It sounds so easy, doesn’t it. Put your money into crypto and watch it double every week. Ah, if only it was so simple.
As we’ve been trading crypto for a few years now, we can vouch for the fact that it isn’t as easy as it looks. Yes, there are some great gains to be made. But, when the tide turns, things can quickly spiral out of control.
And that’s where having a crypto trading strategy helps you to stay focused.
By identifying your trading style, you can avoid doing silly things like FOMOing into trades, selling everything on dips or going all in on a silly meme coin.
Yes, we’ve done all of the above.
Without further ado, these are our best tips for the most effective crypto trading strategy…
Avoid leverage trading
Leverage does equal big gains. But it also equals massive losses too.
So, unless you have a lot of experience and you’re using money you can genuinely afford to lose, we don’t recommend leverage as a trading strategy. Especially not to start with.
Using leverage is the tool of experts and professionals. We recommend building up a solid portfolio and understanding how you react in the trae before you start using leverage in crypto.
Yes, you can really amplify those gains, once you know how to leverage. But… Patience young grasshopper. Good things will come.
- Who is it for?: Professionals and experienced traders
- Difficulty rating: 8/10 – this relates more to managing your emotions with the money at stake than the actual act of trading…
HODL – aka Holding
The easiest way to trade crypto is holding. Or HODL as it’s called in the community. This might mean ‘Hold On for Dear Life’ – or it might just be someone misspelled hold and now it’s stuck.
Is HODL really a viable crypto trading strategy?
Actually, yes, we think it’s the best way for people who are new to crypto, or those who don’t have time to trade.
So how do you HODL?
Simple. Identify the crypto projects that you think will gain in the coming weeks/months/years. Buy your coins and leave them.
It’s a good ideal to set some sell limits based on the projected price gains. This means that when your coin hits it’s target, you’ll take a bit of profit to withdraw or invest elsewhere.
A word of warning. Holding isn’t that easy. The crypto market is notoriously volatile, and no sooner have you put $1000 on Cardano or Ripple, chances are the market will drop 25% leaving your portfolio looking a bit red.
The trick is to ignore these moves, and just allow the market to do it’s thing. Look at your identified coin on a daily or weekly chart, and you’ll see how the moves happen.
Holding usually means holding for a few months or years, at least.
- Who is it for?: Anyone who wants to gain from potential gains in crypto
- Difficulty rating: 3/10 – it does take some patience to sit out those dips and wait for your targets to hit
The trading strategy of the professionals on Wall Street, day trading is where the big money plays. Can you do it too? Absolutely.
Is it easy?
Day trading is essentially identifying opportunities to trade within a one day period and then closing those trades. Typically it refers to leveraged trading too. Historically it was constrained by the timing of the forex or stock markets, which would close at the end of the day. However crypto trading is open 24/7, so technically, you can run a ‘day’ trade over a couple of days if it’s going your way.
To be a successful day trader you need to be able to do effective technical analysis. This means using fib lines, moving averages, trend lines, understanding support and resistance and paying attention to fundamental analysis/market sentiment.
Put simply; you’ll need to do your homework before entering a trade.
You’ll also need to have the time available to watch the market, do your analysis and spend your ‘day’ trading.
This is something that we do regularly here at Playboy Cartel, and yes, it can be very profitable. But before you commit, we think you should try the next crypto trading strategy first.
- Who is it for?: People with technical analysis experience, with time to trade and an awareness of the market
- Difficulty rating: 7/10
This is probably the most popular way to invest in crypto for beginners and casual traders. The reason for that is because you can run a trade over the course of a few days to a week, and make your gains on movements in that time. It’s less stressful than day trading, but you’ll see results quicker than HODLing.
Like day trading, you will need to do some sort of technical analysis. Basically, identifying a coin that is moving in the direction you want, and finding your buy and sell points BEFORE entering the trade.
As an example, lets say you’re entering a trade with ADA (Cardano) and you think it is going to climb in the coming week or two.
You would find your support price to buy in, set your target sell and – ideally – have a stop loss too.
As a crypto trading strategy, swing trading is useful because you can set up a trade in minutes and then go about your week as normal. You can also, of course, run multiple swing trades at the same time.
- Who is it for?: Casual traders, beginners or those with some expertise who want to capitalise on the markets
- Difficulty rating: 6/10 – you still need to do the analysis and identify your buy/sell limits. But less stress means this is a good strategy for those who have other things to do…
Probably the most intense form of trading, scalping involves making profits off small price movements. This means identifying a price range, usually on a 5 minute or 15 minute chart. You would then trade the movement of the price range to take a small percentage gain.
Scalping can be a very profitable trading strategy when the market is buoyant. However it takes the stress factor of day trading and multiplies it tenfold.
Scalping is usually done with leveraged trades, which amplies the gains and losses. That means it should really only be done by experienced traders.
We’ll look at scalping in more detail soon. But if you’re just looking at crypto, this probably isn’t the strategy for you.
- Who is it for?: Experienced day traders
- Difficulty rating: 9/10
Want to do your trades automatically? Actually, yes, this is a very useful approach and one that can take the strain on your daily trades.
Using trading bots is definitely a good way to diversify your crypto trading strategy. But there is still a level of expertise required.
You’ll still need to identify the coins that you think are going to perform, and set up your bot to buy and sell within a range. You’ll also need to set your buy/sell percentages and monitor the market and the bot to make sure it’s all going your way.
There are some really good bots, including on Kucoin and Huobi, which have built in grid trading bots.
We also recommend 3Commas and CoinRule which are really useful bot trading tools.
- Who is it for?: People with some experience trading, but who would rather leave the bots to day/swing trade for them
- Difficulty rating: 5/10 – understanding how to set up the bots can be the hardest part
If you want to learn from experts, then copy trading is an excellent place to start. With copy trading, what you do is follow a trader and either set your trades to copy them exactly, or enter them yourself.
It sounds super easy, and a ticket to instant gains, right? Well, there is more to it than that.
You’ll need to choose your trader wisely, as each have their own trading style. Some might be more gung ho, with the potential to lose all your money. Others might be more cautious and complete small trades on obscure projects.
And that’s the thing. They’re not using your crypto trading style, it’s theirs. But to see how the experts do trading, copy trading is great.
The best platform, by far, is eToro. Sign up via this link and check it out.
- Who is it for?: Learners or those trying to hone their strategy.
- Difficulty rating: 5/10 – you still need to check your trader, follow their trades and pay attention to what is going on
Whats your trading strategy?
For many traders, they’ll have multiple crypto trading strategies on the go. You might be HODLing a few coins long term, doing some swing trading when you get the time and running a trading bot too.
Diversification is key. But remember avoid taking on more than you can handle, and NEVER invest money you can’t afford to lose. Cryptocurrency is a volatile market, and you can easily lose all your money just as much as gain.