Trading cryptocurrency is extremely popular within the crypto space. This is often thanks to how monetarily beneficial it can be when done effectively. The crypto market is extremely volatile, which is great for traders, as this presents frequent trading opportunities. However, trading cryptocurrency must be done with a technique that is appropriate to that market. In this article, we will take a glance at a number of the more popular strategies traders are currently using.
By far a well-liked strategy to use is arbitrate trading. This strategy takes advantage of the manner in which crypto is bought and sold by traders within the space. For instance, if you wanted to shop for Bitcoin, you’ll do so on a variety of exchanges, like Coinbase or Binance. However, it’s often the case that there’ll be some slight variations in price across these exchanges as there are different levels of supply and demand. For example, the worth of Bitcoin might be trading at $10,000 on Coinbase but $10,100 on Binance. This makes arbitrage especially effective, as you’re ready to capitalize on the differences in price that exist between exchanges.
2. Swing trading
One thing that allows trading cryptocurrency to be so profitable is the volatility. The worth of Bitcoin can easily swing by huge numbers over the span of a couple of hours. This is often great for traders that are using the swing trading strategy, as profits are often made on an upward or downward price swing. This strategy is additionally best used with automated tools, like crypto bots and crypto signals (e.g. Binance signals). Successful traders using this strategy are able to better develop a sense for when a swing opportunity may arise.
3. Fundamental analysis
This is not exactly a price action trading strategy, but this strategy is additionally very useful for traders with a longer-term view. The fundamental analysis strategy is focused on identifying assets that are undervalued, then taking advantage of price appreciation before the wider market realises the worth of the asset. This strategy is generally utilized in the context of traditional markets (e.g. stocks and bonds), and as a result, the metrics that are used to determine the worth of an asset can differ to cryptocurrencies. Whilst in traditional markets the worth of a stock is determined via the Earnings Ratio and Earnings Per Share Ratio. For crypto, metrics like the standard of the team and value proposition of the cryptocurrency are more likely to be used.
That concludes our list of crypto market trading strategies that some traders are using to gain a foothold within the cryptocurrency market. These are far and away not the sole strategies that are utilized in the space, so exploring additional strategies is suggested. Find your style and then form strategies that fit that.