Cryptocurrency trading has become a very popular venture around the world over the past few years. While it is very popular, there are some risks involved in trading digital coins. Having a well-developed and proven strategy while trading cryptocurrencies is a very important thing for making profits in the crypto market.
Today, we are going to go through the 3 best trading strategies that you can use to trade cryptos. Each of these strategies is proven to be successful and also has very unique risk management and profit balance.
Based on your risk tolerance and final goals of trading, you can choose the strategy that fits your trading ventures and goals the most. Earning profits through crypto trading is all about making the right predictions about price fluctuations in the market. For this, having a strict set of rules and principles can be a good help.
These are three of the most popular crypto trading strategies in the market:
- Smart Trading
- Automated Trading
Let’s go through these strategies one by one and find what each of them has to offer to traders.
Out of the many crypto trading strategies, one of the most popular ones is the smart trading strategy. When using this strategy, you are mixing different smart orders, such as Stop-Limit and Trailing Stop-Loss.
This trading strategy offers traders a really good risk and returns control, which can help you better plan your positions. There are different types of combinations you can use. One of the easiest is combining take profit and stop-loss.
When using this strategy, you are only required to place 2 orders. The stop-loss is used to limit the losses if something goes wrong in the market. On the other hand, take profit is used to make sure that you get the profits whenever the market reaches aimed conditions.
You can also combine multiple take profits with stop-loss, which is used to take your strategy to another level. When you use 2 or more take profits, you are able to spread the risk of trading which will maximize your chances to make good profits. While it is very similar to the previous method, it simply makes everything easier and less risky.
To test out which method works best for you, you can use the free trading mode and see how different methods work for you.
If you are someone looking for consistent and regular daily returns from the cryptocurrency trading market, automated trading can be a great fit for you. There are numerous crypto trading robots available in the market, such as the Bitsgap trading bot, for example.
Crypto trading robots are able to analyze the market 24/7 and look for the best trading opportunities even when you are asleep. You can also enable smart trade orders, which will further increase its effectiveness.
Automated trading is a very popular strategy in the market as it helps traders easily invest in the cryptocurrency market. This way, you can go on with your day and let the robot make profits for you.
Known as one of the most effective strategies in the market, HODL is used by a lot of crypto traders every day. With this strategy, both risks and possibilities are unlimited. You can end up losing everything or winning huge returns with this strategy.
One of the best things about HOLD is that all you need to do is simply buy digital currencies without setting the take profit or stop-loss. This trading strategy can either make or break you, because of which, it is very important to really think about the risks before deciding to use it. Let’s say that you buy BTC, and the price of it increases 10 or 15 percent on the second or third day after buying.
You will be making good profits even in this little time. But what if the price falls drastically? Then, you’ll be losing. But, the majority of the crypto traders using the HODL strategy are investing when the price is very low and take their profits once the price increases drastically.
Because it is so risky, it is very important for traders to have a special mindset while trading. Basically, you are required to be able to trust your instincts and decisions, otherwise, it will be hard to make good profits with this strategy. A very important thing is to only invest the amount of money that you can afford to lose when using the HODL strategy.
While risky, this strategy is also known as a way to avoid the volatility of the market and survive the short-term price movements in crypto trading.
Which strategy should you use?
While all of these strategies are really good, they all come with their own distinct advantages and disadvantages. For the best outcome, it would be best to use all three of these strategies once you gain enough experience. Diversification is a very important step towards success in any market, and crypto trading is no exception.
You can allocate the funds to each of the strategies according to your personal preferences. However, using most funds for the strategies that have the lowest risks is the best thing to do.