Cryptocurrency Trading Strategies for Beginners

Cryptocurrency has become an increasingly popular asset class for traders and investors around the world. As the market continues to evolve, it's important for beginners to understand the strategies and techniques that can help them succeed in this dynamic and often unpredictable environment. 

In this guide, we will explore some of the basic principles of cryptocurrency trading and introduce a variety of strategies that can be used to maximize profits and minimize risks. Whether you're a seasoned trader or just starting out, this guide is designed to provide you with the knowledge and tools you need to navigate the exciting and complex world of cryptocurrency trading.

Cryptocurrency Trading Strategies for Beginners
Cryptocurrency Trading Strategies for Beginners 

What is Cryptocurreny Trading

Digital currency emerged through the emerging technology of blockchain - the public ledger that keeps track of all transactions. Since the beginning, the potential of this new type of asset and technology in general has sparked interest in specialized circles.

In recent years, trading in cryptocurrencies has attracted much wider attention, as digital currencies have been accepted as a means of payment in more and more places.

Digital currencies have also started generating a lot of interest as an alternative investment. Much of this is due to the headlines resulting from huge jumps in the value of Bitcoin. The price of Bitcoin started at around $1,000 in 2017, and rose to over $19,000 by December of the same year. It reached its all-time high of $68,000 in November 2021 and started to decline in 2022, reaching $42,000 in April at the time of updating this article.

These new assets gained more credibility when exchanges such as CBOE and CME launched trading in cryptocrurrency through futures contracts on Bitcoin. Many people participate in trading digital currencies by buying and selling the actual digital currency itself.

But there are negatives to this, including:

  • The processing time for buying digital currencies is slower than the immediate execution processes used in trading CFDs.
  • Buying actual digital currencies is done through unregulated wallets and is considered decentralized.
  • The risk of hacking Bitcoin and Ethereum wallets, which are exposed to large risks such as theft.

All of these concerns can easily be avoided by trading cryptocurrencies through CFDs. Using CFDs allows for extremely fast transaction times, which is useful for such a volatile market.

How to Make Money with Cryptocurrency

Cryptocurrency have become an increasingly popular investment option in recent years, with many people looking for ways to make money with crypto. However, it's important to understand that investing in cryptocurrency can be risky, as the market is highly volatile and unpredictable. 

That being said, there are several ways that one can potentially make money with crypto, such as through buying and holding, trading, mining, and staking. Each of these methods has its own advantages and disadvantages, and it's important to do your research and understand the risks before investing your money. In this context, seeking the advice of a financial professional or experienced investor can also be helpful.

There are several ways to make money with crypto:

  1. Buy and Hold: You can buy a cryptocurrency and hold it for a long period of time, hoping that the price will increase over time. This is known as HODLing.
  2. Trading: You can trade cryptocurrencies by buying and selling them on an exchange. You can use technical analysis and market trends to make educated decisions about when to buy and sell.
  3. Mining: You can mine certain cryptocurrencies by using your computer's processing power to validate transactions on the blockchain. This requires significant computing power and electricity.
  4. Staking: Some cryptocurrencies allow you to stake your coins in a wallet or on an exchange, which helps to secure the network and earn rewards in return.
  5. Investing in ICOs: Initial Coin Offerings (ICOs) are a way for new cryptocurrencies to raise funds. You can invest in an ICO with the hopes that the new coin will increase in value over time.

It's important to remember that investing in cryptocurrencies can be risky, and you should always do your own research and invest only what you can afford to lose.

Cryptocurrency Trading for Beginners

Cryptocurrency trading can seem intimidating for beginners, but with the right knowledge and tools, it can be a profitable and exciting venture. Here are some tips for those who are new to cryptocurrency trading:

  1. Educate yourself: Learn as much as you can about cryptocurrencies, blockchain technology, and the market trends. This will help you make informed decisions when it comes to trading.
  2. Choose a reliable exchange: Select a reputable cryptocurrency exchange with a solid reputation and strong security measures. Research various options and read reviews before making a decision.
  3. Start small: Begin with a small amount of money to trade until you gain experience and confidence in the market. Don't risk more than you can afford to lose.
  4. Set a strategy: Develop a trading plan and stick to it. Decide on your risk tolerance, the cryptocurrencies you want to trade, and your entry and exit points.
  5. Keep track of your trades: Keep a record of your trades and analyze your performance. This will help you identify successful strategies and areas for improvement.
  6. Stay updated: Keep up with the latest news and developments in the cryptocurrency world. Changes in regulation, new technology, and market trends can all impact your trades.

Trading strategies such as buying and holding, day trading, and swing trading can be employed, but it's important to manage risks by diversifying investments, setting stop-loss orders, and avoiding emotional decisions. It's also crucial to stay up to date with the latest news and developments in the cryptocurrency world, as these can have a significant impact on market trends.

Day Trading Crypto Strategy

Day trading crypto is a popular strategy among traders looking to profit from short-term price movements in the cryptocurrency market. Here are some basic steps to follow for a day trading crypto strategy:

  1. Choose a cryptocurrency exchange: Select an exchange that offers the cryptocurrencies you want to trade and has a good reputation for security and reliability.
  2. Set up a trading account: Follow the instructions provided by the exchange to set up a trading account.
  3. Create a trading plan: Establish a clear strategy for entering and exiting trades. Decide on the maximum amount you are willing to risk on each trade, and set stop-loss and take-profit orders.
  4. Analyze the market: Use technical and fundamental analysis to identify potential trades. Look for price trends, support and resistance levels, trading volume, and news that could impact the market.
  5. Execute trades: Place trades based on your trading plan and analysis. Watch the market closely and adjust your strategy as needed.
  6. Manage risk: Keep a close eye on your trades and use risk management tools such as stop-loss orders to limit potential losses.

Remember, day trading crypto can be a high-risk strategy, so it's important to have a solid understanding of the market and a clear trading plan in place.

Crypto Short-Term Trading 

Crypto short-term trading refers to buying and selling cryptocurrencies within a short period of time, typically less than 24 hours. This strategy is based on the belief that the market price of a cryptocurrency can fluctuate significantly within a short period of time, creating opportunities for profit.

Short-term traders typically use technical analysis to identify trends and patterns in the market, and make trades based on these signals. They may also use fundamental analysis to stay up to date with news and developments that could impact the price of a cryptocurrency.

    There are several strategies to short-term trading with crypto:

    1. Short-term trading in cryptocurrencies involves buying and selling assets within a short time frame, usually a few hours or days.
    2. The primary objective of short-term trading is to profit from the volatility in cryptocurrency prices.
    3. Traders use various technical analysis tools and indicators to identify short-term price movements and enter and exit trades accordingly.
    4. Short-term traders may employ strategies such as scalping, day trading, and swing trading to profit from price fluctuations.
    5. Short-term trading carries higher risks than long-term investments, and traders must manage their risks by diversifying their portfolio, setting stop-loss orders, and avoiding emotional decisions.
    6. It's crucial for short-term traders to stay up-to-date with the latest news and market developments, as these can have a significant impact on cryptocurrency prices and market trends.
    7. Short-term trading can be profitable but requires discipline, patience, and a deep understanding of market dynamics and technical analysis.
    Remember, Short-term trading can be risky due to the volatility of the cryptocurrency market, and it requires discipline and a clear understanding of risk management. Traders must be prepared to cut their losses and take profits quickly, and should never invest more than they can afford to lose.

    Learn About Scalping Crypto Strategy

    Scalping crypto strategy is usually used to achieve small profits by opening and closing trading positions in short timeframes, such as a few minutes or seconds. This strategy aims to take advantage of small fluctuations in the price of the digital currency, which can occur quickly. To successfully apply this strategy, traders must follow an appropriate risk management strategy, and demonstrate patience and extreme focus, in addition to setting specific profit and loss targets and not risking more than they can afford to lose.

    Sure, here is a numbered list of the scalping crypto strategy:

    1. Choose a cryptocurrency with high liquidity and volatility
    2. Use short-term charts and indicators to identify short-term price movements
    3. Set up a tight stop-loss order to limit potential losses
    4. Place frequent trades to take advantage of small price movements
    5. Take small profits on each trade and don't get greedy
    6. Use leverage with caution and always consider the potential risks
    7. Stay up to date with market news and developments to adjust your strategy accordingly.

    Trading digital currency and their symbols

    The following list presents the symbols used to represent the main digital currencies against the US dollar:

    • Bitcoin vs US dollar - symbol: BTC/USD
    • Ether vs US dollar - symbol: ETH/USD
    • Bitcoin Cash vs US dollar - symbol: BCH/USD
    • Litecoin vs US dollar - symbol: LTC/USD
    • Ripple vs US dollar - symbol: XRP/USD
    • Ethereum Classic vs US dollar - symbol: ETC/USD
    • Dash Coin vs US dollar - symbol: DSH/USD
    • Stellar vs US dollar - symbol: XLM/USD
    • EOS vs US dollar - symbol: EOS/USD
    • Monero vs US dollar - symbol: XRM/USD
    • Zcash vs US dollar - symbol: ZEC/USD

    Similarly, the list below shows the symbols of the main digital currencies against the euro:

    • Bitcoin vs euro - symbol: BTC/EUR
    • Ether vs euro - symbol: ETH/EUR
    • Bitcoin Cash vs euro - symbol: BCH/EUR
    • Litecoin vs euro - symbol: LTC/EUR
    • Ripple vs euro - symbol: XRP/EUR
    • Ethereum Classic vs euro - symbol: ETC/EUR
    • Dash Coin vs euro - symbol: DSH/EUR
    • Stellar vs euro - symbol: XLM/EUR
    • EOS vs euro - symbol: EOS/EUR
    • Monero vs euro - symbol: XRM/EUR
    • Zcash vs euro - symbol: ZEC/EUR

    Finally, here are the cross-currency pairs:

    • Bitcoin Cash vs Bitcoin
    • Dash Coin vs Bitcoin
    • EOS vs Bitcoin
    • Ethereum Classic vs Bitcoin
    • Ethereum vs Bitcoin
    • Litecoin vs Bitcoin
    • Stellar vs Bitcoin
    • Monero vs Bitcoin
    • Ripple vs Bitcoin
    • Zcash vs Bitcoin

    How to Successfully Trade Cryptocurrency

    It is important to remember that regardless of the market you are trading in, or what style you choose to adopt, trading is about making a decision about whether you want to trade or not. Most people do not like to make financial decisions on the spot. 

    In fact, most people like to spend their time analyzing facts, conducting their research, and so on.

    This should not be any different in trading digital currencies!

    The best way to trade is to have a plan in place and stick to it. This means doing your research, setting your goals and limits, and understanding the risks involved. 

    Remember, trading is not a get-rich-quick scheme, but rather a long-term investment that requires patience, discipline, and a willingness to learn and adapt.

    It should not be different in digital currency trading!

    The best digital currency traders know this and will work to improve their trading environment in order to control their decision-making and organization. Here are some of the most important facts you may find with the best digital currency traders:

    1. Choosing a specific trading style

    Choosing a digital currency trading style is important because it will determine how you make trading decisions and guide you towards the information you need to analyze the most suitable for your goals.

    2. Research and analysis

    The best digital currency trading decisions involve a good level of prior research and analysis. The type of research and analysis you do depends on how much weight you give to technical analysis and fundamental analysis.

    3. Keep your emotions and external factors out of the markets!

    The decisions you make often reflect the quality of your life. If you have negative and mixed feelings outside of the markets, they will seep into the trading decisions you make.

    It is important to keep your risks small and not allow your emotions outside the market to control your decisions, and most importantly - enjoy the journey of learning about the markets and yourself continuously.

    4. Be realistic and focus on reward-related risks

    Digital currency trading revolves around probabilities because it involves winning and losing. Risk management is a fundamental principle not only in becoming a successful digital currency trader but also in other markets as well! For example, using stop-loss is one way to protect yourself from large losses.

    Traders can also search for advanced trading features such as:

    • Protection from volatility.
    • Limit the maximum limit of price slippage in the market and stop orders.
    • Limit or avoid losses altogether from pending orders that fall in price gaps.
    • The ability to fill large orders by enabling partial filling and allowing your orders to be filled in parts.
    • Executing limit orders and collecting profits even on an increase in spot prices by converting them into market orders. 

    Avoid activating orders due to widened price gaps when there is no actual market movement. To learn more about these different features and how they can improve your trading, visit the "Volatility Protection" web page that explains how each of the key features works with educational charts. Of course, at this stage, it is important to be aware of the risks that come with trading digital currencies and contracts for differences.

    Best platforms for trading digital currencies
    MetaTrader 4 and MetaTrader 5 are among the best platforms for trading digital currencies currently available. To connect to your MT4 or MT5 digital currency trading account, here's how:
    • Open a real trading account
    • Download one of the MT4 or MT5 digital currency trading platforms
    • Open the platform and click on the "File" tab in the top left of the screen
    • Select "Login to Trade Account" and enter your trading account details
    • Open the selected digital currency chart
    • Click on "New Order" when you want to buy or sell.

    Where do I find digital currency on the trading platform?

    If you cannot see the digital currencies mentioned in our previous article and want them on MetaTrader charts, simply go to the "MarketWatch" window on the left side of the platform. In that window, you will see a list of trading instrument symbols. To view this list, right-click in the "MarketWatch" window and select "Show All." You should now see the desired digital currency in the price list, as shown in the image below:

    Cryptocurrency Trading Strategies for Beginners
    Cryptocurrency Trading Strategies for Beginners 

    To open the digital currency chart, simply click on the symbol and drag it to the chart window on the right. Alternatively, right-click on the digital currency you have selected and choose "Chart Window."

    Explain of trading digital currency with examples

    It is very easy to make a trade on a cryptocurrency using MetaTrader. Let's look at an example of how to open a cryptocurrency trade using Ethereum. In this example, we used an enhanced version of MT4 by downloading and installing the add-on (MetaTrader 4 Supreme Edition (MT4SE)). The MT4SE add-on is free to download and gives your platform a boost in terms of the number of available indicators and expert advisors.

    Example of trading digital currency: Opening an ETH/USD trade

    First, we opened the ETH/USD chart, then we chose the "lot" as the order size, and then clicked on the S/L field (i.e., the stop-loss field) to set these parameters that you can see in the trading ticket on MetaTrader.

    This function allows you to determine the amount of risk you want to take by placing this trade. You can either specify this as a fixed amount in your account's base currency or as a percentage of your account equity value.

    After that, it's as simple as clicking "buy or sell" to place a contract for difference (CFD) trade on the selected currency. Optionally, you can also set a take profit and/or a trailing stop-loss level.

    So, once you have entered a trade in the digital currency of your choice, how can you close it? There are several ways to do so. Let's first look at the partial closing method of the trade:

    Example: Partial Closing of a Digital Currency Trade ETH/USD

    Sometimes, it may be useful to reduce your exposure to market movements by closing a portion of your open trade. For example, you may want to take some profits in a winning trade or perhaps reduce the size of your losing trade. In both cases, through partial closing, you retain some exposure to future price movements. When you open a trade, you will see notable lines on the relevant digital currency charts representing your trade, as well as any stop-loss or take-profit orders associated with it.

    Cryptocurrency Trading Strategies for Beginners
    Cryptocurrency Trading Strategies for Beginners 

    In this example, a "Buy" trade has been placed, and our trade is displayed in a green box. If we had chosen to sell, this would be a red box instead. Clicking on this box opens a dialogue window on the web that provides you with a variety of options, such as modifying any stop-loss or take-profit orders. We clicked on "Partial Close," and you can see in the image above the dialogue it provides. We entered 0.5 in the Volume field, which will allow you to close half of the open trade.

    Example: Full Closing of a Digital Currency Trade ETH/USD

    Closing your trade entirely is no more complicated than partial closing. All you need to do is ensure that the trade volume is the same as the open trade and then perform the opposite action. We originally bought one lot of ETH/USD to open the trade. To close this, we will need to sell one lot of ETH/USD. As in the example above, you can click on the green box representing the open trade, and this time, just click the red "Close Order" button without first clicking "Partial Close."

    Summary to Cryptocurrency Trading Strategies

    This means using a virtual private network or any other form of encryption to protect the connection, where using strong passwords and implementing secure authentication measures to secure digital currencies is an important step for anyone using them.

    By using secure wallets, strong passwords, private keys, and a secure network from theft and attack, digital currencies can be safely used. With these common precautions, digital currencies can be used safely.

    Imead Rmouche
    By : Imead Rmouche
    Programmer and developer of websites. I have been working in the fields of print-on-demand as a designer since 2019. I have entered into many fields of business and profit online , and I strive to be a part of foreign technical content in an effort to enrich this content in various fields.

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