Crypto trading strategies to follow
With cryptocurrencies gaining momentum all around the world, things associated with them are now seen in a different light. People are now becoming aware of the possibilities that come with it. Traditionally, cryptocurrencies were looked upon as something risky and ‘cryptic’ in the literal sense. But that view is changing now. More and more people are looking at it from different perspectives.
Trading being one of the major reasons for the usage of cryptocurrencies, here are a few things one may want to take into account before taking the leap.
Technical Analysis
This involves the calculative indicators and patterns to study and predict in what direction could the prices possibly move. Some indicators are generated with the help of computer programs, while some others are simply humans deciphering the pattern charts.
One major technical indicator is the relative strength index (RSI). On a chart, this is a straight line that appears beneath with a scale from 0 to 100. If the RSI value is nearing 100, it indicates that the particular entity is being overbought and might soon lose its value. If the RSI is nearing 0, it means that the entity is oversold and the values might increase.
Sentiment Analysis
This factor is less likely to be considered while trading for the short term but helps in the long term. News related to a particular currency and the sentiment around it well affects the movement of the value. There are websites that track the sentiment of the popular currencies based on Twitter trends. More positive tweets about a currency, more the bullish sentiment while negative tweets fuel the bear sentiment.
Scalping
This is a strategy where one profits from small movements in the value over a short period. This strategy works well with coins with good liquidity and volume.
Scalpers often invest using margins or futures contracts to increase their gains. This increases the possibility of losses too, but if minimized can be managed well. This strategy utilizes volume heat maps, order book analysis, or other indicators to gauge the liquidity and volume of a currency.
Range Trading
Here, it is assumed that the prices tend to move only between a certain range. Using this strategy involves studying candlestick charts to analyze the support and resistance points.
Here traders usually buy when the value reaches the predicted support level and is sold when it reaches the resistance level. Pivot points are an example of range-bound trading. Calculating pivot points allow investors to have an idea of the possible price reversals in the momentum.
Bot Trading
Bot trading also called high-frequency trading (HFT), takes the help of algorithms and programmed trading bots to execute frequent and large numbers trades. This method, however, requires knowledge of advanced trading strategies and programming.
Although the bots carry out the trade themselves, high-frequency traders don’t entirely rely on them. Bots are majorly used to come up with a strategy, to develop an appropriate program for the execution of a strategy, and to monitor the executed strategy.
Keynote- Using these strategies doesn’t assure huge profits, but sure minimizes the losses. Hope these 5 crypto trading strategies benefit you.
Happy Trading.