Home Cryptocurrency Which Strategy Is Best for Crypto Trading – 2022 Guide

Which Strategy Is Best for Crypto Trading – 2022 Guide

by Ava-Rose Calderon

Cryptocurrencies are becoming the most used digital asset in the current scenario. Crypto trading is the easiest way to make money but the right strategy is the only way to go. Anyone who wants to trade in crypto needs to know about blocks in technology upon which many tokens are based. Cultivating in-depth knowledge will prevent you from making any silly mistake that can lead to a big loss.

Anyone who wants to get started with trading or wants to earn more, should have a trading plan in their mind. There are many strategies but it is favorable to only stick to one which you think is the best. In this article we will mention some of the most successful trading techniques one of which can be your go to strategy.

High Frequency Trading

Source: thebureauinvestigates.com

High frequency trading or HFT is a reading technique where one takes advantage of making multiple trades per second with the use of an automated system. The idea of high frequency trading is to know the price changes and analyze the market on how future trades may take place. Frequency trading is a strategy that can only be used with the help of a bot.

It is an automated software which monitors the market and analyses the different trends. The boat will execute different trades and follow what reading logic while remaining connected to the exchange. It can be used by big firms as well as independent individuals. The specific trading logic one can be combined with different techniques with this one to generate more profit.

Range Trading

Source: marketbeat.com

Every strategy is based upon an idea that has to be true for it to work. This particular technique assumes that crypto prices corresponding to the currency will only fluctuate within a specific range if we take into account the trends within a certain period. So if the price fluctuates beyond that specified range it is assumed that the market trend is abnormal.

The deviation serves as an indicator that any particular cryptocurrency is about to seriously deviate from the norm. So if the price is diffing below a specified range it can help the trader sell before the prices drop further down below. It helps any investor avoid a downwards swing.

Scalping

This is a strategy which allows an individual to make a small profit after making more trades. With proper use of this technique an individual can generate a larger profit. This strategy focuses on employing large amounts of currency and takes into account small price changes in the market. Over a short period one can generate profit based on the amount of liquidity. Depending on the trader the duration can be hours or as small as a few seconds.

Arbitrage

Source: increditools.com

This strategy involves buying a coin on one exchange platform and then selling it on another at a better price. The basic concept with this technique is that the price of a coin will vary somewhat from one exchange platform to another and the trade needs to be present on both of them to take advantage of this deviation.

It is very easy to make money by increasing the spread based on how well you know the exchange platforms. The only way this approach can be beneficial is when the trader has accounts on multiple platforms that allow for a bigger deviation to make more money.

News and Sentiment Analysis

Source: forex.academy

Learning the psychological responses of any investor community will help in analyzing how a cryptocurrency might fluctuate in the future. Rather than going through the statistical calculations, one tries to understand the sentimental responses of the people involved in a particular crypto trade.

One will have to learn to read the actions and reactions of their fellow investors. Knowing how people are reacting will give you a fair idea of whether the demand will rise or fall in the near future. It is a strategy which needs to be continuously undertaken for better analytical predictions.

Social consensus is important when one wants to predict the actions of the majority of the community. One way to do this is by following the news and then trying out different forums to see what most people are saying. While social media posts might not be the most reliable way of keeping track of market trends, it will be perfect doing a sentiment analysis.

Technical Analysis

Technical analysis is based on statistics and calculations. An individual will be required to make testicle calculations to identify the trains in the market related to historical price data and fluctuations. The idea is to know the history of a particular cryptocurrency in order to understand how the future prices can be impacted. Technical analysis concerns a certain level of production based on historical data.

What You Should Know

Source: newscientist.com

Before starting one should know the engine out of the market and the general trends to sell for profit. The fluctuations allow for making quick decisions. The crypto market is generally fragmented because every currency behaves in a different manner. According to their risk tolerance, using platforms can help you generate profit, like https://bitiq.app/.

The exchange platform that traders use is also dependent on their geographical location and the country regulations. One should always choose a convenient trading exchange before going forward with the initial investment capital.

If you are just beginning it does not require a lot of initial investment because a minimum trade is for just a few dollars. Eventually you also need to understand which trading strategy works for you based on your risk tolerance and potential profitability. Scalping is a low risk technique while high frequency trading is used extensively.

The Takeaway

Knowing the market and the exchange platform is the first step towards trying out crypto trading. No strategy can be called the best because every investor and trader has their personal preference. It is also important to know how to exit the market in case of a download swing.