Cryptocurrency trading strategies that every trader should know
With a number of cryptocurrencies entering the market today, interest in trading these assets remains at an all-time high. Find the trading strategy that suits you by browsing our list below.
Cryptocurrency Trading: What You Need to Know
Cryptocurrencies are traded on decentralized markets, meaning they are not issued or backed by a central authority such as a government, but rather managed across a network of computers (known as a blockchain). Because of the decentralized nature of cryptocurrencies, they are free from many of the political and economic concerns that affect traditional currencies.
However, this does not mean that cryptocurrencies are free from external factors. Conversely, cryptocurrencies are unpredictable and affected by factors such as supply and demand, media presence, integration of payment systems into e-commerce and major events.
Trading strategies:
Moving Average Crossovers
Trading moving average crossovers requires an understanding of moving average indicators and their crossover strategies. A moving average is a lagging technical indicator that sums the price points of a financial instrument over a specific period of time and divides them by a number of data points to give you a single trend line.
This trend line allows you to determine the direction of the current trend, while minimizing the effect of random price spikes. It also enables you to examine support and resistance levels by analyzing previous price movements.
Relative Strength Index (RSI)
The Relative Strength Index is a technical indicator used to identify momentum, overbought and oversold conditions in the market. It can also be used to highlight hidden signals of deviation and deviation in financial markets. This type of trading is also known as trend trading.
Event-driven trading
A strong media presence for a particular coin or cryptocurrency exchange can influence the markets. This strategy focuses solely on taking advantage of these “events.” It is a popular trading strategy for those who are new to trading.
News coverage of current events can affect the prices of many things such as currency pairs, stocks, indices and commodities – not just cryptocurrencies. This effect is not just speculation – many experienced traders will take advantage of this.
Scalping
Scalping is the practice of opening positions in accordance with a particular trend, often entering and exiting a market several times in a short period as it develops. Individual trades are held for a few seconds – minutes at most – so it is one of the most short-term strategies.
This strategy works very well for active day traders. Scalping focuses on subtle, quantity-driven price changes. Once the trade becomes profitable, you will exit the trade.
DCA (Dollar Cost Averaging)
If you are looking for a cryptocurrency trading strategy that does not include indicators, Dollar Cost Averaging (DCA) may interest you. DCA is a popular strategy for both novice and expert traders alike.
Instead of investing all your money in a particular asset at once, you divide your investments into smaller amounts. These amounts are then spread over a pre-determined period of time and invested regularly at a certain time and day of the week – and only on that day and time.
