5 Popular and Simple Strategies in Crypto-Trading for Beginners

Technical Analysis is a reliable assistant in cryptocurrency trading. There are thousands of indicators that crypto traders use to develop their own strategies.Most of them can be difficult to understand for beginners. But there are also effective strategies that are popular among novice traders due to their simplicity.

 

Indicators

Technical indicators reflect market conditions and help to identify key support/resistance levels, overbought/oversold, trend direction and much more.Indicators are used by traders so that they can see a more comprehensive picture of what is happening in the market.

 

№1. Scalping

The essence of scalping is to make multiple trades throughout the day to make small profits of up to a few percent. However, cryptocurrencies are highly volatile assets and their price can change by 10% to 50% or more in a single day.

First trader needs to determine at least two key parameters: support/resistance levels and the direction of the trend. Knowing support and resistance levels, a trader can determine at what moments it is best to open/close positions.

Indicators

  • SMA
  • MACD
  • Parabolic SAR
  • RSI
  • Volume

 

№2. Trading by Trend

In this case, it is necessary to determine in which direction the price is moving at a given moment in time. During an uptrend, price is moving in a narrow channel in a staircase and may go slightly out of it.

Once you’ve determined that the trend is directed upwards, it’s necessary to identify the key support and resistance levels. The support zone will be suitable for opening long positions, and the resistance zone – for closing positions.

Indicators

  • MA (SMA, EMA, etc.)
  • Stochastic RSI
  • MACD

 

№3 Breaking through resistance levels

This strategy is used when a new trend has not yet formed, but a breakout of a key level can indicate that it has changed. During a certain period of time the price can bounce from the support and resistance levels for a long time. But the price cannot move only in one direction.

One of the characteristics of a change in the trend can be seen when the resistance level is almost unchanged and the support level is approaching it, closing the chart in a sort of wedge.

It is not necessary to rush and open a position right after the price has broken above the resistance level. The following condition should be met: the new support level should not be lower than the previous resistance level.

Indicators

  • MA (SMA, EMA, etc.)
  • RSI
  • Parabolic SAR
  • Volume

 

№4. MACD Strategy

MACD (Moving Average Convergence/Divergence) is one of the most popular and simple indicators in trading. Its ease of use is what has made this indicator so popular.

The signal for buying will be the crossing of the fast and slow MA lines below the MACD zero level. The fast moving average must cross the slow MA from the bottom upwards – this is what signals the price reversal to the upside.The signal to sell, respectively, will be a downward crossover of the slow MA.

Indicators

  • MA (included in the MACD)
  • MACD

 

№5. Cryptocurrency Arbitrage

Not all trading strategies can be based on indicators, although they can imply their use as an additional tool. During periods of high volatility in the crypto market, there is often a difference between quotes on different exchanges and in different trading pairs.

 

Types of cryptocurrency arbitrage

There are two main types of cryptocurrency arbitrage:

  • Inter-exchange
  • Intra-exchange

Inter-exchange is when you buy cryptocurrency from one exchange to sell it on another exchange platform.

Intra-exchange arbitrage involves using an intermediate trading pair within a single exchange. Rates in different pairs can also vary greatly.

Conclusion

There are a lot of strategies and tools that help traders make decisions. Studying these strategies and learning to utilise these tools will likely benefit investors.

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