With the advent of trading platforms, it is easier than ever to invest in the crypto of your choice. However, investing without the proper knowledge is naive, and it increases the chances of losing your money.
So, as a responsible investor, you must know a few crypto trading strategies and invest based on merit and research. Understanding compelling strategies will help you buy and sell the tokens at the right time and enable you to maximise your earnings.
While there is not a single investment strategy that will work all the time and as an investor, you have to find the best plan.
Here are some of the common strategies that crypto investors use.
Herein traders set up their charts and assets and exit the market the same day. The primary aim while day trading is to earn profits when trading crypto in a day. They take advantage of the price movements of a cryptocurrency happening in a day to generate profits. Day trading is highly fast-paced and requires a lot of attention. The traders take advantage of charts and market signals to determine entry and exit points.
Under this method, the traders rely heavily on the opinions and recommendations of experienced analysts in the industry. The traders follow these analysts on social media platforms or various chat groups.
The analysts give a range of support and resistance levels for the day. The support is the minimum level, and it is assumed that the crypto will not fall below this level. On the other hand, the resistance level is the maximum price that crypto would achieve in a single day.
Under this strategy, the trader takes advantage of a cryptocurrency’s trading volume to book a profit. They plan and set targets for their margins in a day to book good profits.
Traders excel at scalping by analysing crypto assets, past trends, and volume. This strategy involves a lot of pre-planning because they must carefully determine their entry and exit points.
It is a form of trading strategy that seasoned traders use. They develop algorithms and bots to quickly execute their orders and enter or exit a cryptocurrency almost instantaneously. However, such types of crypto trading strategies require extensive knowledge of subjects like computer science and mathematics. It is more suited for traders who are involved in the trade of various cryptos at the same time.
It is almost impossible to time the market ideally. So, the best way to go about it is dollar-cost averaging. Under this technique, the traders invest a fixed amount of money in crypto at regular intervals. It helps the investors save time and not have to worry about timing the market. Using the DCA strategy, they simply spread their eggs in various baskets by investing in the market multiple times throughout the day.
While entering the market under the DCA approach is straightforward, exiting is quite challenging. One needs to have perfect charts and technical analysis knowledge to find the right exit point.
So, if you are planning to invest in crypto, these are some strategies you can choose to maximise your profits.