Best strategies for cryptocurrency trading you should know
In recent times Cryptocurrency trading has become a very popular venture around the world.
Crypto trading though popular, is also associated with some risks that could lead to total loss of investment capital. Thus having a well-developed and proven strategy for trading cryptocurrencies is necessary for successful trades in the crypto market.
This article introduces the 3 best strategies for trading cryptocurrency. Each of these strategies is proven to be successful and also has very unique risk management and profit balance.
The strategies presented here are dependent on your risk tolerance and final goals of trading, you can choose the strategy that fits your trading objectives the most.
Making profits in crypto trading involves getting the right predictions about price fluctuations in the market.
The 3 best strategies for trading cryptocurrency
These are three of the most popular crypto trading strategies in the market:
- Smart Trading
- Automated Trading
The smart trading strategy is the most popular amongst the best strategies for trading cryptocurrency and is highly recommended. It involves mixing different smart orders, such as Stop-Limit and Trailing Stop-Loss.
This cryptocurrency trading strategy offers traders better risk and returns control, which helps traders to better plan their positions. There are different types of combinations a trader can use. One of the easiest is combining take profit and stop-loss.
A trader using this strategy is only required to place 2 orders. The stop-loss is used to limit the losses if something goes wrong in the market. On the other hand, take profit is used to make sure that one gets the profits whenever the market reaches aimed conditions.
It is also possible to combine multiple take profits with stop-loss, to take your strategy to another level. Using 2 or more take profits enables a trader to spread the risk of trading which will maximize the trader’s chances to make good profits. While it is very similar to the previous method, it simply makes everything easier and less risky.
To test out which method works best for you, you can use the free trading mode and see how different methods work.
For a trader who desires consistent and regular daily returns from the cryptocurrency trading market, automated trading is recommended. There are numerous crypto trading robots available in the market, such as the Bitsgap trading bot.
These trading robots can analyze the market round the clock and look for the best trading opportunities even when you are asleep. You can also enable smart trade orders, which will further increase its effectiveness.
Automated trading is amongst the 3 best strategies for trading cryptocurrency and is a very popular strategy used by successful traders in the market as it helps traders to invest easily in the cryptocurrency market.
With this strategy, you can go on with your other daily activities while the robot makes profits for you.
A lot of crypto traders use the HODL strategy. With this strategy, both risks and possibilities are unlimited. You can end up losing everything or winning huge returns with this strategy.
In the HODL strategy, a trader simply buys digital currencies without setting the take profit or stop-loss, and holds on to it for some time in anticipation of a price increase before trading. This trading strategy can either make or mar a trader.
The price may either increase above the purchase price, thus making a profit or it may drop drastically leading to a major loss.
Let’s say that you buy BTC, and the price of it increases 10 or 15 percent on the second or third day after buying.
However, most traders using this strategy invest when the price is very low and take their profits once the price increases appreciably.
It is advised to invest only the amount of money that you can afford to lose when using the HODL strategy.
This strategy helps to avoid the volatility of the market and survive the short-term price movements in crypto trading, although it is risky.
Which of the 3 best strategies for trading cryptocurrency should you use?
Using all three strategies gives the best outcome, but only for a trader with enough experience. Diversification is a very important step towards success in any market, and crypto trading is no exception.
For a trader, allocating the most funds for the strategies that have the lowest risks is the best recommended.