Crypto Trading Strategies

The Cryptocurrencies market has evolved in the last 10 years. The interest of people in trading crypto is increasing these days. However, for successful crypto trading, you need a solid plan. In this article, you will learn about some amazing winning crypto trading strategies to make money and stay profitable.

crypto trading strategies

What are cryptocurrencies?

Cryptocurrencies are digital currencies used as a medium of exchange across the network of computers in the decentralized market. 

These virtual currencies are not issued or regulated by central banks or governments. As a result, these are free from the factors such as economic and political change that affect foreign exchange currency values. 

As per reports, over 420 million people use crypto globally. There are more than 22000 cryptocurrencies in the world. Bitcoin is the first cryptocurrency in the world, introduced in 2009. 

According to the current data, one bitcoin is equal to 26843.20 USD. Some popular cryptocurrencies include Litecoin, Dogecoin, Ethereum, Ripple, Bitcoin Cash, Dash, Ethereum Classic, Cosmos, Coinbase, etc.

A quick glance

Cryptocurrencies are digital currencies used as a medium of exchange across the network of computers in the decentralized market.

Crypto trading involves buying and selling cryptocurrencies to take advantage of their price fluctuations.

Some popular cryptocurrencies include Litecoin, Dogecoin, Ethereum, Ripple, Bitcoin Cash, Dash, Ethereum Classic, Cosmos, Coinbase, etc.

Arbitrage, scalping, holding, day trading, swing trading, automated trading, mean reversion and trend trading are popular crypto trading strategies.

What is crypto trading?

Crypto trading involves buying and selling cryptocurrencies to take advantage of their price fluctuations. 

Traders speculate the price movement of currencies to earn profit. Trading cryptocurrencies occur in pairs, such as Bitcoin to Ethereum BTC/ETH or a pair of one crypto and one forex currency, such as Bitcoin to US Dollars BTC/USD.

Top crypto trading strategies for beginners

Crypto trading Example

Suppose a trader is trading in BTC/ETH. If he thinks BTC’s value will increase against ETH, he will buy the pair; if not, he will sell the pair.

In this case, if the trader’s prediction became right, he will earn a profit; if not, then he will lose money. However, crypto trading is not simple as it looks, and proper planning is needed. 

What are crypto trading strategies?

A crypto trading strategy is a predetermined plan that helps you identify the right trading opportunities to earn maximum profit on your investment. 

In order to determine in which crypto pair to invest, when, where and how to invest, you need the best crypto trading strategy; remember, with high profit, crypto trading also involves high risk.

The crypto strategy helps you to reduce the chances of loss and stay profitable. Here are some top crypto trading strategies with their features to select the best one according to your needs.

Top crypto trading strategies for beginners

Arbitrage: Best for traders with the different market knowledge  

Arbitrage is the most profitable crypto trading strategy to use different market rates. It is simply based on the principle of buying from the market where the price is lower and selling in the market where the price is higher.

Different country has different exchanges, and the price of buying and selling crypto is based on demand and supply. Similar to Gold trading, the prices of gold are high in some countries and low in others. 

Crypto prices are different in different exchanges. Suppose the Bitcoin trading price in UAE is much higher than in the USA. So a trader buys Bitcoin on the US exchange, sells it on the UAE exchange, and makes money due to price change.

Scalping: Best for experienced traders 

Scalping is the process of taking advantage of short-term price movements. Traders engage in multiple short-term trades from a few seconds to minutes to profit from different trades.

However, scalping in crypto trading can be risky. It requires market knowledge and experience. You need to take instant decisions in scalping, so it is unsuitable for beginners.

Holding: Best for inactive traders 

Holding is one of the popular long-term crypto trading strategies. As the name suggests, holding is the process of holding or keeping an asset for a long period. 

In simple words, traders generally buy the crypto at the lowest price and sell it after months or even years. The profit in holding is also high, and the investment amount is usually high. 

The best part about this strategy is that you don’t need to monitor trades and the factors which affect them continuously. You can choose this strategy if you are an inactive trader or a person in business who rarely trades.

Day trading: Best for short-term traders  

Crypto-day trading strategies are very popular among traders. As the name suggests, day trading is buying and selling a crypto pair within a day. 

It is a short-term strategy mostly used by traders who can trade on a specific day or people with jobs. The main aim of traders is to take advantage of short-term movements by using technical analysis indicators.

Swing trading: Best for medium-term traders 

Swing trading is amongst the most popular medium-term crypto trading strategies in which the trader holds a position for some days, weeks, or months. These traders monitor technical analysis indicators to forecast price movement.

Swing traders usually invest when there is a price reversal, such as high to low and low to high. Suppose the price of USD/BTC is moving downward and has reached a point.

As per historical movement, traders find that whenever prices reach that point, there is a trend reversal which means prices will increase in the future. So he will buy the pair.

Automated trading: Best for trading with technology 

Automated trading is amongst the advanced crypto trading strategies based on Artificial intelligence and technology.

Basically, in crypto bot trading strategies, robots or software programs execute the trade on behalf of the traders based on predetermined strategies.

Suppose you are stuck somewhere and unable to execute your trade, with automated trading, the software itself enters and exits the trade for you. 

Not only this, but this software also helps traders identify the right trading opportunity using technical indicators. However, developing and using such extraordinary bots is complex and requires technical skills.

Event trading: Best for trading with fundamental analysis 

As the name suggests, event trading means trading crypto based on fundamental analysis factors such as news or reports. It is the process of buying during positive fundamentals and selling during negative fundamentals.

Simply put, crypto trading is affected by many factors, such as supply and demand, regulatory decisions, technological change, and market sentiments. Based on this, traders make the trade decision.

In Saudi Arabia, using Bitcoin is illegal. So suppose in the future, maybe the government will accept Bitcoin as a medium of exchange. So it will have a positive effect on crypto prices. As a result, people started buying it.

In a similar case, suppose the Saudi Aravia’s government increase restriction on Bitcoin. It will have a negative effect on Bitcoin, and people will start selling it. It is called event-based trading, where your trade decision is affected by such events.

Mean Reversion: Best indicator strategy for crypto trading 

Mean reversion is the process of determining the mean price of the crypto and anticipating that the price will revert to the means. This strategy requires statistical and mathematical knowledge to place a trade.

You have to first determine the equilibrium price of crypto using statistical tools. And monitor the price to find out average deviations. 

When the price move above the means, it suggests overbought, then consider buying, and when the price move below the means, it suggests oversold consider selling.

Trend trading: Best for trading with charts 

Trends trading is the process of identifying the price fluctuation market trends and placing the trends accordingly. There are three types of trends, upward, downward and sideways.

Upward trends suggest buying, while a downward trend suggests selling. Sideway trends suggest no such major movement to make a buy or sell decision.

Conclusion

You have learned about all the major crypto trading strategies and their features; now, you are ready to start trading. Remember, before selecting a trading strategy, practice your trade on a demo account to analyze the success rate of the plan.

Also, to select the best strategy, you need to consider factors such as investment amount, trading hours, time frames, risk management factors, and experience and analyze whether it suits your needs or not. 

If you are looking for the best trading strategies then Arbitrage is a popular and safest strategy for beginners to start trading in digital currencies. 

The crypto market is a financial market that involves risk. Remember, there is no foolproof plan and guaranteed success in crypto trading. However, using an effective plan for sure decrease the chances of loss.

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JoJo Brown

JoJo Brown is a research specialist with an impeccable knowledge of trading and finance. With an impressive academic background in finance and research, Mr Jo Jo has 15 years of professional experience in the financial domain. Professional Background: Brown started his career as a salesperson in a leading institution. He then tried his hands in the research field and started working as an executive in a forex broker firm. In his career span, Brown has worked with leading signal providers, finance institutions and broker platforms. He has created a wealth of knowledge and analytical skills in 15 years. He has been working as a research head in Market Investopedia for eight years and is amongst the foundation members of our organization. Expertise: Over the years, Mr. JoJo has worked in many leading financial institutions, so he is well-versed in the understanding of forex, cryptocurrencies, commodities, stocks, and indices markets. He has an impeccable knowledge of technical, fundamental, and sentimental analysis that helps him deliver key insight into the trading world. Key Qualities: Mr. JoJo is known for his analytical approach and valuable market insights among our clients. Brown excels in the art of studying data, identifying trends and patterns, conducting analysis, and presenting high-quality interpretations. He has made an immense contribution to creating daily research reports and providing the findings of fundamental and technical analyses of financial instruments to our clients. Mr. Brown is an expert in the financial world, and he knows the best way to present complex financial data in the simplest way to inform and educate traders.

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