|
|||
Best Crypto Trading Strategies for Beginners
Cryptocurrencies were among the best performing asset classes in 2021, as more investors rushed into the crypto market using brokers, forums, and crypto exchanges are hoping to profit from digital investments that have the potential to grow in value over time. However, cryptocurrencies are inherently risky assets with volatile price swings. Crypto trading without a strategy can result in a reduction in investment. While most analysts believe that there is no such thing as a "perfect" trading strategy, there are four well-known methods that are ideal for newcomers.
Dollar-Cost Averaging: Dollar cost averaging is a well-known trading method that works best when applied over a long period. The principle is straightforward. Instead of investing all of your money in one cryptocurrency at once, divide it into little sums and buy just during specific times and days of the week.
RSI Divergence Approach: The RSI divergence approach is more technical in nature, yet it may be very effective in anticipating trend reversals. When the price begins to move in the other direction, from a downtrend to an uptrend or vice versa, this is known as Reversal. The "Relative Strength Index," or RSI, is a chart indicator that calculates the average number of gains and losses over a 14-day period to determine momentum. Whether an asset is "overbought" or "oversold," the indicator line oscillates between 0 and 100, indicating when it is "overbought" or "oversold." This is most usually shown on a channel between 30 and 70. The asset is termed "overbought" when the indicator line breaks out of the channel over 70, and the price will most certainly fall. When an asset breaks through the bottom of the channel below 30, it is termed "oversold," implying that it will likely climb in price.
Golden Cross/Death Cross: The "golden cross/death cross" strategy employs two moving averages (MAs), which are lines on a chart that represent the mean average price of an asset over a certain period of time. Overextended chart time frames like the daily and weekly charts, you're looking for crossings between the 50 MA (an average of the previous 50 days) and the 200 MA (an average of the past 200 days) for this strategy. This is another long-term trading strategy that works best over 18 months and beyond because it deals with monitoring price action over long time periods. You're looking for two types of crossovers: Convergence (golden cross) entails the convergence of two or more points. When the 50 MA crosses over the 200 MA, the market is in a bullish mood. Death cross (divergence): When the 50 MA falls below the 200 MA, it is considered a bearish signal.
Copy Trading: The concept has already evolved into a social layer between professional traders and individuals who are simply looking for a way into the market. Advanced and developing brokers offer new technological goods known as copy trading platforms in response to the expectations of inexperienced consumers. The success of cryptocurrency copy trading is all dependent on the IB you choose to follow. As a result, the goal is to choose an expert with a lower risk profile and a convincing track record of closing deals. Trading alone, on the other hand, is more likely to result in failure, as 90% of all beginners lose all of their money at once. The copy trading model was created to avoid such losses and to keep more beginners involved in successful trading without any prior experience.