If you are keen to engage in crypto trading, you will obviously be doing it with a view to make profits. So, how can you be sure your trades will be profitable? Is there any perfect strategy that can guarantee successful trades every time? While there is no single foolproof strategy that will work for you each time, there are some useful guidelines and trading tips that you can follow to know when the right time to enter or exit trades are. Here are the top trading strategies that have stood the test of time:
- Scalping: This can bring you good returns when executed properly. The idea is to make smaller traders with a minimum time-duration and fetch small profits. So, trades are made in less than one hour but the biggest advantage lies in the volume of trades. This strategy works well when the market is calm and volatility is limited.
- Momentum trading: This is an easy-to-adopt straightforward strategy where you identify a coin’s momentum and ride the wave accordingly. This may be risky and challenging because the predictions can boomerang. But the biggest factor here is the volume. Momentum is defined by volumes that a trend generates. So, traders will ride a wave for as long as the momentum stays above a certain level after which they exit.
- Reverse trading: This focuses on trend reversals in the market. So, the trick is to find the right moment when a particular trend is going to change. For instance, a reverse trader will look for the moment when a coin that has been bullish until now is going to change; he will then bank on that change.
- Fading trading: This involves betting against a trend. It is a rather risky strategy because an incorrect prediction will translate into big losses. However, a right prediction will give you incredible profits as well. So, this strategy is best suited when the market is very volatile, particularly after some breaking news in the crypto world.
- Day Trading: This strategy is good for advanced traders who can predict the direction of price movements. The idea is to make money through trades conducted within a span of 24 hours. Many small day trades can accumulate to give you large profits.
- Buy Dips: When prices of cryptos are down it is actually the right time to get into the market. Similar to stock markets, the crypto market is also likely to bounce back after a decline in prices. It is known for changing directions fast and Bitcoin prices over time will tell you that this is quite a common occurrence.
- Range trading: It depends on support and resistance concepts. You must be able to analyze candlestick charts. The two concepts refer to two price ranges or predictions of a coin’s volatility within a range. So, you buy a currency at support level and then sell it when it is at resistance level.
- High-frequency Trading: This is complex but very profitable. Algorithmic trading implies automating all trading strategy steps so that there is no manual work involved. You can make many trades in a matter of seconds. It involves back-testing and repeating the small trades once you have made minor profits through leveraging.
- Golden Cross & Death Cross Trading: Golden cross refers to the time when short MA crosses the long-term MA (Moving Average). The short-term is the 50 days average while long-term is 200 days average. Death cross is just the opposite when the short-term MA goes below long-term MA.