Cryptocurrency Trading: Easy Strategies for Beginners

There are a number of payment service providers (PSPs), brokerages, and cryptocurrency exchanges that you can use to buy and sell crypto assets. Range trading is all about choosing a range at which you’re comfortable buying and selling over a period of time. Traders should set time aside to familiarize themselves with the upcoming rules and regulations taxing profits earned from crypto.

Unlike other financial markets, the crypto market has no set sessions, so it is essential to pace your trading activity to avoid burnout. Range traders may use technical indicators like the Relative Strength Index (RSI) or the Stochastic Oscillator that displays overbought and oversold zones, typically at 70 and 30. When a price is oversold, the price may reverse and the same if the price is overbought. You’ll find oscillator indicators on most trading platforms, but they aren’t 100% reliable. Most cryptocurrency traders fail because they are in too much of a rush to make money. They do not do the foundational work to prepare for the unpredictability of trading cryptocurrency.

Choose a trading strategy

For identifying users or customers, each exchange has its own set of Know Your Customer (KYC) measures. The KYC process used by exchanges allows financial organizations to limit financial risk while preserving the anonymity of wallet owners. The amount will depend on your personal situation, i.e., your financial capability. That said, the rule of thumb is that you shouldn’t invest what you cannot afford to lose. So, for example, investing the money meant for your mortgage payment is a bad idea because you could lose it all. After you’ve performed demo trading and you’re feeling somewhat confident in your skills, conduct an actual trade with a small amount of money.

• All in all, we recommend experimenting with the different indicators, learning more about them, and determining which one works well for you.
• Telegram signals are trading crypto signals from expert traders to buy or sell a particular cryptocurrency at a specific price or time.
• The use of virtual money (not real crypto) removes the stress of losing funds, allowing traders to hone their skills and test various scenarios.
• In crypto, this strategy is sometimes referred to as BTFD (“buying the f’n dip”).
• Besides, they may employ many other techniques to find inefficiencies in the market.
• These derivatives can be based on other derivatives’ value and forming multiple tiers – a house of cards if you will.

“Knowing what the blockchain does, its network size, governance, and protocols will allow you to assess the overall condition of your prospective investment,” Greenberg says. “So, be prepared to learn a lot and follow news on your selected assets’ blockchain updates.” No matter the market, a day trader should have a thorough understanding of crypto as well as trading principles. If you have impeccable risk management skills and nerves of steel, here’s what you need to know to get started day trading crypto. Once you’ve found a trading strategy that works for you, start looking for an exchange to trade on. Consider factors like ease-of-use, on and off-ramp options, fees, reputation, state of financial health, and the team when picking a crypto exchange.

Securely store your crypto

Cryptocurrency day trading can be quite lucrative, especially for short-term traders. If you have the right cryptocurrency day trading strategy, you should have no problem. Remember about technical and fundamental analysis, – with anemphasis on technical analysis, since historical price analysis can tell a lot about when to enter and exit a position. Once you’re set up on a platform, it’s time to pick what you’re interested in investing in.

• Some small-cap coins with good trading volume include SiaCoin (SIA), Basic Attention Token (BAT) and Fusion (FSN).
• Become familiar with a handful of cryptos with good liquidity and map out zones on the charts where the price may reverse or take off with momentum.
• Utilizing higher time-frames to inform shorter time-frame moves or backtesting their trading strategies can help overcome the inherently myopic nature of day trading.
• The idea here is that your asset will increase in value over time without you having to take any action.

It is best to have a large bankroll to take advantage of this extremely short-term day trading crypto strategy. Although the ROI of each trade is very small, staking a large amount means the scalp comes back with a substantial amount of money (0.5% of $100,000 is $500, enough for a luxury car payment). Trading frequently — sometimes making trades per minute — also means those small gains add up.

Scalping Crypto Strategy

When entering a crypto trade, you must already have an escape plan, so to speak. Exit strategies are plotted based on the support and resistance points of each crypto asset and its transactional history. Many platforms offer unique stop order features, with scalable limitations. This helps to prevent excessive losses when the market trend suddenly flips the other way or when a fall happens too quickly due to an impactful financial event. Volatility is most prevalent in micro coins, or coins with small market caps compared to other cryptos. Right now, any coin with a market cap lower than $1 billion is considered small cap.

• Instead, individuals can conduct cryptocurrency transactions in various locations globally.
• Having a tool that gives you the latest update in trading, as well as for specific coins and their operators, provides you an edge when buying or selling, especially in large chunks.
• On the other hand, take profit is used to make sure that you make a profit whenever the market reaches the given conditions.
• Be careful not to deviate from the predefined rules you establish for yourself to determine which approaches are producing the desired results and which are not.
• You could also try to “time the market,” and wait for a significant dip, assuming you believe one is coming.

It could be based on these broad strategies or something completely new. FA is the art of a trader using both economic and financial factors affecting a given asset to determine an asset’s value. Through FA, you will be able to know whether that asset is either overvalued or undervalued at the current valuation. If you can figure out that question, you can then decide whether or not to invest, when, and for how long a period you would look to keep the investment.

Which crypto coins are the best for day trading?

Read on and learn the best strategies and tools to help you with your crypto trading journey. As such, day traders aim to capitalize on intraday price movements, minimum deposit i.e., price moves that happen within one trading day. Day traders trade on timeframes higher than that scalpers but still close their positions within a day.

• These indicators help identify potential entry and exit points by signalling overbought or oversold conditions or indicating market reversals.
• This strategy is typically used in long-term investment portfolios, where the idea is simply to get in the market without any regard for timing.
• Day trading cryptocurrencies can be a good strategy for a volatile trending market.
• A trading strategy is simply a plan that you will follow when executing your trades.

Crypto day traders should look carefully at an asset’s trading volume to gauge whether it can be sold quickly and at a higher price level than purchased. Understanding and accounting for volatility is a day trader’s best friend. The volatility of a market refers to – the unpredictability of crypto price movements. Factors that affect the volatility of markets include the news cycle, economic data, and research reports. In the crypto markets, the same factors have a dramatic impact (or none at all) on certain crypto assets.

Pros and cons of day trading cryptocurrency

And one of the best ways to learn this is through price action; the technique that the majority of professional traders use. Once you have learned how to read the charts, you will know why the market is going up, down or sideways and then will you recognize which strategy to put into play in that direction. The most significant benefit of signals is that they provide valuable trading data to their members, allowing investors to more effectively manage their assets. If you’re new to trading you are probably wondering how it is that traders can make sense of market conditions and actually find reliable ways to make profits. You can invest in Bitcoin directly by using one of the major cryptocurrency exchanges, such as Coinbase or Binance.

• They can identify potential buying or selling opportunities, determine entry and exit points for trades, set realistic profit targets, and manage risk effectively.
• When you exit the trade you must of course give back that $900, but any profits you get to keep.
• Scalping may be a good option if you are comfortable spending the entire day seated in front of your trading chart and entering and exiting multiple trades at regular intervals.
• This way, you’ll be able to sit atop the crypto trading markets with the least amount of risk.
• After you’ve performed demo trading and you’re feeling somewhat confident in your skills, conduct an actual trade with a small amount of money.

The profits from swing trading cryptocurrencies can be significant, but you may need a larger stop loss than day trading cryptos. The practice of buying cryptocurrencies from one market and selling them in another market to profit from price differences is known as arbitrage trading. The trader makes money by taking advantage of the low price correlation among crypto assets offered on two or more exchanges. Five of the most popular cryptocurrency trading methods include scalping, day trading, swing trading, buy and hold, and arbitrage. And while we’re covering what these crypto trading strategies mean and how they work, we’re not offering you specific advice on how to use them.

Playing Bitcoin Volatility

Usually, they break before reaching the extreme of this area, but as they approach it each time the price tests the trendlines the chance of a breakout becomes higher. Historical price action, psychological levels, trendlines, Moving Averages, Fibonacci retracement, and extension levels, to name common ones. We won’t be getting into all of these things here, so we’ll keep it simple and we’ll talk about channels and wedges. Various metrics can form areas of support and resistance, and these act as places where price action tends to get stuck or turn around. Support refers to when one of these areas is below the current price, and resistance is the term when it is above.

Technical analysis is a trading discipline predicated upon the idea that a trader could predict an asset’s future price movements, given its historical price action. TA uses a host of technical indicators to achieve this, including trade volume, moving averages, trend lines, candlesticks, chart patterns, and more. At the end of a technical analysis, a trader should have identified trading opportunities and a potential entry point.

Long-term Holding (The HODL Method)

Take the recent Bitcoin bottom for example – the market printed one of these bullish divergences right at the lows. The RSI divergence strategy is a more technical strategy but can be used to great effect for timing trend reversals before they happen. This is when the price starts moving in the opposite direction, from a downtrend to an uptrend or vice versa.

• With this strategy, you can end up losing everything or making huge profits.
• Most of the trading strategies we will mention also work in financial markets like forex, stocks, ETFs, etc.
• Purchasing goods and services with cryptocurrencies is done online and does not require revealing personal information.
• Overbought means that buyers have satisfied their needs and the stock is likely to sell; oversold means the opposite.

If we look at the circled area (white) more closely on the 30-minute chart, we can see there was another divergence that showed momentum was changing back to bullish. HTX’s new mission is to build a metaverse free port with a vision to achieve financial freedom for 8 billion people on earth. HTX is embarking on a growth strategy of “global expansion, thriving ecosystem, wealth effect, and security and compliance.” “H” stands for Huobi, “T” represents TRON with a commitment to being all in TRON, and “X” stands for the exchange.

Bitcoin is New Gold!

You also want to know how much you are gaining or losing from a particular trade or investment. To better understand leverage, assume you enter a trade with 5x leverage. This means that your trade’s position size is 5 times the capital you staked from your own pocket (i.e., margin).

• Although it is very similar to the previous method, it just simplifies everything and makes it less risky.
• Day trading, scalping, and high-frequency trading are examples of short-term strategies that require active engagement with the market on a daily basis.
• As a result, it’s usually going to make your life simpler to go for a more passive strategy over time.
• A third option is to invest in a Bitcoin-focused fund such as an exchange-traded fund (ETF).

The RSI is widely recognized and utilized by retail traders for its popularity in capturing trends and market sentiment. Variations in trading success arise from a trader’s capacity to interpret the tool and deduce appropriate decisions. A trading bot is an automated software tool investors use to buy and sell financial instruments at a preconfigured time or when predefined conditions are met to maximize profits. Crypto trading bots are designed to increase profits and reduce losses and risk. Since beginner traders are concerned about the financial risks involved with crypto investments, trend trading is suitable for them.