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How To Trade Cryptocurrency With the 3 Best Strategies

The desire to learn how to trade cryptocurrency is one which is rapidly growing as we all seek to get ahead of the market moves. 

With the recent surge in popularity of cryptocurrencies, more and more people are looking to get involved in trading these digital assets but if you’re new to the world of cryptocurrency trading, there are a few things you need to know before getting started. 

In this guide, we will run through the basics of how to trade cryptocurrency, including how to choose a broker, how to place orders, and a few of the best cryptocurrency trading strategies you may want to employ.

how to trade crypto across multiple devices
Choosing a Crypto Broker Or Exchange Is Necessary 

When it comes to choosing a crypto broker or exchange, you will want to make sure that they offer a platform that is easy to use and has all the features you need. You may even want to consider some of the differences of centralized vs decentralized exchanges before making that choice. One thing you will definitely want to be sure of is that they offer competitive fees. 

Once you’ve found a crypto exchange that meets your needs, you’ll need to open an account and fund it with cash or cryptocurrency. Once ready with an active account, you will then be able to start placing orders. 

Order Types Are An Important Part Of To How To Trade Cryptocurrency Successfully

When you place an order, you’ll need to specify the amount of cryptocurrency you want to buy or sell, as well as the price you’re willing to pay. It’s important to remember that prices can fluctuate wildly in the world of cryptocurrencies, so it’s important to monitor your positions closely and use buy orders that are set to ‘Limit ‘order price rather than ‘market’.

To set a limit order, you are stating the maximum price you are prepared to pay for your cryptocurrency buy, and if the price is above that level, your order will not be filled. If you set a market order, the exchange will fill your order at the best available offer, which during times of high volatility can be moving rapidly by the second.

Even more so when you are learning how to trade cryptocurrency rather than just invest, you will want to be on top of your order types in order to best implement one of your trading strategies.

Once you know how to execute a buy order, you will then need to learn how to set stop loss orders, trailing stop losses, as well as target prices for when to take profits. 

Each of these order types can be pre-set and is advisable especially if you are considering holding positions open for any length of time above a few minutes. With stop-losses in place, you can sleep soundly with overnight positions in the knowledge that your downside is limited to your predefined level.

3 Best Cryptocurrency Trading Strategies

Cryptocurrency trading has flourished in recent years with trading volume and high volatility levels in various crypto encouraging short-term as well as long term trading. Traders are being supplied with plenty of movement on hand for varying crypto trading strategies to be effective but of course none of this is relevant if you do not know how to trade cryptocurrency. 

If you are a beginner to trading in crypto, apart from knowing when to buy cryptocurrency, there are a few day trading crypto strategies that you will want to know about. Below is a list of some of the best cryptocurrency trading strategies ranked in 2022 that might interest you;

1. How To Trade Crypto With Swing Trading Momentum

Swing trading is usually a short term trade where you can earn profits by opening positions for a limited duration of time. Most swing trading crypto strategies will keep positions open from a few hours, all the way through to a few weeks but it is more common that traders will try to exit positions within days.

This cryptocurrency strategy enables you to hold on to positions to predefined targets on a larger price movement that would be made possible from a preset day trading period. By holding positions for more than 1 day, you are able to participate in larger macro movements. 

You need to utilize both analytical and technical analysis to calculate your position and target, as well as track market price to aim for crypto with short-term momentum that can be used for this type of cryptocurrency trading strategy. 

swing trading in crypto using arc of a momentum swing
The swing trading strategy uses the momentum of the market for short term trends, before a reversal sets in

Swing trading is undoubtedly a very useful strategy meant for those that intend to open smaller positions as compared to larger trades that involve a relatively higher risk percentage on a volatile market.  This is all about taking advantage of market momentum and spotting trends on charts.

Swing trading applies to all forms of cryptocurrencies and you can easily find plenty of resources, videos, e-books, webinar tutorials, and even full-length courses that collectively cater to the cryptocurrency swing trading community of learners. 

It requires less time investment but consistent oversight to master live cryptocurrency trading strategies that work effectively. Swing trading includes a risk factor in particular scenarios when you are using leverage and trading crypto on margin. At this point, if you do not have proper stop losses and risk management strategies in place you can wipe out your account with a smaller movement owing to the volatility that crypto trading provides. 

2. The Scalping Strategy, For Active Crypto Traders

In the act of learning how to trade cryptocurrencies, one such cryptocurrency trading strategy for daytrading that you must not ignore is the Scalping Strategy

This popular strategy involves taking many mini profits from small price shifts. You might expect a typical scalper to make upwards of double digit trades per day, versus a swing trader who might only choose to take 1 trade. This particular strategy is suitable for all those traders that like playing within a narrower risk range as opposed to taking larger risks because most of your trades will be within quite a narrow range.

Crypto strategies have multiple timeframes and charts open
Scalping crypto trading strategies involve multiple timeframes and charts open and many daily trades

In the scalping strategy, the principal priority is to limit your risk percentage through brief market exposure and by capitalizing on smaller price investments to earn benefits with greater frequency. 

Practically speaking, you will need to commit your time to your live trading feed and your entire focus must be on the screen when working with one-minute charts. However, you must be aware that scalping is not as profitable when the market is stuck in a narrow range. 

Therefore, you must be skeptical as well as analytical while dealing with longer time frames and if they reveal no opportunities, then try shorter time frames for scalping. 

3. Crypto-Arbitrage Trading Strategy Requires Tools

When learning how to trade cryptocurrency, another strategy worth mentioning that could enable you to reap the exciting benefits of digital currency market volatility is the “Crypto-arbitrage Strategy”

You will likely be very interested in the fact that this is one of the cryptocurrency trading strategies that helps to reduce the risk factor as close to zero as is possible. 

crypto arbitrage trading strategy buy and sell simultaneoulsy
Crypto Arbitrage trading strategy involves buying and selling simultaneously and taking the small differences in price sometimes available

Using crypto-arbitrage you can trade a single cryptocurrency at different rates across different crypto exchanges at any single point in time. You are effectively aiming to scan multiple crypto exchanges to locate the trending price differences for the same cryptocurrency and then buy it at the lowest possible price whilst simultaneously selling it for a higher price to make a small profit without jeopardy. 

This is a strategy that would require quite a lot of dynamic checking from a human trader, and as such a crypto arbitrage strategy can be employed most successfully by using an automated trading bot

The bot would prove a helping hand in enabling you to scan various exchanges at the same time, thus making both buying and selling possible simultaneously. In this way, you can take advantage of the maximum price shifts before they potentially get resolved.

Some of the interesting tools you may wish to consider for this strategy include Expert Advisor software, crypto signals services, algorithm trading bots, and dynamic trading charts.

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SUMMARY : Best for beginners