Best cryptocurrency trading strategies
What are the best cryptocurrency trading strategies and how can we make use of these methods that help us understand trading and also help us earn more.
Cryptocurrencies are traded in decentralized markets, which means that they are not issued or backed by a central authority such as the government and are managed by a network called the blockchain network.
Due to the decentralized nature of cryptocurrencies, they are free from many of the political and economic issues affecting traditional currencies.
However, this does not mean that cryptocurrencies are devoid of external factors, on the contrary, cryptocurrencies are unpredictable and subject to the influence of factors such as supply and demand, the presence of the media, the integration of payment systems into e-commerce and major events.
These factors make it important to focus not only on cryptocurrency trading strategies, how to deal with volatility, but also on diversifying your investment portfolio, which will allow you to trade different asset classes, including cryptocurrencies, and diversify your portfolio.
By diversifying the types of trades you take, you can hedge the risk of the market moving against you, as well as take advantage of positive moves.
Best cryptocurrency trading strategies
Due to the volatile and unpredictable nature of cryptocurrencies, it is important to have cryptocurrency trading strategies in place, especially for specific cryptocurrencies, before attempting to trade in the market.
And when we talk about cryptocurrency trading, we mean speculating on price movements of cryptocurrencies through a CFD trading account, which are leveraged derivatives that allow you to speculate on price movements without owning the underlying asset.
In addition, you can buy cryptocurrencies through exchanges, which means that you will buy the coins yourself, and you will need to create an account on the exchange, fund the full value of the position, and store the crypto tokens in your own wallet until you are ready to sell. It can also be a matter of buying cryptocurrency directly. It is difficult and not recommended for novice traders.
What are the best cryptocurrency trading strategies
If you need to develop in this difficult field and work in it and make big profits from it, then all this requires experience, work and great efforts to achieve big goals in the field of cryptocurrency trading, and there are a lot of ways to understand it. The nature of the market and reading the future trends of digital currencies, so you need the best cryptocurrency trading strategies.
Cryptocurrency trading strategies help beginners and professional traders to understand the market and predict prices, ups and downs of cryptocurrencies, making it easier for the investor to obtain valuable information that helps him achieve his goal and reduce the percentage of losing trades. :
Moving Average Crossover Strategy (MA)
Moving Average Crossover (MA) requires an understanding of moving averages and cryptocurrency trading strategies and let’s start from the beginning, a moving average is a lagging technical indicator that aggregates the price points of a financial instrument over a period of time and divides by the number of data points to give you a line in one side.
This unified trend line allows you to determine the direction of the current trend, reduce the impact of random price jumps, and allows you to explore support and resistance levels by analyzing past price movements.
So, how do you include this indicator in your cryptocurrency strategy? One of the main uses of a moving average is called “crossing,” which means when the price has crossed or crossed, i.e. when the price of an asset crosses above or below the moving average to indicate a possible change in trend.
In order to use the moving average crossover indicator in the cryptocurrency markets, you will need to wait for price crosses before buying or selling the cryptocurrency in question using a financial instrument such as a CFD.
Another viable strategy is to have two moving averages on the chart, one short term and one long term, and when the shorter moving average crosses the longer moving average it indicates that the trend is trending up, this is known as golden cross.
This can be viewed as a buy signal and when the shorter moving average crosses the longer moving average, it indicates that the trend is going down and is known as a death cross for the cryptocurrency.
Relative Strength Index (RSI)
The Relative Strength Index (RSI) is one of the best trading strategies for cryptocurrencies. It is a technical indicator used to identify momentum, overbought and oversold conditions in the market. It can also be used to identify hidden divergence and divergence signals in the financial markets. This type of trading is also known as trend trading.
The Relative Strength Index is a calculation of the profitable closing price relative to the losing closing price, expressed as a percentage.
Calculated using the formula: RSI = 100 – (100 / [1 + RS]
The indicator is displayed as a percentage of 100, with a lower percentage usually indicating an oversold position and a higher percentage reflecting an overbought position, so what are the best cryptocurrency trading strategies for RSI trading, it depends on your risk appetite and trading style. The RSI can be used to trade both short and long signals when the price is also range bound by nature.
However, since the markets are trending regularly, using the RSI indicator to highlight entry and exit trends will give you an idea of the best time to trade.
event trading strategy
This strategy is a well-known cryptocurrency trading strategy, and a strong media presence of a particular currency or cryptocurrency exchange can influence the cryptocurrency markets, and this cryptocurrency trading strategy focuses only on exploiting these “events,” which is a popular cryptocurrency trading. A strategy for beginners in the world of trading.
News coverage of current events can affect the prices of many things like currency pairs, stock indices and commodities, not just cryptocurrencies, this effect is not just speculation and many experienced traders will benefit from it.
Typically you would wait for the market to show a consolidation pattern before an expected news release such as an earnings report and then act once the market breaks out, but due to the volatile and unpredictable nature of cryptocurrencies, you may have to wait for such news releases before initiating trades.
Simply put, you can buy your chosen cryptocurrency when positive news is announced and sell it when negative news comes out.
Speculative trading strategy
Scalping is also a popular cryptocurrency trading strategy among traders because it is the practice of opening positions in line with the trend.
They often enter and exit the market multiple times within a short period of time as they develop, and individual trades are completed for only a few seconds or a maximum of minutes, so this is one of the short term strategies.
This trading strategy works very well for active intraday traders. Scalping focuses on minute to minute price changes which depend on quantity, and once the trade becomes profitable, you can close the trade.
There is no need to “wait for the market to pick up trends” as you have to be quick and close losing trades immediately, the more volatile the market, the better to speculate.
And you may want to use speculation when you are speculating, where you can create a position in the opposite direction until you are ready to exit, either by locking in your profits or limiting your losses.
Keep in mind that speculation can be very risky if you make multiple trades on a very short term basis, risks must be managed carefully and speculation is one of the best short term cryptocurrency trading strategies.
DCA Trading Strategy
If you are looking for the best cryptocurrency trading strategies that do not include indicators, then you may be interested in Dollar Average Value (DCA). DCA is a popular strategy for beginners and experienced traders alike.
Instead of investing all of your money in a specific asset at once, you divide your investment into smaller amounts, then these amounts are distributed according to a predetermined schedule and invested regularly at a certain time and day of the week, and only on that day. day and time.
What it looks like in practice, let’s say you decide to invest in bitcoin, put $15,000 in it, and decide that the DCA strategy will be the best way to work, so all you have to do is divide your first amount by the number of weeks you want to implement the strategy.
In this example, we’ll say you want to invest $15,000 over six months, and then divide the original amount by 24 which is the number of weeks in six months, giving you $625 a week for the next six months, and every Tuesday at 14:00. You invest $625 in bitcoin until your initial amount is exhausted.
Why invest in this type of cryptocurrency trading strategy Buying an asset at regular intervals helps mitigate the impact of market volatility, which means that you usually get more currency out of your final investment than if you invested all your money at once.