Along with investing in crypto, digital trading currencies have become a very popular venture, especially with the rise of crypto’s popularity over the years. Despite its rising popularity, there are still some risks involved when dealing with digital currencies; however, if you have a well-developed strategy for crypto trading, it can be a very important aspect for making money in the crypto market.
In this article, we’ll go through our top 4 crypto trading strategies that you can utilize to make the most out of crypto trading; each of these trading strategies has already proven itself to be successful and you can employ it via a trading platform like Immediate Edge.
The Top 4 Crypto Trading Strategies
Digital currencies are one of the most sought out assets in the investment market today; however, it is now considered as one of the riskiest types of investment there is. Despite its existence for more than a decade already, most still consider this technology to be relatively new; thus, they expect how high the volatility rate of crypto can be.
With that in mind, a lot of investors think that trading cryptocurrencies have very little difference compared to just giving the money away, and unfortunately, it would take time for anyone to figure out how it works. Regardless, crypto trading strategies that are profitable don’t necessarily require comprehensive knowledge of the market, or crypto in general, making it optimal for new traders. Below are the top four strategies ideal for beginners in crypto trading:
Buy And Hold
The best and easiest crypto trading strategy that you can do to gain significant profits is the buy and hold strategy. You might already be aware of this kind of strategy as it also applies not only to cryptos but to all sorts of investments assets as well. In general, the buy and hold strategy is the complete opposite of scalping, as instead of buying crypto and selling them as soon as its market value rises, you wait a considerable amount of time before selling your assets.
With that in mind, you would need to have a goal in mind to increase your chances of success in this kind of method. Because once your goal for profit has been achieved, that’s the sign you’ll be waiting for so that you’ll be able to proceed in selling the digital currency you’ve held on to for so long. Overall, the buy and hold strategy is the simplest one there is, but you still need to consider the performance of the asset in the market despite not typically considering the timing of this strategy.
Just like any other investment asset in the market, there are times when crypto can be highly volatile as one day its market value rises to the roof, only to decline soon after. With that in mind, traders that use the scalping method can get a great from it, which is another one of our top crypto strategies that beginners can easily adapt. In general, the scalping method is a trading strategy where the traders buy a particular crypto asset when its market value is acceptably low and then sell it as soon as its value rises.
Furthermore, the strategy can also work the other way around; either way, scalping is a strategy that makes a great deal of profit as traders utilize how volatile crypto is. However, in the eyes of a beginner, it may not look like a profitable strategy compared to buy and hold; scalpers believe that all of their earnings would eventually pile up if they do this strategy over a long period of time.
The third one on our list is probably one of the most popular trading strategies out there, and it’s called the dollar-cost averaging strategy. If you’re unfamiliar with this term, you don’t have to worry, as this process is relatively easy to follow. Instead of dropping your money into a particular digital currency in a single day, you create a system of your own as you divide your investments into several assets. Depending on your goal, you can choose to invest your money on a crypto monthly, weekly, or at a specific date of each month; the choice is all yours.
For instance, if you have 20,000 dollars worth of capital to invest into crypto, normally, you would invest all of it in a single digital asset. But with the dollar-cost averaging strategy, you have the option to split the 20,000 dollars that you have into multiple trades, let’s say for 1,000 dollars each trade, resulting in having 20 different trades. Doing this method allows you to minimize the downfall of one of your crypto, given how highly volatile they are.
The last crypto strategy on our list may sound a bit intimidating, especially to the new investors in the scene; however, arbitrage is much simpler than you think. In general, arbitrage is a crypto trading strategy where the investor purchases a particular crypto in a single exchange platform and then sells it on a different crypto exchange, typically at a higher market value compared to when you initially bought it. While this method may seem like a long shot to gain significant income, you have to remember that numerous exchange platforms buy, sell, and trade crypto every day, thus having different market values.
Finding a certain scenario where you can use the arbitrage method is not that impossible; as a matter of fact, it’s actually quite common. Take Bitcoin, for instance; there was a time when the asset’s market value in South Korea was relatively higher than in the United States, so by taking the crypto you got from the US and then selling on an exchange platform in South Korea, you can make a lot of profit.
Now that you’ve read our top 4 crypto trading strategies that you could make the most profit from, what do you think is the best one for you? Experienced crypto traders often believe that trading strategies that are not easy to follow with complex mechanics are the ones that make the most profit; however, that’s not always the case. As you’ve read from above, you’ll find that some of the most common and simplest crypto trading strategies are actually the ones you make the most profit from. With that in mind, it’s the reason why the market for crypto trading is flourishing, because it’s open for all investors regardless of their experience and exposure, and it’s also applicable to beginners.