) left the market prematurely and missed out on good profits.

More detailed information and advice on buy and hold cryptocurrency trading.

Trade cryptocurrencies with price action

Price action trading is reliable and useful for virtually all negotiable financial instruments. Human psychology creates common price action patterns that are useful to informed traders. Learn how to interpret them and you might put a few pounds in your pockets.

Why cryptocurrencies can be traded efficiently with price action.

Breakout Cryptocurrency Trading Strategy

Two very important advantages of crypto breakout trading are confirmation and guaranteed entry. When cryptocurrencies are really on the move, sometimes they don’t make deep setbacks. People who expect such pullbacks often miss out on good opportunities to profit trending / momentum.

Yawning lion

Breakout trading is a great way to trade cryptocurrencies due to the massive price movements they produce. Powerful one-sided movements are ideal for making money with breakouts.

Cryptocurrency Swing Trading Strategy

Not all traders have the patience to perform buy and hold crypto transactions. For these people, swing trading can be a good option.

There are many swing trading strategies that use all kinds of candlestick patterns, technical indicators, and even retail sentiment. Swing traders often use a combination of technical and fundamental analysis, but primarily focus on the technical aspects.

The volatile nature of the cryptocurrency market makes it a great playground for swing traders if used correctly.

Candlestick Cryptocurrency Trading Strategies:

Shaved Bar Cryptocurrency Trading Strategy

Momentum is really useful when trading in traditional markets, so why not use it with crypto trading? Shaved bar candlesticks can be powerful indicators of solid price dynamics, but should be used in the right context.

To find out what exactly a shaved bar is and how to trade it in the cryptocurrency market, check out this space for a link to a detailed article on shaved bar strategies. Don’t miss this one!

Learn more about trading with candlesticks.

Cryptocurrency trading strategy with engulfing bar

Some candlesticks contain powerful clues about the direction of order flow and the likely direction of price. The mighty engulfing bar is one of them and marks the levels where reversals are likely to occur. Gobbling up the entire price range of the previous candle says a lot about where the big players in the market place their money. More information on engulfing crypto bar trading coming soon!

Pinbar cryptocurrency trading strategy

The pinbar is one of the most profitable price action signals. Often called hammers or shooting stars (depending on the position and nature of the candles), pinbars are the “icing on the cake”! As with other financial instruments, a decent pinbar on a crypto chart is something you can’t afford to miss.

Watch this space for lucrative pinbar trading strategies, to come.

Support and Resistance Cryptocurrency Strategy

Understanding support and resistance is quite handy in the world of trading, not only with forex, stocks, and commodities, but also with the newcomer to the block – cryptocurrencies. For example, when the previous resistance turns into new support, we often come across splendid buying opportunities in a strong uptrend. Check out this space for a powerful cryptocurrency strategy of support and resistance ahead!

For more information on trading with support and resistance, follow this link.

Fundamental Cryptocurrency Trading Strategy

Not all cryptocurrencies are the same. Some are mined while others are created all at once and slowly brought to market. Some cryptos gain some type of interest when held and some are tokens used by innovative development networks / platforms. Other considerations like the maximum supply of a cryptocurrency, alternative uses (other than being a medium of exchange), can greatly influence its future performance.

Bitcoin money supply

The supply of a particular cryptocurrency usually plays a big role in its price. Bitcoin’s supply is limited to a maximum of 21 million units.

Of course, any significant news regarding the development, regulation and enforcement of different cryptos can also have a noticeable effect on their price. Other price catalysts include weak spots in blockchain systems, crypto hacks, scalability issues, and more.

Learn all about fundamental forex trading strategies here.

Tackle the Bull (trendy) by the horns

Now that you know more about the different ways to trade cryptocurrencies, it’s time to get involved in this dynamic market. To get started quickly and easily, take a look at our top crypto brokers and compare the different benefits and features that each one offers. Take advantage of the powerful crypto bullish trend today.

Moving Average Convergence Divergence Crypto Strategy

The Moving Average Convergence Divergence (MACD) strategy is ideal for cryptocurrency trading. As a trend indicator, the MACD identifies when a market is completing a directional price movement.

To learn how to use the moving average convergence divergence in crypto trading, see our dedicated MACD page.

Relative Strength Index Encryption Strategy

For active traders, the Relative Strength Index (RSI) is a valuable tool in identifying when a cryptocurrency becomes overbought or oversold. As a momentum oscillator, the RSI is ideal for quantifying trend exhaustion and possible reversal points.

To learn how to use the Relative Strength Index Cipher, check out our dedicated RSI technical analysis page.

Bollinger Bands for Crypto

Created by John Bollinger in the 1980s, Bollinger Bands (BB) are a preferred indicator for active traders around the world. BBs measure the current volatility of a cryptocurrency and are a good way to put seemingly random price action in a manageable context.

For more information on using Bollinger Bands for crypto trading, be sure to check out our dedicated BB technical analysis page.

Parabolic SAR Encryption Strategy

Developed by renowned market technician Welles Wilder Jr., the Parabolic SAR is an easy-to-use trend indicator. Represented as a series of sloping points above or below the price, it is one of the simplest and most effective technical indicators.

If you would like to learn how to use the Parabolic SAR crypto strategy on your favorite coins, be sure to click on the link above.

Technical analysis of cryptocurrency

In the contemporary crypto market, technical analysis is king. It doesn’t matter if you are implementing a trend, reversal, or rotation trading strategy, technical analysis can help you improve your performance.

If you are a budding crypto trader and want to learn how to perform technical cryptocurrency analysis, be sure to visit the FX Leaders educational suite.


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