The events that occur in the bitcoin market are not arbitrary, but rather the result of a confluence of various causes and developments. For this reason, traders who are relying solely on their gut instinct or intuition to make cryptocurrency trades should think about adopting a tested trading strategy.
It is wise to develop a plan that takes into account your individual risk tolerance and investing horizon before putting money into the bitcoin market. While it’s possible to win trades by pure chance every once in a while, a suitable crypto trading plan is necessary to determine your next steps and guarantee earnings.
Moving Averages
A simple moving averages (SMA) trading method can be useful for crypto investors who like to look at the big picture rather than the daily changes in price. Cryptocurrency holders and would-be traders can keep tabs on market movement with the use of a Simple Moving Average (SMA) trading approach. The ability to compare prices over different time periods using simple moving averages makes it possible to spot and analyze trends and patterns.
There is no fixed length of time for which a moving average must be determined; examples range from 10 days to 200 days to weeks.
Range Trading
Range trading, on the other hand, is an open trading method that doesn’t rely on moving averages. range traders capitalize on the notorious volatility of the cryptocurrency markets. Crypto traders that engage in range trading do so by establishing a price band within which they will make and take trades over a specified time frame. The trader exits at the top of the range and enters at the bottom.
If traders want to engage in range trading, they must have a firm grasp on exactly when the cryptocurrency will trade inside a given range.
Scalping
Crypto traders may also employ the scalping method, which involves making quick, profitable deals, to coordinate their day trades. Scalping is a trading method in which traders make numerous tiny deals throughout the day in the hopes of netting a large profit by the close of trading. However, with these trading techniques, there are trade assistance bots like bitcoin circuit which assist traders with effective trading strategies.
Because the cryptocurrency market can swing by double digits in a single day, day trading is a common trading method. Specializing in short time frames, scalpers anticipate and capitalize on short-term price fluctuations. Leverage and strict stop-losses are utilized with scalping to mitigate the effects of market volatility and negative price swings.
Event-Driven Trading
This method of trading involves attempting to profit from fluctuations in the price of a cryptocurrency either before or after a significant event occurs related to that currency. The most recent and finest illustration of this tactic is seen in the traders who rushed to buy Ethereum before the Merge update. A trader needs to be able to identify minor changes in the market from major ones, as both can affect the value of cryptocurrencies.
RSI Trading
The relative strength index (RSI) is a helpful indicator for crypto traders looking to understand market patterns. The Relative Strength Index (RSI) is a technical indicator used to forecast price movement in the direction of an upcoming trend reversal or to determine if current price action in a market is overbought or oversold. The basic buying margin for RSI is to buy it between 40 to 60 as it exceeds if crossed 70 and lies under the category of brought if bought by 30. Nevertheless, RSI works best in sideways or range-bound markets rather than surging ones.
The Bottom Line
The navigation process of the trading market blesses trades with a bag full of trading options. It is wise to adapt your trading strategy to larger macro tailwinds such as regulatory developments, stock markets, the dollar index, etc.
Therefore, the crypto trader will employ multiple methods in order to arrive at a workable plan.
Credit: Source link
