Expert crypto traders use a variety of strategies to make profits so if you want to become one, you should adopt whichever strategy works for you. This guide will help you by listing down some easy crypto trading strategies new traders can grasp. When starting your journey in crypto trading, it is vital to fully learn these trading strategies so you can use them wisely and get the best results you desire.
Difference between trading and investing
Before you start buying and selling crypto, you should know first the difference between crypto trading and investing. These two terms are often used interchangeably but they have different meanings.
Trading involves buying and selling assets at short intervals or entering and exiting multiple positions within the day to generate small profits. Investing, on the other hand, involves buying and holding assets for a long time until their price appreciates to make huge profits.
The only similarity between the two is their end goal which is to gain profit from your activities.
Why should you use a trading plan?
The volatility of the crypto market makes way for lucrative trading and investing, but for you to gain large profit, you need to have a concrete trading plan or strategy that can guide you in making informed decisions. Additionally, this can reduce your risk of losing assets.
Another reason why you need a trading plan is that it allows you to make rational and sound decisions regardless of the market situation. One of the biggest hurdles new traders face is the intrusion of their feelings and emotions when making trading decisions. Having a trading strategy can help you avoid it and make a more concrete decision by giving you a guide that you can follow. In other words, you no longer have to listen to your fear and doubt by sticking to the trading strategy that you follow.
Easy crypto trading strategies for beginners
Here are some of the easy crypto trading strategies that new traders can quickly grasp. Check them out below:
When using the crypto day trading strategy, you can take full power of the crypto market’s volatility. Here, you will make multiple trades during the day by buying low and selling high. It is a type of short term trading that can be done within just a few minutes to hours.
Day trading may give you little gains but it can grow to large amounts by the end of the day. While it may be hard to do this manually, you can consider using trading bots that automatically trade for you.
Like day traders, swing traders take advantage of the crypto market’s volatility and make multiple trades when the price moves. But instead of entering multiple positions within the day, they wait for a slightly longer time that can range from a few days to weeks.
If you plan on being a swing trader, you should focus mostly on the daily and weekly charts and ignore the shorter timeframes. Look at the price history and short trends rather than staying updated on the price change every hour.
This trading strategy is fit for those with a small amount of capital to invest as the crypto market’s volatility can experience 10% to 20% growth within just one trade cycle.
The Relative Strength Index (RSI) trading uses the RSI indicator to measure the speed and change of price shifts on the market. You can access the RSI on the crypto trading platforms you use.
RSI indicator is used when measuring and evaluating the recent price changes to determine whether a certain asset is overbought or oversold. This tool is important to spot a general trend and look for failure swings.
Traders often set the RSI between the 30-70 range and if it drops to 30, the coin is oversold meaning its price will recover shortly after which means it is a great time to buy. But if the RSI is over 70, it indicates the asset is overbought which can lead to a sell-off. The RSI indicator is not always accurate and perfect but it can give you a more specific overview of the current market situation.
Position trading (Buy and Hold)
Position trading, also known as the ‘buy and hold’ strategy involves investing in your assets for a long time. Here, you will buy an asset when the price is low and sell when the price is high just like any other trading strategy. The only difference is you will be holding your assets for a long time which can last for a year to a decade or longer despite the fluctuations.
This is one of the simplest trading strategies out there as its execution requires only minimal knowledge about the crypto market. All you need to do is to buy coins and hold onto them for a certain period. Checking its price regularly is not required and is not advised since the fluctuations can trick you to an early sale.
Benefits of crypto trading
Take a look at some of the benefits of crypto trading below:
Compared to the stock market that has specific times for closing and opening, crypto markets have no closing time which means you can trade 24/7. You can even use trading bots to let your trades run all the time without your direct supervision.
High market volatility
The volatility of the crypto market can be a positive aspect of crypto trading since the constant rise and fall of prices allow traders to make multiple trades and profits.
Private and anonymous trading
If you want to trade your assets privately, crypto trading is the perfect investment for you. With this, you can have access to decentralized exchanges where you can trade without the need to make your identity shown online.
Diversity of assets
Despite being popularized just this late 20th century, the crypto market has evolved so much that traders can now have access to countless crypto trading platforms and currencies online. This means that traders can choose from a wide range of cryptocurrencies and create trading pairs that can give them large potential profits.