ZoneBitcoin EditorialThese last years, crypto trading really intensified. I even receive more and more questions about cryptocurrency trading on this blog. I am also delighted with it!
That said, trading requires very specific skills and a mind of steel. You will necessarily have to lose a lot before you start winning in the long term. It’s like that, trading is an art, and you have to spend many hours to understand the intricacies.
Of course, we are lucky today to be able to use trading robots, which are software in fact, which do trading automatically. These prove to be much more effective than manual trading.
But, even to properly configure these crypto trading robots, you still need to know the basics of trading. Even just the different strategies that exist and are the most effective.
So that’s the purpose of this article, here. Show you the most famous and successful trading strategies.
Cryptocurrency trading strategies
The problem is that there are many strategies you can use. None is better than the other, but each strategy has a different type of trading.
Here are the different cryptocurrency trading strategies that you can follow to improve and maximize your profits.
The Hodl strategy: the best known and the easiest
The term "HODL" and not "HOLD" (which means to keep) has a rather funny story. The word appeared in 2013 and it was someone on a forum who wrote (making a typo) "hodl" instead of "hold". From there, the term stuck because it was specifically about bitcoin.
We therefore talk about the hodling strategy when we talk about the strategy which consists of preserving and keeping one's cryptocurrencies warm. Hodlers therefore buy bitcoins and cryptocurrencies with the aim of holding them until prices skyrocket.
Quite simply. This is why the HODLing strategy is probably the easiest. It's even a strategy that we all do more or less indirectly with regard to bitcoin. We tend to see it as a placement and an investment.
To best follow this optimal strategy, the ideal is to follow these steps:
- Buy bitcoin or cryptocurrencies at the lowest price.
- Do not hesitate to buy large sums of rising cryptocurrencies.
- Wait and take a long-term view.
- Do not look too closely at all the fluctuations because the volatility is very high.
- Secure your cryptocurrencies in a Ledger type secure wallet.
Although HODLing is not technically a form of trading, it is certainly a safe way to invest in bitcoin.
The arbitration strategy: the least difficult
I say straight away that it is the least difficult in the sense that it does not require pure trading skills. It’s truly classic trading.
This strategy consists of taking advantage of the price difference of cryptocurrencies on different exchange platforms.
Indeed, the prices displayed for each cryptocurrency differ from one platform to another. This differs depending on the popularity, transaction volume and even commissions of each platform. It's a whole set of factors that mean that cryptocurrencies do not have exactly the same price from one platform to another.
So, to give you an example, this amounts to buying bitcoin on Binance at a lower price and immediately resell it on Poloniex, another platform where bitcoin is sold more expensively.
Do you see the principle?
Well, now you know the technique that many people use to make profits on trading platforms. It's truly pure trading without using curves, indices and other signals.
Day trading for the most meticulous
One of the most common forms of classic trading and that of cryptocurrencies is certainly this: day trading. As its name suggests, it involves trading in the same day. Day trading involves closing your positions before sleeping. You must therefore open and close positions every day that you trade. It can be tedious at first but traders who make money trading are often day traders.
However, the big disadvantage of day trading is that it requires a lot of expertise. The learning curve can even be relatively difficult. It takes a lot of effort. Likewise, you will of course have to learn the basics of trading but above all work on your mind.
You will have to look at several screens and graphs. You will also need to know how to make decisions quickly. Your level of attention must be high but it can pay off a lot.
Swing trading for the most relaxed traders
This is certainly the strategy that is most suitable if you have an intermediate level in the stock market. This is the strategy furthest from day-trading. In fact, when swing trading, you won't really need to keep your eyes glued to your monitors. You don't need to watch for the slightest trend on a chart as is the case with day trading.
Swing traders practice in the short and medium term. They open positions for short periods of time. Some positions remain open for weeks.
Unlike day trading, swing traders run the risk of incurring larger losses or gains because they hold their positions for longer periods of time.
The Altcoin Flipping Strategy
The other two trading strategies actually belong to classic finance trading. This is for example the case of day trading and swing trading. Of course, they work perfectly with cryptocurrencies. That said, here we are going to see a strategy that comes purely from the field of cryptocurrencies.
This strategy or method was born with the massive appearance of many new cryptocurrencies. Now it is a very popular trading method among crypto lovers (yes I have wanted to use the expression for a long time!).
This strategy involves trading multiple cryptocurrencies in the hope of generating profits. How?
Well, as you know, for the majority of altcoins, you cannot buy them with credit cards or fiat money (like euros, dollars or other national currency). No, as a general rule, to obtain altcoins, you must buy them with bitcoin and ethereum.
You understand better why bitcoin has gained so much value over time, hmm?
So the strategy simply consists of buying different altcoins as soon as they are released (only choosing the most promising ones, eh). Then, resell them of course. To make interesting profits, obviously, you must be able to have significant capital.
Traders who use this cryptocurrency trading strategy mainly use it on the Poloniex exchange platform. It seems to be best suited to this trading strategy.
The strategy of the Altoins short circuit
There are several cryptocurrencies that were created in reverse of each other. A good example is that of Bitcoin Cash created in reaction to bitcoin. Thus, traders who use this trading strategy observe the fluctuations of a currency to anticipate the reaction of other cryptocurrencies.
It's a strategy that requires a certain amount of know-how, but once you understand the mechanism, it becomes almost child's play to anticipate the trends of other cryptocurrencies.
Trading strategy on peer-to-peer exchange platforms
There, it is a strategy which consists of trading not in exchange platforms and trader brokers, but in the real world so to speak.
This is a method that is quite easy but can take quite a bit of time to master. Indeed, to the extent that you work on exchange platforms like LocalBitcoin or Paxfull, you must create a reputable user profile. That is to say having good grades in your previous transactions. It may take a little time at first but then it can go very quickly.
On these platforms, buyers and sellers meet and negotiate on their terms. With the large number of payment options, you can do this for almost any payment method. To earn bitcoin, all you have to do is sell it for more than you got it.
Are all cryptocurrency trading strategies equal?
This is indeed the question we can ultimately ask ourselves. What you need to know is that in general, all cryptocurrency trading strategies have the same principle (sell for more than you bought), but not the same process.
Some methods do not require trading knowledge. Others, on the other hand, require real training and real learning of trading.
See our article on the best platforms for trading cryptocurrencies and those dedicated to crypto trading robot.
Are you using any of these cryptocurrency trading strategies above?
