In the volatile world of cryptocurrencies, you’ll need nerves of steel, a winning game plan, and crypto strategies if you want to win.
You will find these nerves of steel and the best crypto strategies by doing research, research and more research. Let’s take a look at the X factor of this complex and profitable world, i.e. the different crypto strategies you will use during your journey.
There are a multitude of trading strategies and multiple platforms out of which some of the most popular day trading strategies are range trading, scalping and arbitrage.
Attention! The content of this article is not financial advice. The world of cryptocurrencies is very volatile. Invest at your own risk and do your own research.
To read: What is a DAO?
8 Best Crypto Strategies to Try in 2022
1. Range trading
Market participants also rely on experienced analysts, who communicate support and resistance levels daily.
“Resistance” refers to the point that the price can go up to and therefore a resistance level is a price above the current price.
Conversely, “support” is a level below which the price of a cryptocurrency is not expected to fall, and therefore a support level is always below the current price.
2. Dollar-Cost Averaging
When it comes to finding the ideal entry and exit point in a cryptocurrency market, it is best to assume that knowing the “perfect” moment in the market is next to impossible.
So, a rather healthy way to invest in cryptocurrencies is the “Dollar Cost Averaging” (DCA). DCA involves investing a fixed amount at regular intervals. This strategy allows investors to get rid of the daunting task of timing markets and creating long-term wealth.
However, exit strategy can also be tricky in DCA style. It requires studying the market trend and understanding the market cycle. Reading technical charts can also help you get out when the time is right. Cryptocurrency investors should watch oversold and overbought regions before making a decision.
Just like with common stocks, it can be useful to automate your cryptocurrency purchases to take advantage of cost averaging.
Most cryptocurrency exchanges, including Coinbase and Binance, allow you to set up recurring purchases.
Cryptocurrency investors ask the platform to buy a fixed amount of their favorite cryptocurrency every month – for example, $100 worth of bitcoin. This means that they get a little less of the change when prices are high, and a little more when prices are low.
It is therefore no longer necessary to try to time the market by buying a currency at the lowest possible price or selling it at the highest price.
To read: What is yield farming?
3. Technical analysis
Technical analysis is a statistical trading strategy. By performing various statistical calculations on historical price data, you attempt to discover market trends. Technical trading is based on the belief that past prices have some effect on what future prices will be.
Arbitrage refers to the strategy whereby a trader buys cryptocurrencies in one market and sells them in another. The difference between the buy price and the sell price is called the “spread”. Due to the difference in liquidity and trading volume, traders may find an opportunity to make profits. To take advantage of this opportunity, you need to open accounts on exchanges that show a big difference between the prices of the crypto you are trading.
5. Play Bitcoin Volatility
The Chicago Mercantile Exchange (CME) offers options on bitcoin futures, opening up a multitude of volatility strategies to traders. The volatility of cryptocurrencies is 5 times greater than that of traditional asset classes. Volatility trades are ideally directionless, which means it is possible to make money whether bitcoin goes up or down.
The long straddle is a directionless volatility strategy using Bitcoin options. To start, you simultaneously buy a call option and a put option at the same strike price and the same expiration date. The Bitcoin straddle is profitable when Bitcoin falls or rises against the strike price by an amount greater than your premium. To exit the trade, you sell the call option and the put option at the same time.
In simple language, a big move up or down is in your favor.
To read: Top 6 of the best “Play To Earn”
6. Create a balanced portfolio
Cryptocurrency trading is still in an evolutionary stage. While several countries welcome cryptocurrency trading, others are still skeptical about it. Central banks around the world are scrambling to find better ways to regulate digital currencies, so trading in cryptocurrencies is often a risky business. However, there are strategies that can help investors avoid extreme volatility.
Building a balanced portfolio that includes various cryptocurrencies such as Bitcoin, Ethereum, and other top-tier cryptocurrencies can help reduce volatility.
Furthermore, investors can also maintain a fixed amount of regular investments in different cryptos. This will systematically increase risk appetite and help your portfolio produce favorable returns over the long term.
7. Use “trading robots”
Trading robots can be useful in certain circumstances, but they are not recommended for beginners looking for crypto investing tips. Often these are just scams in disguise.
If there was a real algorithm that could perfectly synchronize your buy and sell trades, everyone would use it!
To read: What is a “bullrun”?
8. News and Sentiment Analysis
News and sentiment analysis is similar to technical analysis, with one crucial difference: it is based on predicting actions and human reactions, rather than price trends.
With news and sentiment analysis, you try to predict whether demand will fall or rise for a given cryptocurrency by analyzing different sources of information.
By analyzing the sources, you try to understand the social consensus on this currency and predict the actions people will take. The sources of this data are industry and mainstream news outlets, as well as social media posts.
To read: What is PancakeSwap?
Conclusion – How to Execute These Crypto Strategies?
If you don’t yet have a crypto exchange account and are looking to get started in the wonderful decentralized world of cryptocurrencies, we recommend using Binance.
Trading on Binance can be a wonderful experience if you know how to use the platform. Before you start trading, you need to create an account and then make a deposit of funds, after which you can start trading. The good news is that the fees are very low for withdrawals. You can therefore withdraw your amounts without any problem.
Thank you for taking the time to read our article!
Feel free to leave your questions in the comments below!