Cryptocurrency trading has to do with the buying and selling of digital assets on various exchanges with the sole aim of making profit. However, it's imperative to note that cryptocurrency markets are highly volatile, and trading always involves risks. Here below are some cryptocurrency trading techniques I have applied over time and it works:
Capitalize on short-term price movements within a single day.
Here you need to execute multiple trades within a day, taking advantage of price fluctuations. Traders usually use technical analysis and chart patterns. so make sure you study the chart patterns carefully to uncover the rise and fall in prices then make your informed decisions.
Capture price "swings" or trends over a few days to weeks.
As a traders you need to identify trends and enter positions at strategic points, holding onto them until the trend changes. Technical analysis is often applied.
Hoarding (Long-Term Holding)
Hold onto cryptocurrencies for an extended period, usually based on fundamental analysis.
Investors believe in the long-term potential of certain cryptocurrencies and hold onto them despite short-term price fluctuations. Just hold on
Exploit price differences of the same cryptocurrency on different exchanges.
Buy low on one exchange and sell high on another, taking advantage of price inefficiencies. This strategy requires quick execution and may involve higher transaction fees. You need to be brave at this.
Make small profits from numerous trades throughout the day.
Execute a large number of small trades, taking advantage of minimal price movements. Scalpers focus on liquidity and short-term price volatility.
Trend Following
Identify and follow prevailing market trends.
Traders follow the direction of the market trend, entering positions in the direction of the trend. Technical indicators and trendlines are commonly used.
Capitalize on the return of an asset's price to its historical average.
Traders identify overbought or oversold conditions and assume that the price will revert to its mean. Contrarian indicators and statistical analysis are often used.
ICO Investing
Invest in Initial Coin Offerings (ICOs) to get in early on new projects.
Research and invest in new blockchain projects during their ICO phase, hoping for significant returns once the project is developed.
Automate trading strategies using algorithms and bots.
Programmed algorithms execute trades based on predefined criteria, enabling automated trading 24/7. Algorithmic trading requires coding skills and a deep understanding of market dynamics.
Regardless of the chosen strategy, it's crucial to have a clear risk management plan, stay informed about market trends and news, and continually adapt to the dynamic nature of the cryptocurrency markets. Additionally, using a combination of technical and fundamental analysis can enhance decision-making in cryptocurrency trading.