Crypto Trading Strategies for Beginners

7 Tips on Building Crypto Trading Strategies for Beginners

VWB Blog 3 years ago 4

Do you want to invest in cryptocurrency?

In April 2021, Bitcoin reached an all-time high of $64,863. It started with a $0.0008 value in 2009. It first made waves 8 years later, hitting thousands of dollars in only a few months.

However, Bitcoin isn’t the only important cryptocurrency for your strategy. If you’re new to trading, it helps to learn about other assets. Keep on reading to develop more crypto trading strategies today.

  1. Set Your Targets

First, set your goal for crypto trading. What motivates you to start?

It’s important because you’ll experience some losses, no matter how good you are. Knowing your motivation helps you move forward despite losses.

Your goal also eases your strategy development. It helps avoid making irrational decisions. In this journey, you’ll face a lot of decisions leading either to a win or a loss.

When you have a clear goal, you’ll have a direction to better gauge your options. Furthermore, it prevents your emotions from swaying your investment decisions.

When the time comes you hit your target, it won’t let your greed take over. It applies whether it’s a short-term or long-term goal. Remember, too much greed leads to a huge downfall.

Keep an eye out for pressure. It’s one of the most common reasons investors fail in crypto trading. Never let your fear of missing out on the latest trends cloud your judgment.

If it doesn’t align with your goal, don’t give in to pressure. It holds even when people earn money using a specific strategy now. Focus on your long-term objectives to make the most out of your investment.

  1. Do Your Research

What’s the scope of your current crypto knowledge? If your answer is something shallow, you don’t know enough about it. For example, all you know about cryptocurrencies is easy income.

Before you dive into crypto trading, expand your knowledge base. You have a lot of options for cryptocurrencies. Learn about them first so you can come up with a better strategy.

Assess the risks and decide the trading risk levels you’re comfortable with. When you have a good risk understanding, you gain a competitive advantage.

  1. Learn the Different Types of Trading

You can create a custom strategy since other traders do the same. Regardless, you must know the primary principles of cryptocurrency trading. They serve as the foundation for your methods.

First, we have crypto day trading. This method is all about trading on the exchange in one trading session. The positions don’t carry over to the next day.

Another popular style of trading is scalping since you must be quick. It involves opening and closing positions within 15 minutes. It results in low but quick profits.

For a new, casual trader, an investing strategy might work better. It’s less of a trading strategy since you’re buying an asset for long-term goals. You hold the currency, hoping it increases value over time.

These give different results, all can give some profits. However, the timing must be right. Study the different crypto trading strategies to see which works better for your goals.

  1. Split Your Crypto Trading Portfolio

You can reap thousands of dollars in a day, but you can also lose it within the same duration. If you want to avoid this outcome, diversify your portfolio.

You can set up your rules about how you want to split your portfolio. However, it’s best if you don’t go all-in on one asset. It allows you to use your other cryptocurrencies to cushion the fall.

Bitcoin is the most valuable cryptocurrency today, costing $50,245. It’s okay to use it as a base for your strategy. Never rely on it since the future is unpredictable.

  1. Determine Your Enter and Exit Strategy

One of the basics of crypto trading is knowing when to enter and exit. Entering means buying a crypto asset and exiting means selling it.

Determining your entry and exit strategies depends on your research and understanding of the market. Learn technical analysis and study graphs and charts for maximum profits.

Consider selling in portions. Leave some coins to ride in case it gets higher. It allows you to make profits all the way up while better managing your risks.

  1. Stay Updated

The beauty of the crypto market is the lack of regulation, leading to its phenomenal growth in recent years. However, it also means the market is extremely volatile.

Everything you know can change in a day. For example, the Aave price can go up today and down the next day. Stay on top by reading the news and keeping yourself updated on the trends.

Look for legitimate news sites and consider getting on social media, too. It helps to follow other traders and forming a network. It allows you to learn more about the market and gain new insights about trading in general.

  1. Start Small

The best advice for new traders is to trade only what you’re willing to lose. Assume the money you shell out has a low chance of coming back to you.

Don’t put your life savings in an unpredictable market. Starting small helps you learn the basics without the pressure of having your next meal dependent on your decisions.

If you lose, you’ll at least gain some helpful knowledge for the next time. Or it might make you realize trading isn’t for you after all.

Learn More About Crypto Trading Strategies

One important thing to remember is a “one-size-fits-all” formula doesn’t exist. Do your research and gain more valuable insight. Never copy another person’s crypto trading strategies, but use them as a basis for your own.

In the end, you won’t know the result until you try it. Never limit yourself to hypothetical situations and invest money into cryptocurrencies today. Start small to avoid losing your life savings.

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