Monday, August 15, 2022

Crypto Trading Strategies: Overview

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By simply buying and selling crypto, you are unlikely to make significant profits. Special trading strategies allow you to know exactly where to purchase a particular digital asset. Those tactics are based on various analysis instruments, including math indicators, graphic tools, etc. You should learn more about those tools before you start using them when trading for real money.

Types of Crypto Strategies

If you are new to trading, you should be aware of the possible types of trading strategies that you can use. All those tactics can be divided into three main groups — trend following strategies, reversal systems, range trading tactics.

Trend following strategies allow you to buy and sell those tokens and coins that are currently trending. This means that their price is constantly growing (even if there are some short and brief corrections). To build such a strategy, you may need to install a trend-following indicator (like Moving Average, Envelope, etc.) or use graphic tools like trend lines, price channels, and others.

Reversal strategies, in turn, allow you to earn a profit when the trend is over, and the price turns in the opposite direction. To create this type of strategy, you can use various types of oscillator indicators like Stochastic, RSI, etc. You can also use support/resistance levels, Pivot Points, and other graphic tools to define points where the price may change the direction.

Range strategies are relevant in situations when the market has no clear direction. The price fluctuates within a horizontal channel testing its upper and lower bands. Those strategies may include oscillator indicators and various graphic tools. They are very simple to understand and apply. You need to wait until the price tests any of the range bands and trade in the opposite direction.

Should I Use Fundamentals to Trade crypto?

Crypto trading strategies may also include some fundamental analysis features. You may avoid news if you don’t want to deal with it, but it is recommended to follow the latest cryptocurrency industry trends to understand what is happening around you to make more reasonable decisions.

Fundamental analysis is one of the key factors of success in crypto trading. If you check most charts, you will see that the price reacts on various news releases, and, sometimes it may cause significant price fluctuations.

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