7 Cryptocurrency Strategies You Must Try in 2023
In the volatile world of cryptocurrencies, you need nerves of steel, a winning game plan and crypto strategies if you want to win.
You will find these nerves of steel and the best crypto strategies through research, research and more research. Let's take a look at the X factor in this complex and profitable world, that is, the different crypto strategies that you will use during your journey.
There are a large number of trading strategies and different platforms, some of the most popular day trading strategies are range trading, scalping and arbitrage.
1. Chain trade
Market participants also rely on experienced analysts who communicate support and resistance levels on a daily basis.
"Resistance" refers to the point where the price can rise, and therefore a resistance level is a price above the current price.
By contrast, "support" is a level below which the price of a cryptocurrency is not expected to fall, and so a support level is always below its current price.
2. Technical análisis
Technical analysis is a statistical trading strategy. By performing various statistical calculations on historical price data, it tries to detect market trends. Technical trading is based on the belief that past prices have some effect on future prices.
Arbitrage refers to the strategy where a trader buys cryptocurrencies in one market and sells them in another. The difference between the buy price and the sell price is called the spread. Due to the difference in liquidity and trading volume, traders can find the opportunity to make money. To take advantage of this opportunity, you need to open accounts on exchanges that show a big difference between the prices of the cryptocurrencies you trade.
4. Average Cost in Dollars
When it comes to finding the ideal entry and exit in a cryptocurrency market, it's best to assume that knowing the "perfect" time in the market is nearly impossible.
Therefore, a fairly healthy way to invest in cryptocurrencies is "dollar cost averaging" (DCA). At DCA, a fixed amount is invested at regular intervals. This strategy allows investors to get rid of the daunting task of timing the markets and building wealth over the long term.
However, an exit strategy can also be a difficult DCA style. It requires studying the market trend and understanding the market cycle. Reading technical charts can also help you get out when the time is right. Cryptocurrency investors should look at oversold and overbought regions before making a decision.
As with common stocks, it can be useful to automate your cryptocurrency purchases to take advantage of cost averaging.
Most cryptocurrency exchanges, including Coinbase and Binance, allow you to set up recurring purchases.
Cryptocurrency investors ask the platform to buy a fixed amount of their favorite cryptocurrency every month, e.g. $100 worth of bitcoin. This means they get a little less in return if prices are high and a little more if prices are low.
Therefore, there is no longer any need to try to time the market by buying a coin at the lowest possible price or selling it at the highest price.
5. Use “trading robots”
Trading robots can be useful in certain circumstances, but they are not recommended for beginners looking for cryptocurrency investment advice. Often these are just scams in disguise.
If there was a real algorithm that could perfectly time your buy and sell transactions, everyone would use it!
6. Create a Balanced Portfolio
Cryptocurrency trading is still in an evolutionary phase. While several countries welcome cryptocurrency trading, others are still skeptical about it.
Central banks around the world are struggling to find better ways to regulate digital currencies. Therefore, cryptocurrency trading is often a risky business. However, there are strategies that can help investors avoid extreme volatility.
Building a balanced portfolio of multiple cryptocurrencies such as Bitcoin, Ethereum, and other top-tier cryptocurrencies can help reduce volatility.
In addition, investors can also hold a fixed amount of regular investments in various cryptocurrencies. This will systematically increase risk tolerance and help your portfolio achieve favorable long-term returns.
7. Play Bitcoin's Volatility
The Chicago Mercantile Exchange (CME) offers options on bitcoin futures, giving traders access to a variety of volatility strategies.
The volatility of cryptocurrencies is 5 times higher than that of traditional asset classes. Ideally, volatility trades are directionless, meaning it is possible to make money whether Bitcoin goes up or down.
The long straddle is a directionless volatility strategy that uses Bitcoin options. For starters, you buy a call option and a put option at the same time at the same strike price and expiration date.
The Bitcoin interface is profitable when Bitcoin falls or rises relative to the strike price by an amount greater than the premium. To close the trade, sell the call option and the put option at the same time.
In plain language, a big step up or down is in your favor.
If you don't already have a cryptocurrency exchange account and want to get started in the wonderful decentralized world of cryptocurrencies, we recommend using Binance.
Trading on Binance can be a great experience if you know how to use the platform. Before you start trading, you need to create an account and then deposit money, after which you can start trading. The good news is that the fees for withdrawals are very low. So you can easily withdraw your amounts.
Attention! The contents of this article are not financial advice. The world of cryptocurrencies is very volatile. Invest at your own risk and do your own research.
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