When trading in cryptocurrency, you need to know that those who have come before you and have earned quite a lot use many strategies to survive in the industry. If you want to master the process of crypto trading, you should learn these strategies in order to make wiser decisions and avoid losing your assets. 

This article will teach you the seven most effective trading strategies in crypto and how you can master them easily.

Day Trading

Day Trading simply means entering and exiting the crypto market on the same day within the trading hours. This means that your trade should start and conclude within a single day so you can profit from tiny market movements. Since cryptocurrencies are volatile, day trading can be a pretty good starter for beginners who are not comfortable taking long-term and riskier trades yet.

To achieve this, you must pay close attention to the technical indicators amidst the intraday price movements and figure out when to buy and sell your assets.

Arbitrage Trading

This crypto trading strategy involves buying crypto from one market and selling it to another. Depending on the market, you will be a difference in the buy and sell price you can use to earn. The difference is called the “spread” and many master traders usually register their accounts in markets with significant price discrepancies to profit.

Dollar-Cost Averaging

DCA has been a very reliable strategy for long-term strategies. If you plan to hold it for a few years before selling it off, DCA might be the one for you. This strategy is one of the most relaxed ones, where you only need to worry about buying consistently.

To employ this strategy, simply set an amount you can put into the market regularly. For example, putting $100 every 20th of every month for a few years. Using a DCA calculator, if you started doing this back on August 22, 2019, and wished to withdraw your funds on August 22, 2022, you will have gained 157.64％ on your investment. That’s $3,600 invested with a total end value of $9,275, or $5,675 in profit.

HODL (Buy and Hold )

HODLing came from a purposive misspelling of hold and it is a strategy that has helped many traders and investors stay in the industry for a long time. This is ideal for people in the crypto world who are after the long-term value appreciation of their assets. You basically hold on to crypto and wait for an increase in the value so you can sell it for a large profit.

HODL also prevents anxious traders from falling prey to the market’s short-term volatility since you don’t have to sell low or buy high to avoid losses immediately.

Technical Analysis

Technical analysis is quite complicated and might not be for everyone as it requires a lot of time to study, as well as experience, or potentially expensive experience. However, masters of technical analysis have made a lot of money doing this.

You may have tried this approach once in your life without knowing it. Looking at a candlestick chart and trying to predict its movement is practically what technical analysis is. There are in-depth guides everywhere about patterns and what they might lead to.

One popular pattern is the head and shoulders, where you have a previous lower peak, a high peak, and another lower peak at a similar level to the previous lower peak.

Futures

Trading futures are another great passive way to do crypto trading as the conditions are already set in the contract. Futures are a deal set in advance to buy and sell at a particular price set at a particular date.

This protects you from market fluctuations since it doesn’t matter what the market is going through. It only matters what’s said in the contract. For example, if you choose to buy 1 BTC today for $21,000, and in the contract, you both agree that the other party will buy it from you for $25,000 on a future date, you have just profited.

Range Trading

This is a more active approach wherein the investor or trader determines a specific price range to buy and sell crypto in a short period of time. For example, if certain crypto is trading at $35,000 and you expect the value to go up to $45,000 to $50,000 in the next few weeks, you can trade it at $35,000 to $40,000. 

FAQs

Is cryptocurrency better than cash?

Cryptocurrency is like digital cash that you can store in an e-wallet. The difference is that you can track and store digital money with the help of blockchains to make it more secure. Digital money also makes it easier for people to transact across boundaries and online.

Does the crypto market close? 

No, it does not since it is a decentralized market. This means that the crypto market is open for trading and investing 24 hours a day and 7 days a week. Since it is decentralized, it is not physically transacted from a single location. Instead, the transactions can be conducted in different locations worldwide.

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