Today, cryptocurrency has become a full-fledged source of income for a huge number of people around the world. Long-term investing, mining, staking, pharming... There are a lot of ways to benefit from digital assets, and everyone can choose what they like. One of the most popular ways to make money in the cryptocurrency market is trading.
Cryptocurrency trading or crypto trading is speculating on the price movements of digital currencies, that is, you exchange one cryptocurrency for another or for fiat money in the hope of selling the asset at a better price.
Of course, learning how to trade on cryptocurrencies takes more than a day and a vast amount of knowledge, and you need a sound strategy to do it effectively. But where to start if you are new to this field? Today we've prepared for you 5 popular and relatively simple crypto trading strategies that even a novice trader can master. Sit back and take note!
Yes, this may not be the easiest strategy for novice crypto traders, but it can bring good results if you manage your risks well.
The essence of the strategy: to make a lot of small transactions during the day to get a small profit of up to a few percent. The effectiveness of this strategy is achieved due to the high volatility of cryptocurrencies - their price can change by 10-50% in one day, and sometimes more.
Trading by trend
The essence of the strategy: you need to determine in which direction the price is moving at any given time. This can be done with the help of trends, which can be local or global. Global trends are suitable for medium and long-term trading, while local trends are suitable for short-term trading. Once the trend direction is determined, the subsequent order of actions is set up.
Breaking through the resistance level
The point of the strategy: it is necessary to identify the moment when the new trend is not yet formed, but the preconditions for its change are already visible. During this time frame the price can bounce back from the support and resistance levels for a long time, but sooner or later the market forces shift in the other direction because the price cannot move in only one direction. When the price rises considerably, the buyers get weaker and the bears, the traders who profit from the drop in price, get actively involved in the game.
Strategy on MACD
This strategy is based on the MACD indicator (Moving Average Convergence/Divergence), one of the most popular and simple indicators in trading.
The strategy's essence: traders evaluate MACD value and make forecasts about growth or decline of cryptocurrency prices in future. Based on the information received, a decision is made whether to buy or sell assets at the moment.
This strategy differs from the others in that it does not imply the mandatory use of indicators, although they can be used as an additional tool.
The essence of the strategy: in the periods of high volatility on the crypto market there is often a difference between the quotes on different exchanges and in different trading pairs, the difference can reach 5% or more. Traders, by arbitrating different bids, find discrepancies in quotes and benefit from exchange rate differences on different trading floors.
Of course, in this article there is only a brief description of some of the most popular trading strategies among beginners, but familiarity with them will help you to determine what is right for you!