Here we will present a strategy for trading bitcoin which is the most actively traded market at the moment. It is more active than stock trading, oil trading, gold trading and any other market at this point, the reason why people think this will continue is the strength of blockchain technology.

 

Today we will highlight the Bitcoin trading strategy, and in fact, it works for all digital currencies, not just Bitcoin.

 

Crypto Trading Strategies You Need To Know

In the following lines, we will highlight Crypto Trading Strategies:

 

Day trading

Day trading may be the most popular active trading strategy. It is a common misconception to think that all active traders are day traders, but this is not true.

 

Day trading involves entering and exiting trades on the same day, so day traders aim to profit from intra-day price movements, i.e. price movements that occur within a single trading day.

 

The term "day trading" has its origins in traditional markets where trading is only open during certain hours of the day. Thus, in these markets, day traders do not stay in positions overnight, when trading is off.

 

But most cryptocurrency exchanges are open 24 hours a day, all year round, so day trading is used in a slightly different context when it comes to the cryptocurrency markets.

 

It usually refers to a short-term trading style where traders enter and exit trades within a time period of 24 hours or less.

 

Day traders usually use price action and technical analysis to come up with trading ideas. Additionally, they may use many other methods to come up with inefficiencies in the market.

 

Range trading

A long-term trading strategy that involves holding trades for periods longer than one day, but usually no longer than a few weeks or a month.

 

In some ways, swing trading falls between day trading and trend trading.

 

Swing traders generally try to take advantage of volatility waves that take several days or weeks to occur.

 

Swing traders may use a combination of technical and fundamental factors to arrive at their trading ideas.

 

Of course, fundamental changes may take longer to occur, and this is where fundamental analysis comes in.

 

However, chart patterns and technical indicators can also play a pivotal role in a swing trading strategy.

 

Swing trading is perhaps the most suitable active trading strategy for beginners. An important advantage of swing trading compared to day trading is that swing trades take time and however, are short so that you can track the trade effortlessly.

 

High-Frequency Trading (HFT)

Trend trading, sometimes referred to as position trading, is a strategy that involves holding positions for longer periods of time, usually at least a few months.

 

As the name indicates, trend traders try to take advantage of trending trends, traders may enter a buy position during an uptrend or a sell trade during a downtrend.

 

Trend traders usually use fundamental analysis, but this may not always be the case. However, fundamental analysis deals with events that may take a long time to unfold – and these are the moves trend traders try to take advantage of.

 

The trend trading strategy is based on the assumption that the underlying asset will continue to move in the direction of the trend. However, traders should keep in mind the possibility of a trend reversal.

 

Hence, they may also incorporate moving averages, trend lines, and other technical indicators into their strategy to try to increase their success rate and reduce financial risk.

 

Trend trading may be ideal for novice traders if they exercise due diligence and manage risks properly.

 

Passive investment strategies

Passive investment strategies offer a less interventionist approach, as portfolio management requires less time and attention.

 

Although there are differences between trading and investing strategies, trading basically means buying and selling assets in the hope of making a profit.

 

Investing in bitcoin indices

Investing in indexes usually means buying ETFs and indices in the traditional markets.

 

But this type of product is also available in the cryptocurrency markets, on centralized cryptocurrency exchanges, and within the decentralized finance movement.

 

The idea behind the cryptocurrency index is to take a basket of digital assets and create a token that tracks the aggregate performance of these assets.

 

This basket may consist of coins from a similar sector, such as privacy coins or service tokens. It could be something completely different, provided it is subject to a reliable price update.

 

As you can imagine, most of these tokens are highly dependent on blockchain intermediaries.

 

Bitcoin trading strategy

There may be a high risk, when trading bitcoin in day trading, but several methods can be used to improve this strategy:

• The type of your trading, meaning that you do not focus on Bitcoin only, but try to combine Bitcoin, Ripple, Litecoin, Ethereum and other cryptocurrencies.
• This is in order to reduce the daily risks associated with a particular currency.
• Minimizing trading costs, opening multiple positions every day affects your daily investment return.
• To reduce the cost of trading, choose a trustworthy exchange with low fees.
• Use a stop loss. 
• Place stop-loss orders on each trade. Start with a 2:1 loss-to-profit ratio.