Do you want to level up your crypto trading strategies? Or maybe you are wondering if this is the time to enter markets for day trading?
If you are a crypto trading enthusiast that feels lost in the world of complex trading strategies and uncertain markets, this article will take away any confusion. The world of crypto trading might seem foreign and complicated in the beginning. Still, after understanding the different trading strategies and the tools at hand, it is not that hard after all.
In this post, I set out to discover the top crypto trading strategies which you can quickly learn and apply to your trading on Multi HODL and beyond.
1. Scalping
When appropriately executed, Scalping can be the best strategy that you have adopted in your lifetime. Scalping is all about making small trades with a minimal time duration while taking in small profits.
The time duration has to be small, ideally less than an hour at max. The biggest asset for scalpers is volume; the number of trades is more important than the profit in one transaction. Scalpers will never aim for big profits and cannot afford to wait for the market to reverse to reduce losses.
On Multi HODL, you are free to open up multiple positions at the same time for as long, or as short as you want.
Scalping should never be done during uncertain times, and the best market for a scalper is a calm market with limited volatility.
2. Reverse trading
Reverse trading is considered one of the advanced trading strategies and is based on the reversal of the general trend in the market. To understand this in detail, the strategy is all about finding the exact moment when a trend is about to be reversed. If a coin has been bullish for some time, a reverse trader will look for the time when it will reverse the trend and bank on it.
Another interesting version of reverse trading is trading by predicting the day’s high/low and making money on that prediction. The risk involved in the strategy is the general risk of making the wrong prediction of timing the reversal.
3. Momentum trading
(Source: Exchange Trade Volume by blockchain.com)
One of the most straightforward strategies in the list, momentum trading is all about understanding the momentum of the market/coin and riding the wave.
This is also considered as one of the riskiest and the most challenging strategies to master as predictions can go both ways. The major component of this strategy is volume. The momentum is defined in the volumes that a trend is generating.
Traders ride the wave till the moment the volumes remain above a particular level and then exit. The hard part is of judging the right moment to exit the market and analyzing the volumes changes based on various indicators.
4. Fading trading
Fading is the strategy of betting against the trend in the market. It is also one of the riskiest strategies in crypto as making the wrong predictions can result in huge losses.
Contrary to that, making the right move will result in huge profits, and this strategy is about betting on a few trades to make significant profits.
The best time to execute this strategy is when there is a lot of volatility in the market. This usually happens before significant news or some countries talking about implementing or banning the use of cryptocurrency.
5. Day Trading Using Volatility
Volatility in cryptocurrencies gives birth to a lot of opportunities for traders. Volatility in the market exists for a reason, and during this time, the direction of the market can go to any side. One of the most effective strategies in these times is cashing in on small trades that happen before a significant change in the market.
A lot of small trades in this time results in big profits, and this strategy does not include predicting the direction of the market after the volatility has settled down.
6. Buy Dips and Hold
The times when the price of Bitcoin and other cryptocurrencies are down, it might seem time to remain away from the market, but that is one of the best times to enter a market. Just like the trend is in stocks, the cryptocurrency market overall is strong and regains prices after significant falls due to news.
The cryptocurrency market is one of the most volatile ones and can change directions quickly. There have been hundreds of instances when the price of bitcoin has fallen significantly and recovered after a specific time. This strategy is also one of the safest ones but involves time and limited profits relatively.
7. Range trading
Range trading is heavily dependent on the concept of support and resistance used in stocks and forex trading. The first thing to learn to master this strategy is candlesticks charts. These charts have been used for centuries to make models of support and resistance, which are basically two price ranges which are the predictions of the volatility of a coin in a range.
You are supposed to buy the currency at the support levels and sell it when it nears the resistance levels. The idea behind the strategy is that the price will remain in the range and if it increases beyond a particular level it will be considered as breaking the limits which happen less frequently and is the only risk involved in this strategy.
8. High-frequency Trading (HFT) or Algorithmic Trading
High-frequency trading is the most complex strategy in this list, but it is also one of the most profitable for many traders all over the world. Algorithmic trading is all about automating all the steps of a strategy and automating your strategies without having to do it manually.
HFT is making a lot of trades in seconds, and most HFT consists of making trades in a few milliseconds. Now, that is not possible by humans, and you can create your own rules which will be executed on auto-pilot.
It involves a lot of back-testing and repeating small trades after raking in small profits and leveraging on volumes of trades. It’s important to know that it’s not that straightforward to find a profitable crypto trading algorithm that you can use.
That’s why so many crypto trader prefer to use Multi HODL. It has all the wonderful, automated benefits of algorithmic trading, but with a more hands on, user friendly experience to help one profit from market volatility.
9. Golden Cross and Death Cross Trading
(Source: TradingView via Investopedia Death Cross definition)
The golden cross and death cross is quite an exciting strategy, and you have to understand both these terms to execute it properly. The golden cross is basically defined as the time when a short term average of a particular cryptocurrency crosses the long term average. The short term average is generally defined as the 50 days average, and the long term is defined as the 200-day average.
The death cross, on the other hand, is the exact opposite of the golden cross and is defined as the moment when the short term average goes below the long term average.
Confirming the occurrence of these trends is done by analyzing the change in the trading volume. Some traders also use other indicators like RSI and the MACD, but volume is considered one of the best indicators.
The strategy revolves around buying at the golden cross and selling at the death cross.
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