Cryptocurrency trading, known mostly for its high volatility, have made many people millionaires and even billionaires, while another election of people have lost everything. Crypto trading is certainly volatile, and with the potential for significant returns come the very same potential for significant losses. Is crypto trading a phenomenon based purely on luck — or lack thereof — or are there strategies to help take your financial situation to the moon? While trading crypto isn’t the only way to profit from the digital asset class, it is the most common method of growing your money. There are other ways that aren’t as impacted by the dramatic volatility of this market, such as crypto mining.
While crypto mining is a great way to help you achieve financial independence, in this article we’re going to explore the 10 most successful crypto trading strategies. While no strategy, or collection of strategies will ever eliminate risk entirely, these are the most historically commonly used and successful ones to know.
An intentional misspelling of the word “hold,” HODL refers to the purchasing of a cryptocurrency and simply holding it long-term, with the assumption that over time the crypto will rise in value despite its volatile fluctuations along the way. This strategy is used by investors who believe in the potential of the underlying technology behind a certain coin.
This strategy utilizes averages, and involves investing a fixed amount of capital at regular intervals, regardless of the price of the cryptocurrency. This strategy disregards volatile market fluctuations and is popular among those who aim to accumulate a certain amount of the asset over time without worrying about highs and lows.
Scalping involves making multiple trades in a short period of time, aiming to make small profits with each trade. This strategy requires a thorough understanding of the market and the ability to make quick decisions without reconsideration. Scalping is a popular strategy among those who like to trade frequently and are not swayed by the high volatility of the crypto market.
This strategy involves holding a position for a short period of time — usually a few days to a few weeks — with the goal of profiting from short term price movements.
Position trading is similar to HODL in that the investor will buy a coin and hold it for a long period of time. In position trading, however, the investor takes a more active approach, focusing on identifying trends and technical analysis, profiting from long term price movements.
A more basic investing strategy, trend following is exactly what it sounds like: following trends. In this strategy, investors identify current trends in the market and make trades based on those trends.
Buy low, sell high. Mean reversion involves buying an asset when its price is low and selling when its price is high. While easier said than done, mean reversion is based on the assumption that the price of a crypto will always eventually return to its average, and is a popular strategy among those who are able to identify overbought and oversold market conditions.
This strategy is based on the idea that when an asset’s price breaks through a key level, such as a resistance level, it is likely to continue moving in that direction, creating an opportunity for traders to profit. Breakout trading is a high risk strategy that requires sound understanding of the market.
When using this strategy, investors will take positions that are opposite to current market trends, with the assumption that the market will eventually correct itself.
Algorithmic trading involves the use of artificial intelligence based algorithmic bots, or algo bots, to make trades based on the strategies programmed into the bot. Algo trading is becoming increasingly popular, as the algo bots often outperform human traders in a variety of metrics. 0 Percent offers its Algorithmic Trading Accelerator (ATA) program, helping investors and businesses utilize the power of artificial intelligence to potentially increase returns.
As already mentioned, no strategy can totally eliminate risk, but knowing these strategies and correctly implementing them into your trades can have positive results on your returns. 0 Percent is committed to financial independence, education and the use of cutting edge technology. Follow us for more info on all things fintech!
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