Best Trading Strategies for Crypto
Cryptocurrencies have become an inseparable part of the modern world. It isn’t an easy task to select the best trading strategies for crypto.
First of all, do you know what cryptocurrency is?
It is a digital currency supported by a global network of computers. Cryptocurrencies or cryptos, as many call them, aren’t the same as fiat currencies like U.S. dollars or euros.
To cut a long story short, they are totally decentralized. Central banks aren’t in charge of cryptocurrencies. Importantly, cryptocurrencies aren’t affected by common monetary issues. For instance, inflation.
You need to remember that there are no physical crypto coins. Importantly, cryptocurrencies are normally kept in digital wallets. However, in order to keep cryptocurrency networks secure and transparent, balances are recorded on public ledgers.
It is worth noting that all crypto transactions are authenticated through a process known as “mining,” and then recorded on the currency’s ledger. The vast majority of ledgers are supported by blockchain technology.
While anyone on the network has the ability to view the ledger, entries can’t be deleted. Moreover, it isn’t possible to rewrite them.
There are thousands of cryptocurrencies in circulation. However, even experienced traders don’t know all cryptocurrencies.
However, some of them are very popular all over the world. One of them is Bitcoin, the world’s first decentralized cryptocurrency. Moreover, it is the world’s largest cryptocurrency in terms of market capitalization. We shouldn’t forget about Ethereum. It is the second-largest cryptocurrency when it comes to market capitalization.
There are other famous cryptocurrencies as well. For instance, Solana, Tether, and the Binance Coin.
Trading strategies for crypto
Now, let’s move on to the best trading strategies for crypto.
It is important to select a strategy that is in line with your investment appetite.
Unsurprisingly, it is hard to draw a line between crypto trading strategies for beginners and crypto trading strategies for experienced traders.
So, let’s take a look at some of the best crypto trading strategies in general.
Have you heard about a simple moving averages (SMA) trading strategy?
Traders can use the above-mentioned strategy to track the price movements of the cryptocurrencies or cryptos, as many call them, they hold or would like to trade. The strategy mentioned above has the capability to help spot trends. It is also possible to use the strategy mentioned earlier to recognize patterns in price movements. Moreover, it is possible to compare trends and patterns in price movements in the short, medium, or long term.
What’s interesting, the strategy mentioned earlier is utilized in various trading patterns. We also need to mention that it is possible to use the trading strategy mentioned above in order to complement both fundamental as well as technical analysis.
Range trading and scalping
As opposed to the SMA trading strategy, the strategy we are going to discuss is an active trading strategy. Have you heard about range trading?
It is no secret that cryptocurrencies are extremely volatile, and crypto traders cash on this volatility while traders range trade.
Interestingly, a trader spots a range to sell and buy over a period of time. It is noteworthy that the upper one (range) is the exit point. What about the lower one (range)? The lower one serves as the entry point for the crypto trader.
What about scalping?
It is also a short-term trading strategy. Importantly, they can use scalping in order to align their day trades. The strategy mentioned above involves small and frequent trades. The aim of scalping is to make a good profit at the end of the day.
We need to note that the strategy mentioned earlier is a popular day trading strategy in cryptocurrency.
What’s it like to be a scalp trader?
You need to learn various details about technical analysis as well as charting tools. Moreover, it is important to have the ability to make decisions quickly.
Event-driven trading and RSI trading
We can’t forget about an event-driven trading strategy when it comes to trading strategies for crypto.
The strategy mentioned above involves trade attempts to profit from price changes before or after development, or an event takes place related to a particular cryptocurrency.
The event-driven trading strategy is a popular strategy that concerns important developments as well as news that may influence cryptocurrencies in the short term.
It is important to learn how to differentiate between less important events and significant events.
What do you think about relative strength index (RSI) trading?
The RSI is a great tool for traders to examine the trends for a specific cryptocurrency. What’s important, it is an indicator that depicts whether a cryptocurrency is overvalued or undervalued, etc.
Interestingly, it is possible to use RSI in combination with other tools for the technical analysis of a cryptocurrency. Moreover, it is possible to use RSI in order to identify highs and lows to decide the entry/exit prices.
You need to remember the RSI isn’t a determiner of a trend reversal or a trend continuation. It is worth mentioning that you should use a combination of tools to come to a conclusive strategy.
Strategies for crypto trading and traders
Fortunately or unfortunately, it is hard to name the best trading strategies for crypto. The trading strategies mentioned above are quite good. However, the one-size-fits-all approach doesn’t work in the case of cryptocurrencies.
So, traders should select a strategy according to their needs. There is no right or wrong answer when it comes to the best trading strategies for crypto. It is important to learn as much as possible about various strategies in order to find a suitable strategy.