Top 6 Cryptocurrency Trading Strategies for 2021

Buy promising cryptocurrencies and hold onto them for months. For instance, you could buy 100 Ethereum and just check the index in 3 years. It is your guarantee for a permanent buyer/seller connection. Otherwise, you won’t be able to make a deal when the price is falling.

If you didn’t know, Ethereum is the second most popular cryptocurrency, as well as the second-highest market cap . Trading Bitcoin for profit is actually a universal cryptocurrency trading strategy. It can be used to trade any of the 22,000 and counting cryptocurrencies available to trade today. If you’re not already familiar with cryptocurrencies it’s best to first start with a brief introduction. Is a type of algorithmic trading strategy typically used by quantitative traders (“quant” traders).

  • The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
  • You have to analyse a lot of information and be ready to connect each trap with bearish or bullish trends.
  • But, on top of the crypto exchange fees, it is essential to know that crypto tax comes on top of the trading platform fees.
  • This encourages traders to remove the cheaper LINK and add ETH until the prices realign with the rest of the market.

Some focus on technical analysis using technical indicators, such as the RSI indicator, MACD, moving averages, or simply identifying chart patterns and other price action patterns. Crypto day trading is a high-risk strategy involving the frequent purchase and sale of cryptos in the pursuit of short-term profit. Anyone who’s interested in day trading crypto should know where they plan on trading, have a detailed day trading strategy, and stick to their entry and exit points. The long straddle is a popular option in crypto trading because of the crypto market’s volatility.

What is paper trading?

Its highest yield strategy, with an average APY between 20-80%, sells far out-of-the-money , short expiration term covered call contracts on Bitcoin to earn interest for stakers. If Bitcoin’s price is below the strike price at the date of expiration, the Flynt pool walks cryptocurrency trading strategy away with the entire cost of the call contract. Expert traders rely on well-thought-out methods for their success. They know that even though crypto prices fluctuate, they tend to follow predictable patterns. As a result, a strategic approach to trading is required.

If you understand this manipulation process, you can also take advantage of them. If you are interested in range trading, you will also have to pay strong attention to oversold and overbought zones. By overbought, we mean that the traders have saturated their profits, and now they might sell off the token, while oversold is the opposite situation. Another popular cryptocurrency trading strategy is called Scalping, which looks to use frequent, but smaller trades that are closed once it shows a small profit. These trades may be held for a few minutes before being closed out and scalpers may trade many times a day.

Cryptocurrency trading strategy

That was a systemic failure that led to a market meltdown. The cryptocurrency derivatives marketplace consists of financial instruments whose value is based on a virtual currency’s value. These derivatives can be based on other derivatives’ value and forming multiple tiers – a house of cards if you will. Luckily, with cryptocurrency, most of the networks are public such as Bitcoin and Ethereum making access to these on-chain factors easy.


SHIB token is our first token and allows users to hold Billions or even Trillions of them. Nicknamed the DOGECOIN KILLER, this ERC-20 ONLY token can remain well under a penny and still outpace Dogecoin in a small amount of time . Popular worldwide, and already up thousands of percent, Shiba token is the first cryptocurrency token to be listed and incentivized on ShibaSwap, our decentralized exchange.

Cryptocurrency trading strategy

Often, your goal will be to identify an asset that looks undervalued and is likely to increase in value. You would purchase this asset, then sell it when the price rises to generate a profit. Or you can try to find overvalued assets that are likely to decrease in value. Then, you could sell some of them at a high price, hoping to buy them back for a lower price.

Decentralized exchanges

If you’re big on your right to privacy, then you will love cryptocurrency trading. With crypto trading, you have access to decentralized cryptocurrency exchanges. These allow you to trade with self-custody assets without the need to submit your identity online. Of course, there are centralized trading platforms if you don’t mind sharing your particulars and having another party storing your digital assets. The problem with traders and investors, in general, is having their hands on too many cryptocurrencies at a time. While this may not seem like a problem, the common sense here is to focus only on a few coins.

Cryptocurrency trading strategy

Bear in mind that scalping can be risky if you’re placing multiple trades on a very short-term basis. You may want to use tear-off tickets when you’re scalping. With them, you can set up a position in the opposite direction so that you’re ready to exit, either taking your profits or limiting your losses. There’s no ‘waiting for the market to depict trends’ as you’ll have to be quick, and close trades that are losing money instantly. The more volatile the market, the better it is to employ scalping.

Chapter 4 – Technical Analysis Basics

For this strategy, you are looking for crossovers between the 50 MA and 200 MA over long chart time frames such as the daily and weekly charts. Because it deals with observing price activity over wide time periods, this is another long-term trading strategy that works best over 18 months and onward. Technical analysis is a trading discipline predicated upon the idea that a trader could predict an asset’s future price movements, given its historical price action. TA uses a host of technical indicators to achieve this, including trade volume, moving averages, trend lines, candlesticks, chart patterns, and more. At the end of a technical analysis, a trader should have identified trading opportunities and a potential entry point. According to Greenberg, a technical understanding of the technology and team behind an altcoin project gives traders a competitive edge.

Trading platforms

When it comes to trading and technical analysis, leading indicators can also be used for their predictive qualities. However, no special indicator can predict the future, so these forecasts should always be taken with a grain of salt. The main idea behind drawing trend lines is to visualize certain aspects of the price action.

Traders who use tight stops may be subject to a series of losses compared to those that use wide stops. Although wide stops can save you from incessant knockouts from trades, they can also leave you with large losses enough to blow your account. Using the 2% rule might be profitable and ensure you sustain your account in periods of losing streaks. As stated before, volatility varies among different coins, and studying them subjectively will help you from avoiding losses. For example, Bitcoin’s daily price fluctuation can be around 1-5%, whereas other small-cap coins like PERP might have a daily percentage gain of up to 10% and more.

Liquidity, where getting in and out positions is relatively smooth and predictable. In the legacy markets, people found guilty of facilitating pump and dump schemes are subject to hefty fines. Pump and dump schemes are often orchestrated by private “pump and dump groups” that promise easy returns for joiners . However, what usually happens is that those joiners are taken advantage of by an even smaller group who have already built their positions.

The traders then dump the crypto after earning profits, tanking the price. Cryptocurrencies and the blockchain technology that powers them are decentralized and designed to keep users anonymous and capable of processing payments without an intermediary. For day traders on a centralized exchange, the absence of government taxes and fees make the cost of transacting crypto very cheap. A trading bot is an automated software tool investors use to buy and sell financial instruments at a preconfigured time or when predefined conditions are met to maximize profits.

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