Cryptocurrency trading strategy

As we all know, the volatility of Cryptocurrency is very large, but it is this relatively large volatility that gives it great potential. This article will outline some trading strategies to help you get a greater return in trading.

The past few months have been very breakthroughs for Cryptocurrencies, especially Bitcoin. Bitcoin and many other Cryptocurrency token leaders have reached a record high. Cryptocurrency has gone from being questioned to getting approval from institutions and companies to enter the mainstream market. (For example, the successful listing of Coinbase), this change is amazing.

However, investors who have been on the battlefield in the currency circle know that this journey has not been so smooth. In fact, it is the inherent volatility, risk, and loss that keep many mainstream investors away from Cryptocurrency transactions, and this is also the factor that affects the government and established financial service companies to join the decentralized financial revolution.

How to avoid common investment traps? While reducing management risks, what strategies are there to increase the return on investment? The following are some suggestions for reference as appropriate.

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More popular Cryptocurrency trading strategies

1. Dollar-cost average

This trading strategy refers to regular investment (buying a fixed amount of tokens or assets). For example, buying a Cryptocurrency worth $10 per week is a dollar-cost average investment. This investment method allows investors to be free from emotional disturbances and helps them balance high-cost purchases and bottom-hunting when prices fall.

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2. Day trading

In today’s trading, buy and sell, trying to profit from price fluctuations during the day. For example, when an investor buys 0.5 ETH at a certain price, he hopes to sell it at a higher price.

Since most Cryptocurrency platforms are open 24 hours a day, many traders use limit buy and limit sell orders, hoping to buy or sell tokens at a specified price, and according to the trader’s expected profit rate, according to Sell ​​at a higher price.

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3. Swing trading

You can think of swing trading as trading days, weeks, or months. When the price change is more favorable, hold a position, if it does not reach the expected price, it will remain open. This trading method is not like short-term trading like same-day trading, and it may take several days or even a month to wait.

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4. Trend trading

If we regard day trading as a short-term strategy, then the swing is a mid-term strategy, and trend trading is a long-term strategy. The opening and holding time will be longer, usually several months. Those who do trend trading will invest in tokens that they are more optimistic about the upward trend to maximize the rate of return. People doing trend trading may hold long-term positions if they think that an asset will appreciate, and short-term positions if they think the opposite is true.

One method that can be used to determine whether an asset is trending upward or downward is to connect the highs of each phase, where the highs indicate a downward trend, and the lows indicate an upward trend. Reflecting the level of an upward trend can draw a support point for future price trends, indicating that the price is climbing and the possibility of a decline is unlikely.

On the other hand, a series of apparent downtrend lows created resistance to future prices, which means that the price of the asset is dropping and it is impossible to rise immediately.

Different markets will follow different trends and develop for different periods of time. For example, it is generally believed that the first-hand market trend of a bull market and a bear market will affect the price of stocks for 1-3 years, but for Cryptocurrencies, it may be longer or shorter. Your investment horizon and the asset class you invest in will determine when you should look for trends

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5. Buy and hold

Buying and holding assets is a passive investment strategy. Regardless of market conditions, they will hold assets for a long time. This strategy will not only yield benefits, but in most cases, the market will take a long time to generate returns. In the currency circle, this investment strategy is called long-term investment. Those investors who buy and never sell assets are called “hodlers.”

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6. Index investment

Index investment refers to the purchase of ETFs (Exchange Traded Funds), which is similar to investment products provided by institutional financial services. Cryptocurrency ETFs are usually summarized according to the performance of different commodity Cryptocurrencies/or Cryptocurrency assets with different risks/returns or according to specific Cryptocurrencies. The selected product assets can get average compensation. On Binance, ETF tokens are connected to specific Cryptocurrencies such as Bitcoin or Ethereum. In this way, the asset can be provided without holding the asset, and it can also be used for investment. On Binance, the token of ETF is 3 times leverage.

For example, you can invest in a low-risk product that is the most stable or most popular Cryptocurrency, or you may have a foreboding that privacy or off-chain solutions will increase significantly, then you can invest in more privacy and off-chain solutions. The ETF commodity of the scheme.

With index investment, you can invest in a package of commodities instead of tracking individual projects to achieve expected returns in areas of interest.

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7. Golden cross and death cross

This strategy looks for buying and selling signals based on the average price changes of tokens or assets.

If the average price of the past 50 days exceeds the average price of the past 200 days, this is an indicator of the trend, known as the golden cross, which is a buy signal.

If the average price of an asset in the past 50 days is lower than the average price of the past 200 days, this is a sign of a downward trend, known as a death cross, or a sell signal.

It may not be easy to use tools in the exchange you use to calculate the 50-day, 200-day price average of the token you are interested in. Therefore, for those who are good at using trading tools and charts, this is a very used trading strategy.

Binance’s trading chart provides investors with a lot of information, such as trading pairs, trading prices and price changes in the past 24 hours, the lowest price in the past 24 hours, the highest monthly price and trading volume. Traders can specify your trading strategy through a 15-minute snapshot. You can also use the k chart to analyze the highest price and the lowest price in a certain period of time, or use the depth chart to see the different prices of buying and selling. These icons can be used to predict how prices will change in the near future and how most market transactions will occur.

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8. RSI

RSI, the relative strength index, measures momentum by calculating the average profit and loss of a token in two weeks. RSI fluctuates between 0 and 100 and is used to determine whether an asset is overbought or oversold. Anything over £70 is considered an over-purchase and may fall thereafter. Anything less than £30 is considered oversold and may increase in price.

If you want to successfully implement the RSI difference strategy, you must accurately predict the price trend before the RSI appears. This strategy may not be easy to achieve, but as long as the tools are proper and the practice is proper, you can still predict price changes well and get rich returns.

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