Today, with the passage of time and the development of technology, many methods of earning money have been presented, one of which is earning money through trading in the digital currency market. As you read in the Oscillation and Candlestick articles, you need to learn certain techniques to analyze and review each cryptocurrency, and in this article we intend to introduce you to trading strategies. Trading in financial markets means buying and selling assets. Trading and investing are different and not the same thing, trades are done on a monthly to yearly basis. Day trading is the shortest type of transaction that the user opens a transaction in less than a day, then exits it.
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In fact, the trader makes the transaction in a few hours, which is usually low in this trading style. It is recommended to use technical and fundamental analysis to buy and sell assets. Analyzing and reviewing these charts helps the user to better understand the upward or downward trend of a cryptocurrency and start trading using the correct statistics.
Therefore, in order to make any transaction in the financial markets and digital currency, users must first know how to trade and the right time, which we will discuss below.
Read more: Digital currency training
10 of the best trading strategies
For a better understanding of trades and trading strategies, you must first analyze and review the asset in question. By using trading strategies, you will undoubtedly have a greater chance of success in future transactions.
Scalping is one of the good and profitable methods for trading in the financial markets, which is known as volatility. In this way, traders benefit from momentary fluctuations of the market. According to experts in the world of digital currencies, with the correct use of the scalping method, you can achieve significant profits. In fact, in scalping, you enter the transaction by identifying the fluctuations in the price of the desired currency and exit as soon as you earn a certain amount of profit from this asset. The amount of profit in these trades is low, but since a professional trader makes many trades in this way during a day, he will receive a significant profit in total. In this transaction, high profit is not important and the only thing that matters is the number of transactions in a short period of time.
The most important feature of the scalping strategy is its very short trading time frames. In this case, suppose you make a mistake to enter a trade, you can get out of this trade as soon as you realize your mistake because the losses in scalping are very small.
2. Momentum trading
Montum trading is recognized as one of the simplest trading strategies in the digital currency market. In this way, you can profit by just riding the wave of price fluctuations. Unlike scalping, this method is a risky method, because the process may change at any moment and cause you losses. One of the things that is very important in Montum trading is the volume of transactions. In this method, traders wait until the trading volume of the desired asset reaches a certain amount, then exit. This method is not recommended for beginners because using the right indicator and correctly analyzing the market trend is not for everyone.
3. Reverse trading
In this method, traders enter the transaction by predicting the reverse of a cryptocurrency; Suppose Akita digital currency has had an upward trend during a certain period of time, traders predict its future downward trend and enter the transaction quickly. This method is one of the most profitable trading strategies, but keep in mind that if you make a wrong prediction, you may suffer significant losses. Therefore, reverse trading can be considered a high-risk method, for which it is better to have a high risk-taking power.
4. Fading (Fading trading)
Feeding works like reverse trading; In this way, the trader must predict and identify the reverse method in the market, then enter the trade. Most of the trading strategies like feeding are dangerous and full of risk, so it is recommended to learn the methods of analysis and review first, then start trading. It is true that this method is full of risk and danger, but with its correct and timely use, its profitability is much higher than daily trades.
5. Daily fluctuation
Undoubtedly, the market of each cryptocurrency has various fluctuations in its price value, which goes up or down after its price fluctuations. Traders in this method enter the trade in the shortest possible time after observing the fluctuations and ride the wave of fluctuations created. For example, the price of Bitcoin fell by 20% in the last few days (you can read the reasons for this price drop in the article on the fall of Bitcoin) and traders started trading after observing this price fluctuation. Buying or selling at this time depends on your trading strategy.
6. Range trading
In the swing range method, users must be thoroughly familiar with candlestick patterns because in this method traders are constantly dealing with support and resistance levels. Suppose the price of Gala digital currency approaches the support level, traders enter the market at this time and sell their assets when the asset approaches the resistance level. Volatility ranges can be a good trading strategy for beginners in the digital currency world. But keep in mind that learning candlestick patterns is a must in this method.
7. Buying at a low price and holding assets
Buying currency at a low price and holding it is a long-term strategy. Warren Buffett is one of the rich giants of the stock market, who has mentioned a lot about long-term investment in his book. In the lessons of Warren Buffett’s book, it is mentioned that investing in the long term, you should hold your capital for at least more than a decade. As mentioned, the digital currency market is a world full of risks and is not suitable for everyone. Many people may get scared and get out of the market after every price fluctuation and prevention of the downward trend, but such fluctuations are a great opportunity for professional traders.
After observing such fluctuations and price drops of a cryptocurrency, traders enter into the transaction and after holding it in the long term, they achieve significant profits. Keep in mind that until now, digital currencies, especially those that have gained a lot of fame, were always growing and climbing, and this is due to their great popularity in the last decade. Therefore, the buy and hold strategy is considered one of the low-risk methods with high profit.
8. Algorithmic trading (High frequency trading)
One of the most complex trading strategies is algorithmic or high frequency trading. In this method, the entire trading process is done by specialized computers, and traders need specialized equipment to trade with this method. To predict and check the market of a currency, you can do all the mentioned things together with the help of a computer. The most important advantage of this method is its high speed, because there is no need for traders to start investigating and analyzing an asset; Traders can complete the entire process in less than a few minutes using a computer. Algorithmic trading is a method of gaining profit in the short term, but because it does not require the intervention of a trader and all the work is done by the computer in the shortest possible time, it has considerable popularity.
Arbitrage is an easy and convenient method; In this way, users check the price of a currency in several exchanges and after finding the cheapest price in one exchange, then sell their assets to another exchange with a higher price.
10. Golden Cross and Death Cross
Another way to check the trend of a market is golden points and death crossings. Golden points are when the average price of a currency is higher than its long-term average in a short period of time. For example, suppose the price of Ripple digital currency has increased by 8% in the last year, but it has grown by 10% in the last month. With this time, Ripple’s golden points are said. On the contrary, if this result is the opposite, the intersection of death occurs.