Using the best crypto trading strategies may look like a shortcut to success and wealth. However, in reality, crypto trading is a more complicated issue that is considered a high-risk investment. It is not just about having a clear trading plan but also a clear understanding of investment methods that can vary depending on the tactics and techniques you prefer.
The main thing you need to keep in mind is there is no “ideal” crypto trading strategy. On the other hand, beginners can benefit from a couple of proven approaches that might be a good pick for a start. In this article, we will have a detailed overview of the two best crypto trading strategies that rely on charting and a basic understanding of how candlestick patterns work.
As stated earlier, even the simplest approaches will require some knowledge. The good news is that some of the described tactics can be optimized using automated trading tools or bots. Besides, you can always opt for copy trading as the ultimate beginner tool to enter the market without prior knowledge. In the rest of the cases, traders are supposed to learn how charts and candlestick patterns work.
So, the two best crypto trading strategies for beginners are the following:
DCA is a popular methodology that can be applied to any tactics including crypto trading strategies. The idea is to execute orders over timeframes. The concept relies on the idea of dividing your initial capital into smaller parts and investing in several assets or coins instead of investing all your cash into a single instrument. Additionally, a trader is supposed to conduct a schedule and define a specific period for buying or selling coins.
For example: let’s say, you have $15,000 you want to invest in crypto. Instead of putting all eggs into one basket, you can divide the initial capital into 15 lots of $1,000 each. At the next stage, you need to define a specific time of the week or day you are going to purchase coins. Over the next several weeks, you need to stick to the schedule and gradually invest all of the 15 lots.
The main mission of such an approach is to reduce the risks resulting in increased market volatility. Regular intervals will let you keep the asset price under control as well as promptly react to the market movements.
The ability to make the process fully automated with the help of trading bots makes this crypto trading strategy perfect for beginners, although you should not solely rely on artificial intelligence. Besides, manual control will help you learn the market faster.
The method relies on utilizing two moving averages, which means you have to work with technical indicators and chart patterns a lot. Indicators will help you identify the mean price of an asset over a given timeframe.
To follow this crypto trading strategy, users will need to seek a crossover usually plotted between the 50 and 200 MA that appears on long-term charts following the daily or weekly patterns. The idea is to keep control over the price activity and move over a wider timeframe. This is why the golden cross/golden death refers to a long-term trading technique. To have the best results, the method should be implemented over an 18-months period or even longer.
As a crypto trader, you will have to search for two different types of crossovers:
Golden cross generates signals when a short-term momentum exceeds the long-term one. It means you need to enter the market with a long position. Vice versa, golden death is associated with the long-term momentum exceeding the short-term one, which means you need to go short and exit the market. This method works great in case of increased market volatility and the asset price moving up and down sharply.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.