There are a lot of cryptocurrency trading strategies. Each strategy should be selected basing with your personal preferences, habits and work schedule. Here we gathered the most popular strategies for cryptocurrency trading. Scalping. In this strategy, a trader works with very short transactions, which are maximum several minutes long. The trader should analyze the transactions of other users to open a new deal in case the volume of purchases over sales exceeds (because there is a possibility of price growing). During trading, it is popular to use trading robots, which can make decisions to open or close new deals using special algorithms. Arbitration. Using this strategy the trader should buy and sell cryptocurrencies almost at the same time. So it is possible to make profit from the price difference between different exchanges. For example, a trader buys an asset on the first exchange, where the prices are lower, and sells it on the another exchange with higher prices, so it is possible to make a profit from the difference. To make your work successful, you can use special trading tools (such as trade robots and special arbitration tactics). However, be careful to notice that as the market develops, it becomes more difficult to work with arbitrage strategies. Buy and hold. This is one of the classic variants for cryptocurrency trading. The trader buys an asset, holds it for some (often long) time, and then sells it once the price goes up. When using this strategy, rely on fundamental analysis, pay attention to the opinions of the experienced users and big investors, and monitor the demand for your cryptocurrency. You can also use the technical analysis to make your work more accurate. Bitcoin could be a good real-life example to describe this strategy, like in 2009 Bitcoin costed just several cents, but in 2017 exceeded to 18 thousand dollars. Therefore, those who bought this cryptocurrency at the very beginning at last made a very successful investment. Fundamental analysis. Initially, a fundamental analysis was used in cooperation with companies -as stock trading. Usually the ratio of the stock price to the profit, the ratio of profit to the price of the stock, and the return on capital were taken into account. For crypto currency, it is better to use factors such as NVT - the ratio of the cost of the network to the number of transactions, price of the cryptocurrency. In addition, it is important to analyze the quality of the team that is working on cryptocurrency launching. Cryptocurrency portfolio. This is the strategy, when a trader invests in different cryptocurrency assets and gets an income from each one. Such a portfolio can equally include both top-level cryptocurrencies and unknown or just new altcoins. If the portfolio is formed correctly, the trader can get a good profit. Moreover, even if one of the assets falls in price, it will be possible to cover the loss from the other assets’ income. You can get more details about creating and working with cryptocurrency portfolio in our article. Trading on fluctuations. This method is good and possible due to high volatility of cryptocurrencies. The trader buys cryptocurrency, keep it for several days or even weeks, while trying to determine the next movements of the price. Nevertheless, the strategy assumes some great risks, since it is extremely difficult to predict the price movement correctly in high volatility. Trading with news. This is the complex and ambiguous strategy. The trader should track the news, and in case of the emergence of positive or negative messages from the media make a decision to sell or buy his assets. This strategy works simpler theoretically than in real life, where trading with news involves greater risks and ambiguity (for example, news may be misinterpreted by crypto community, or even go unnoticed). Back to the previous level. This is an active trading on short-term gaps. The trader opens deals in the opposite direction to the main trend. It is better to use this strategy during a strong rates decline, when the price is expected to return to its previous level. This method is convenient due to the high cryptocurrency volatility, and sometimes such jumps happen quickly enough. Nevertheless, there are also difficulties – for example, sometimes it is very hard to determine the right time for the transaction. To avoid risks do not make large bets, choose ones with 2% of the deposit amount maximum. Transactions from the support level. A trader opens trading positions when the rate grows to the desired psychological level (you can use the resistance and support lines on large timeframes.) It is possible to earn money with this strategy, because it requires simple analysis and allows you to use a wide range of rate fluctuations. But it's important to remember that it is better not to invest too much due to high risks. It is better to use 2-3% operations of the main deposit. |
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