Are you an advanced trader looking for your next crypto trading strategy? Look no further. It's always a good idea to switch up your trading strategies. As the crypto space changes before our eyes—stablecoins becoming unstable, like Terra UST’s recent downfall—you can't go wrong with stabilizing and expanding your strategies to move with the market shifts.
So, why is having a crypto strategy important?
The importance of having a cryptocurrency trading strategy
The crypto market has recently been in a state of flux. With the value of tokens dropping overnight, it’s now more important than ever to have a crypto trading strategy to protect you from its volatility. You wouldn’t send a sports team out onto the field without a game plan, so the same approach should be applied to your crypto trading.
By crafting a strategy that fits your trading style, you’ll be able to trade more smoothly and be a more disciplined trader. It’s easy to get caught up in the excitement of the different types of trades available to you (leverage, limit, and swap on bitoftrade), but it’s best to have a plan that you can follow to stay on track with your trading goals.
A strong crypto strategy keeps you on track with trading and helps reduce the stress that comes with it. You won’t feel rushed by market fluctuations if you stick to a dedicated strategy. Your trading emotions stay stable and you can continue to trade in a controlled environment.
Three things to consider before picking a strategy for trading cryptocurrency:
Crypto risk management
Just like any investment, there are risks in trading crypto, so risk management is absolutely key!
Avoid emotional trading
Emotions and finance should never mix, especially when emotions are running high and the market’s up in the air. When making crypto decisions, it's best to remain level-headed so you don’t get too excited or let down by a trade’s potential.
Find the best token to trade
You should research and plan which tokens to use in your trading strategies. It's a good idea to diversify your portfolio with different tokens, so you’re not putting all your eggs in one basket. If you invest in just one token, you risk losing everything if the token loses value—like we’ve seen recently with LUNA.
So, now you know why you need a trading strategy, let's explore the different strategies you can choose from!
Types of cryptocurrency trading strategies:
There are four main types of trading strategies: position trading, scalp trading, swing trading, and day trading.
But how do you know which one is best for you? That’s simple, you pick the one that suits your trading style and you feel the most confident using. Read on to become more familiar with each trading strategy.
A position trade is close to a buy-and-hold investment strategy. The idea is to capitalize on trends in the crypto market by identifying strong tokens and holding onto them until the time is right to trade, so when you notice a price rise. You can hold onto your tokens in this strategy for long periods—months and even years.
Advantages of position trades:
Less time commitment. Positional trading requires a lot of research time beforehand, but once you’ve positioned your trades you don’t need to attend to it very often, although you should monitor them frequently.
Low transaction fees. Most trading platforms charge fees for transactions. However, as position trading involves very few trades for long periods, you won’t be paying many fees at all.
Scalping trading is extremely fast-paced. A crypto scalper can make up to 20 trades in a few minutes. It takes a lot of energy to scalp trade so it’s not something you should do for long periods. As crypto prices can change rapidly, a scalper has to watch for increases in trading volumes and know the exact exit point before even beginning the trade. The key to successful scalp trading is using a trading platform with fast execution times so you avoid lag time. Lag time can make you miss key trading opportunities and can increase your chances of loss. So, always go with a fast trading platform and make sure you know its speed before trying scalp trading to avoid getting caught out mid-session.
Advantages of a scalping strategy:
Combining small gains into big profits! The idea of executing lots of trades at once increases the chance of success, and all the little wins add up to high-profit potential.
Low risk. As each trade is usually quite small, you won’t lose huge amounts of money if a trade doesn’t quite go to plan.
Swing trading crypto
Swing trades are somewhat the opposite of scalp trades, as the time frame of a swing trade is usually longer. The idea around swing positions is to spy any ‘swings’ in the crypto market— these can occur over days, weeks, and even months! There are two types of swing positions that you can look out for.
Swing highs: if the market peaks before it backs, this means you execute a short trade.
Swing lows: if the market bounces and dips, this means you execute a long trade.
Advantages of swing trading cryptocurrency:
Lower intensity. A longer time scale for trades allows you to relax when you’re conducting shorter trades.
Trade part-time. Similar to the above, a longer time scale allows you to go about your daily life without having to dedicate every single second of your time to trading.
Day trading cryptocurrency
A day trading strategy involves opening and closing positions on the same day throughout the day, so this is short-term crypto trading. The idea around day trading is that you increase your profits as the price of a token moves. To successfully use this day trading crypto strategy, you need to consider technical indicators to suss out entry and exit points.
Advantages of cryptocurrency day trading:
High-profit potential. If you master a day strategy, you can turn a quick profit.
Independence. Many day traders are self-employed. It can be rewarding to reap the benefits of your own decisions.
So, now you know all about trading types, how can you start day trading?
Winning cryptocurrency trading strategies for day trading:
Day trading is both the most used strategy and the most accessible for traders of all levels, so even if you’re a newbie you’ll be able to get the hang of day trading in no time. Javad Khan, traded Bitcoin successfully — reaching a value of $352,000. This led to him being able to outright buy a Bentley!
You too can be successful with day trading, but how? The best approach to master day trading is to look at fundamental and technical analysis for cryptocurrency. You can read all about crypto indicators for day trading here.
Cryptocurrency fundamental analysis
A fundamental analysis cryptocurrency strategy will help you gain as much knowledge as possible about a crypto project — think of it as background research! This method helped trader Erik Finman become a teenage Bitcoin millionaire! Clearly, fundamental analysis is a huge factor in market prediction. You can read more about market predictions here.
The three metrics of fundamental analysis:
On-chain metrics. This is all about the data of a crypto project—you evaluate addresses, transaction value, hash rates, and fees.
Financial metrics. You look at market capitalization, trading volume, circulation supply, and the liquidity of a token.
Project metrics. You research the crypto project in its entirety, so you conduct background analysis of whitepapers, roadmaps, tokenomics, utility, and competitors.
Knowing the full history of a token can help you look out for trending patterns and make your future predictions more accurate. Now that you know all about fundamental analysis, it’s time to cover technical analysis!
Cryptocurrency technical analysis
Technical analysis of cryptocurrency includes studying past behaviors and trends of the specific token you’re thinking about trading with. As the name suggests, this side of the strategy is technical! It involves looking at charts that show turnover values, order sizes, price changes, and technical crypto indicators.
Cryptocurrency technical analysis charts identify predictable behavior in the market. Katie Stockton has made a professional career out of technical analysis, not just crypto but other stocks too, and she’s a firm believer it’s a great way to gauge market strategy.
Three principles of technical analysis:
History repeats itself. Studying previous patterns can inform price forecasts.
Trends influence token prices. If a token is set in a trend, it’ll remain in that trend unless there’s a clear indication that it will change.
The market takes everything into account. Market prices include information about a token, its micro and macroeconomic situation, industry, regional, and political conditions.
The main chart you’ll come across while doing your technical research analysis is candlesticks. They’re great for tracking crypto trading indicators and allow you to see full price fluctuations, making predictions easier. Lucky for you, candlestick charts will soon be available on bitoftrade. You can read all about how to read a candlestick chart here.
Cut loss with limit trades
Like with all trading strategies, it’s important to limit risks as much as you possibly can. By applying limit orders to trading cryptocurrency strategies, you can control the amount of potential loss to your portfolio. It’s in the name: limit trades limit loss!
Crypto trading tips for using your strategy on bitoftrade
As the bitoftrade platform is expanding at a rapid pace, providing and bringing all your trading solutions together under one roof, we thought to make trading even easier with our simple tips on how you can implement your strategy on our platform:
Read our token reviews. We like to offer our users value from reading our blog, by educating and informing them of all things crypto. We share reviews of tokens and share trading tips and essential trading knowledge. Click here to visit our blog to help with your fundamental analysis.
Candlestick charts. You can upgrade your chart reading skills with our incoming candlestick chart feature! You can do all the technical analysis your heart desires!
Stop-loss and limit trades. You can protect your crypto portfolio by applying stop-loss and limit orders to your trades. This is perfect for trading in current market conditions.
You can read all about how to make money with crypto on our platform here.
So, there you have it, you’re now officially an advanced strategy pro! You can put your knowledge to the test by trading on our one-stop shop platform here.
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