Welcome to the volatile world of cryptocurrency trading, where there are always fresh chances. It might be difficult to know where to start because there are so many possibilities and factors to take into account. Don’t worry, dear merchant!
The top five tactics that will make it easier for you to navigate the cryptocurrency market have been prepared by us. These tactics provide you the tools you need to be successful in the quick-paced world of crypto trading, from spotting market patterns to mastering risk management.
1. Dollar-Cost Averaging (DCA)
The first cryptocurrency trading approach on our list, dollar-cost averaging (DCA), uses a similar principle to traditional assets like gold or real estate. It entails investing a certain sum into a cryptocurrency asset after a predetermined interval, holding it, and then hoping to sell it for more money later. Purchasing $100 worth of ETH each Saturday, as an illustration.
DCA is a long-term asset-gathering strategy with a decent probability of paying off in the future, in contrast to the other four cryptocurrency trading strategies on our list that depend on rapid deals. Just remember to think about which cryptocurrency you’re going to purchase, how much you’re going to invest, and how frequently.
2. Range Trading
Range trading is all about spotting, comprehending, and capitalizing on market patterns. While there are innumerable factors that might affect a single trader’s decision-making, the market as a whole tends to follow predictable patterns.
Here’s what initially made this tactic easier for us to comprehend. Consider the fictitious cryptocurrency asset A. Around $40 is the price of A when traders start to close out their positions, which drives the price of A back down. However, as it falls below the $35 threshold, traders start to repurchase it, which results in a price increase.
3. HFT (High-Frequency Trading)
High-frequency trading might be compared to a faster variant of scalping. It trades cryptocurrency assets in a matter of milliseconds using robust algorithms and automation tools.
These trading algorithms are made to profit from minute market changes that are generally too quick for a human trader to take advantage of. Despite having the lowest per-transaction returns, HFT is actually fairly profitable over the long term due to its incredibly large trade volume.
As you might expect, high-end hardware and software are needed to conduct this kind of precise and quick crypto trading. Unfortunately, the average individual trader cannot afford these. Having said that, there are rumors that cryptocurrency exchanges will soon include HFT into their systems.
4. Day Trading
Opening and closing positions within a single day in order to take advantage of minute fluctuations in the market is known as day trading. Therefore, you wait for a price increase and sell a cryptocurrency asset right away rather than buying it and waiting for a long time for its price to increase. Every time you see a new chance, repeat this procedure several times, and presto—profit.
Day trading can swiftly deplete your capital if done incorrectly. Using technical analysis of price action, volumes, chart patterns, and other indicators, we have found that the secret to success in cryptocurrency day trading is to overcome the market’s volatility.
One of the quickest-acting crypto trading tactics you can use is scaling. It entails immediately purchasing and selling cryptoassets in order to profit from the minuscule short-term price movement (usually in under five minutes). Scalping is all about purchasing after little falls and selling as soon as the candlestick turns green once more, as opposed to waiting for significant price moves.
The risk is somewhat low because you are making the trades so quickly. However, this also implies that each trade’s benefit would probably be modest as well. What we advise doing to increase your scalping profits is as follows:
- If at all possible, start with a sizable investment (or margin trade) to ensure that even modest gains of 1% or less result in respectable returns;
- Find a trading platform like MEXC that has low commissions and lots of liquidity;
- the ability to comprehend and put into practice well-known scalping techniques like the exponential moving average, the stochastic oscillator, or William fractals;
- Use trading bots to start and close deals automatically based on preset trends and indicators.
Each of the five tactics on our list is top-notch and has a track record of producing large returns and little losses when used appropriately. Not all of these, nevertheless, are appropriate for every trader.
For instance, day trading and range trading suit methodical traders who enjoy using analysis tools to predict market movement, but scalping and high-frequency trading are for traders who prefer speedy turnarounds. If none of this frantic trading appeals to you, you can use the dollar-cost average technique to invest for the long run.
Whatever tactic you decide on, just be sure to comprehend it and use it correctly.
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