Research shows that the value of all existing cryptocurrency is somewhere in the region of $900 billion, with approximately $385 billion of this being attributed to Bitocin.
The market is incredibly competitive at the moment. It’s believed that one billion people worldwide will use cryptocurrency by 2030.
Because of this, you need to establish solid strategies to stay ahead of the game. We’re going to help you do exactly that by revealing some actionable strategies you can follow.
Why do you need to have a crypto strategy
Before we take a look at some of the best actionable strategies for staying ahead of the crypto game, let’s establish why having a solid strategy is key.
In order to reap long-term benefits from trading cryptocurrency, market enthusiasts must develop strategies that ensure trading is safe, fun, and profitable.
Trading cryptocurrency, like trading any asset, can be a rollercoaster. The cryptocurrency market is known for being volatile. Nevertheless, if you have an effective cryptocurrency investment strategy, volatility doesn’t have the be a problem.
For those new to the world of crypto investing, seeing fluctuations in their portfolio can cause panic. You can let your emotions takeover, meaning you start selling when you shouldn’t. Mistimed trades can also happen due to FOMO, i.e. fear of missing out.
Nevertheless, with a strategy, you can be at ease knowing you have formulated and calculated the most effective cryptocurrency trading strategy for you.
You don’t need to have a complex investment strategy. It’s an individual choice that needs to be planned out by considering your current financial situation, your risk profile, and your overall goals. The best way for you to invest in cryptocurrency may not be the best approach for someone else.
With a cryptocurrency strategy, you’ll have a much improved chance of making a considerable return on your investment. If you don’t have a strategy, emotions can takeover and you can miss out on big opportunities.
Actionable strategies for keeping ahead of the game in the crypto market
Now that you know why it’s vital to have a cryptocurrency investment strategy, let’s take a look at some of the different possibilities:
Investing in ALT coins, such as the APE coin
Altcoins were born shortly after Bitcoin, providing people with an alternative to the most famous cryptocurrency.
When you consider how expensive and prevalent Bitcoin is today, it’s not hard to see why an alternative would be attractive.
At the same time, there’s more risk involved when purchasing altcoins over more established and traditional cryptocurrency, such as Ethereum and Bitcoin.
The emergency of altcoins means there’s plenty of different platforms available online where you can buy APE Coin, Litecoin, Tether, Ripple, and so on.
If this is the sort of strategy that appeals to you, we recommend following these six basic steps:
- Start by determining what percentage of your portfolio you want to allocate to altcoins. As they say, you should never put all of your eggs in one basket.
- Shop around for the coins with the most promise. Your preferences and needs will come into play here.
- Exchange your fiat currency for your chosen cryptocurrency.
- Select the right exchange for your needs.
- Choose a currency pair.
- Carry the trade out and make sure the altcoins appear in your wallet.
Dollar Cost Averaging (DCA)
If you’d prefer a cryptocurrency trading strategy that doesn’t involve indicators, dollar cost averaging (DCA) is likely to be ideal for you. DCA is a popular strategy for both experts and beginner traders alike.
Rather than investing all of your funds into a certain asset at once, your investments are divided into smaller amounts. You then spread these amounts over a predetermined timeline, which are invested regularly on a certain day and time of the week – and only every on that day and time!
So, for example, let’s say you’ve set aside $10,000 to invest in Ethereum and you want to follow this strategy. You divide $10,000 by the number of weeks you want to run the strategy for.
So, for example, let’s say you’ve decided on 16 weeks, you divide $10,000 byy 16, which is $625 each week. For the next four months, every Wednesday at 3pm, you’ll invest $625 until your initial amount has been spent.
The appeal of this approach is that you can alleviate the affect of market volatility by purchasing an asset in regular intervals. This means you’ll typically generate more of the currency from your final investment than if you were to put all of your money into the cryptocurrency at once.
Scalping
In addition to the suggestions that we’ve mentioned so far, another approach you can use is scalping.
Scalping involves opening positions in line with a trend, usually entering and exiting the market numerous times within a short time period while it’s developing.
You’ll hold individual trades for just a few seconds, or a few minutes at the very most. So, this is a good approach if you’re looking for a short-term trading strategy.
This trading strategy works very effectively for an active day trader. Scalping concentrates on minute-to-minute price changes, which quantity will drive. Once the trade becomes profitable, you then exit.
You don’t wait for the market to depict trends because you need to be quick. If a trade is losing money, you’ll close it right away. The more volatile the market is, the better it is for employing scalping.
When scalping, you may wish to use tear-off tickets. This enables you to establish a position in the opposite direction, meaning you’re ready to exit if you need to. This will either limit your losses or bring you profit.
Event-driven trading
Cryptocurrency markets can be impacted by a strong media presence of a crypto exchange or certain crypto coin. This cryptocurrency approach is purely focused on taking advantage of such ‘events.’
This is a popular trading approach for those new to the world of cryptocurrency trading.
Current events news coverage can impact the prices of a lot of things, such as commodities, stock indices, and forex pairs, not only cryptocurrencies.
It’s important to stress that this influence is not just about speculation. A lot of experienced traders will leverage this.
You’ll typically wait until a consolidation pattern appears in the market prior to the anticipated news release, such as an earnings report, and then you need to act as soon as the breakout in the market happens.
However, because cryptocurrencies are unpredictable and volatile, you may need to wait until the news release has been published before engaging your trade.
In the most basic terms, this approach is all about purchasing your chosen cryptocurrency when there’s an announcement that’s positive or shorten your position when negative news is released.
Using relative strength index (RSI)
Last but not least, we have the relative strength index (RSI), which is a technical indicator that is utilized to determine momentum, oversold, and overbought conditions in the market. You’ll sometimes see this referred to as trend trading.
You can also use this strategy to highlight divergence signals, and hidden divergence in the financial markets.
But, what actually is RSI? Well, it’s a calculation of the profitable price close in relation to an unprofitable price close. This is reflected as a percentage. You can use the following formula to calculate this:
RSI = 100 – (100 / [1+RS])
The indicator is shown as a percentage out of 100. A higher percentage represents an overbought position. A lower percentage represents an oversold position.
So, what’s the most effective strategy when trading RSI?
Ultimately, this all comes down to your trading style and risk appetite. You can use the RSI for trading both long and short signals when the price is rangebound in nature too.
Nevertheless, as markets tend to move in trends on a frequent basis, utilizing an RSI indicator to highlight trends for exit and entry will give you an excellent understanding of when you should engage.
Stay ahead of the game with actionable crypto strategies
So there you have it: some actionable cryptocurrency strategies to follow to stay ahead of the game.
As the crypto market becomes more and more competitive, it’s imperative to continue to hone your efforts so that you can remain profitable.
Author bio (if needed):
Kerry Leigh Harrison has over 11+ years of experience as a content writer. She graduated from university with a First Class Hons Degree in Multimedia Journalism. In her spare time, she enjoys attending sports and music events.