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Effective crypto trading strategies you should know about

In recent years, cryptocurrencies have become more mainstream across the world as people begin to see their undeniable benefits in providing cost-effective, seamless and efficient transactions.

With digital assets’ current performance in the market, it’s the best time to start investing and trading crypto. If you’re curious to know how you can make the most out of crypto trading, read all about it here at Cryptoshimbun.

Crypto trading 101: Strategies for beginners

Similar to trading and investing in traditional commodities and fiat currencies, financially involving yourself in digital assets also requires having basic knowledge of the industry. Learning these will help you make key decisions that can result in profitable returns. To get you started, here are some of the basic crypto trading strategies you should know about:

Do your homework

When trading and investing in cryptocurrencies, researching is one of the most important things you can do to prepare yourself. There’s a lot of complex information you need to digest before you understand the gist of how it works but reading the right materials suited to you will make this easier.

Even if you already grasped the basics, the learning process in digital assets is a continuous cycle. There’s a level of expertise you need to achieve before you can confidently delve into it.

You can start by learning about other cryptocurrencies in the market. It’s important to know how they work and what unique features they have so you can choose which one fits your needs. Bitcoin may be the top contender in the crypto sphere, but there are other promising tokens you can find such as Ripple (XRP), Curve (CRV), Ethereum (ETH) and Stellar (XLM).

Another thing you can research is exchanges. When you’re looking for a crypto trading platform, make sure you look for a site that offers a competitive portfolio, liquidity services, an intuitive interface and charts to help you read the market’s movement. Additionally, make sure the exchange you choose is reliable and credible so you know your funds are safe.

Choose the right wallet to use

Trading crypto the proper way means you need to have the right wallet to store your precious tokens. The type of wallet you need to get depends on your need. If you want accessibility, you can go for hot wallets. On the other hand, if you prioritize safety and security, your best choice is a cold wallet.

Cold wallets are safer compared to hot wallets because they’re not connected to the internet 24/7, which makes them more secure from online breaches. They usually come in compact devices like USB flash drives you can plug into your devices.

Meanwhile, hot wallets are apps you download on your phone or tablet. These are more susceptible to hacking because they’re connected to the internet. However, hot wallets are more ideal for day trading because you can easily open them across devices.

Learn how to read the progress of the market

When you’re trading cryptocurrencies, it’s important to know how to interpret market trends. Bull and bear are the two movements in the crypto market you should know about. When a certain asset is having a consistent upward movement, it’s called a ‘bull market’. Meanwhile, if an asset has a downward trend, it’s called a bear market.

Knowing how to read these movements can help you make important decisions when you’re trading and yield more profits as you go along.

Try using crypto trading bots

Crypto trading bots are AI-powered programs that help traders buy and sell digital assets without being present. Using bots allows users to generate more profits as much as possible with ease. What bots can do depends on how you tweak their program. You can change how they will interpret market movements such as volume, orders, price and time and program self-executing actions based on your set conditions.

Most trading bots offer backtest, strategy implementation, execution and job scheduling services. If you’re planning to use a bot, it’s important to give them an accurate historical market to ensure that their actions are accurate.

If you can’t track your trading daily, using bots can help you achieve your tasks. Since the crypto market is always moving, having a bot that can track the changes happening overnight can help you become a more efficient trader.

Some of the best bots you can try are Blackbird Bitcoin Arbitrage, HaasOnline Software, Trality and 3 Commas.

Don’t go overboard with your investment

If you’re a first-time trader and investor, it’s not a good idea to go overboard with the amount of money you want to invest. The best way is to start small and see where your initial attempts will take you. Once you’re satisfied with the profits you make, you can gradually add more to the tokens you want to trade.

Always remember that cryptocurrencies are volatile by nature and do not follow the usual cycle of real-life assets. Going all out on your money can cause huge losses if you’re not careful.

Learn about the types of trading you can do

There are several ways you can trade in the crypto market. Depending on your skill and experience, you can choose from swing, trend and day trading. Before you dive into the crypto market, it’s important to differentiate between these types so you know which one is the right fit for you:

  • Day trading – Day trading means entering and exiting the market on the same day. Usually, a day trader’s goal is to make profits off of the intraday price movement of assets. People who day trade usually refer to price actions and technical analyses for reference.
  • Swing trading – Swing trading is a type of strategy that is more long term. When people swing trade, they usually hold their place in the market for longer than a day, but will not exceed a few weeks or a month.

Trend trading – Also known as position trading, trend trading is a strategy where users hold their place in the market for long periods. It could last several weeks to a few months. Usually, people who trend trade make the most out of directional trends and fundamental analysis before they enter the market.a

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