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Cryptocurrency Trading Strategies for Beginners

Crypto Trading Strategies

When it comes to trading, everyone refers to buying and selling assets to make profits. No matter what you trade, the aim is the same. Purchase an asset and sell it at a higher price. It is the same for cryptocurrency trading. Crypto trading also involves buying a cryptocurrency and then selling it at a price higher than you paid to buy it. 

How Does It Work? 

Cryptos are digital assets running on the blockchain. The blockchain technology stores ledgers of all cryptocurrency transactions on each node running the blockchain. Nodes refer to computers linked to the network of Bitcoin to mine them. If any miner attempts to enter a false transaction, it gets nullified by the ledger. The miner’s records help select the right ledger. 

To transact with cryptocurrencies, you should have private and public keys. They are passwords produced by cryptocurrency wallets. The private key helps approve transactions sent from your wallets. The public key is linked to the address of your wallet and lets people send you cryptocurrency. 

What Should Be Crypto Trading Strategies for Beginners? 

It will be an understatement to say that cryptocurrency trading may be profitable. With the improvements in many cryptocurrencies and their outperformance, no other asset can beat them. But, choosing the right cryptocurrency trading strategies and the right trading opportunities can be difficult. So, before you begin trading crypto and get into advanced technical analysis and overly -complex indicators, you should learn some helpful, basic crypto trading strategies for beginners: 

Long-Term Holding 

Known as the HODL Method, this is the simplest strategy when it comes to crypto trading. Holding is known to be simple as it often needs a little knowledge to become successful – because nearly every cryptocurrency has experienced growth over the years. This strategy works with a simple rule: buy a cryptocurrency that you think has a promising future. Hold it for many months or even years. 

Day Trading

This strategy is the opposite of previously discussed long-term holding. It is an act of selling and buying a cryptocurrency on the same day and multiple times within the day, taking the benefit of smaller price moves. Day trading can yield high profits when done perfectly because of the inherent cryptocurrency volatility. But, it is riskier than the HODL method. You can lose a significant fraction if you day trade crypto due to a crash. So, ensure to set the stop loss and use the capital you can lose in case of drastic losses. 

Swing Trading

Swing trading occurs over a longer timeframe than day trading – generally a week or a couple of weeks. Swing trading intends to capture huge gains over a longer time frame, making it a simple strategy for new investors. Swing traders are generally concerned with weekly and daily charts. Shorter time frames are not of much concern for them. Good swing traders use both fundamental and technical analysis to decide whether a coin will experience a noteworthy price swing or have sufficient momentum to change any trend. Cryptocurrency news plays an essential role as new development can affect the price actions of your picks. Chart patterns are used since they offer a lot of information about a cryptocurrency and when to enter/exit a position. Indicators like MACD or RSI can be helpful if used for a longer time frame. 

Scalping

Scalping is a fast-paced trading strategy that has the potential to produce reasonable returns promptly. Though scalping is quicker than day trading, it should occur on only high-volume coins as it is much riskier. Scalping lets traders make the most out of micro fluctuations cryptocurrency witnesses over shorter time frames like 1, 3, or 5 minutes. Presently, nearly every cryptocurrency with large trading volumes is volatile to the scalp. You should scalp on larger cryptocurrency exchanges or famous trading platforms. Scalping is not for those faint of heart. It requires a time commitment for executing trades successfully. 

RSI Divergence Trading Strategy 

It is a technical strategy that can be used for a time trend reversal even before they happen. It is when the prices begin moving in another direction from an uptrend to a downtrend or vice-versa. RSI is a known chart indicator that measures momentum by calculating an average number of losses and gains over 14 days. The indicators oscillated from 0 to 100. It underlines when crypto is oversold or overbought. If the indicator goes above 70, the crypto is overbought, and its rate will come down. When crypto goes below 30, it is oversold, and its price will rise. 

Dollar-Cost Averaging 

It is a well-tested and well-known trading strategy for longer time frames. It has a simple concept. Instead of putting all your funds in a specific cryptocurrency together, you can divide it into smaller amounts, select a time and day, and purchase at that time only. Buying cryptocurrency at regular intervals helps decrease volatility’s impacts – when the prices fall and rise sharply. Another benefit of using this strategy for new traders is that they can automate the entire process through many trading bot services. So, you will have to deposit funds, inform the bot when and what you wish to trade, and let the bot do the hard work on your behalf. 

Key Points to Choose Best Crypto Trading Platform

There are lots of options such as Stormgain with regards to crypto trading platforms. Selecting the right platform is very important for you. It is helpful to do a little research to find out which is best for you. Below are a few key points you should look for: 

Available Currencies: Though Bitcoin is the most common crypto, other tradable cryptos should also be considered. Some may be available on one trading platform, while not on others. Ensure that the platform you choose supports the cryptocurrency you want to trade. 

Minimum Investment: Minimum investment is the minimum amount that you can deposit in your trading account. It is vital because different platforms require different amounts. Select one that fits your budget. 

Hedging: It is a risk reduction method that involves taking offsetting positions on primary assets. It reduces the loss possibility and also offers insurance. 

Leverage: Leverage refers to the amount of money you can trade above your deposit amount and by what amount you can multiply gains. High leverage isn’t recommended for beginners but can suit the risk-takers that look for high rewards. 

Customer Support: Whether big or small, you will always want your queries to be answered appropriately, so select a trading platform with good customer support. 

To Sum up

Trading cryptocurrency is the new trend, not because everybody is doing it, but because both old-timers and beginners like it. If you are new to the cryptocurrency trading world, you can follow the crypt trading strategies mentioned above and become a successful crypto trader.

Marjorie Glover
About author

Marjorie Glover is a news editor and writer with a special interest in business and finance. She holds graduate degree in journalism and working as a news writer for FinanceKnown. In her spare time, She usually roaming around with friends.
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