Boost Your Crypto Trading: Advanced Trading Strategies

Many considered Bitcoin an illegal tender, and only those with criminal tendencies were engaging in illegally transferring funds from one account to another. Another reason why it was hated was the number of scams pulled in the crypto market.

Although scams are indeed frequent in the crypto market, one must not neglect that financial crimes have also been prevalent since money was introduced. Amassing illegal wealth in terms of legal tender is not a new phenomenon.

It is also true for crypto scams. The reason why these scams are more prevalent is due to a lack of general awareness about cryptos and the obvious red flags to watch out for when a potential crypto scam is encountered.

The myth that cryptocurrency is used in illegal activities is far from the truth. The fact that you transfer financial funds from one account to another while maintaining anonymity has triggered this false myth.

Although your identity indeed remains anonymous during fund transfers, it can be traced back to you through your keys. You get two alphanumeric keys that act like your email address. One key is a private key, which is used to send in the cryptos, while the other is a public key, from which you receive the cryptos.

Now that we have cleared the shroud of secrecy surrounding the cryptocurrency, we shall now look for techniques that will allow us to trade cryptos like pros and make substantial profits.

Understanding your trading style

One of the most important steps, before you begin trading in the crypto market, is to understand your trading style. Based on your trading style, you will understand how to research and make a robust Cryptocurrency trading strategy that will ensure more profit than loss.

You must remember that you will make losses; even seasoned crypto traders are known to make losses. However, what makes them stand apart is that they do not repeat the same mistakes.

In a crypto market, you will find two types of traders: short-term and long-term. A short-term trader will try to make huge profits within a short span by trading in cryptos regularly.

A long-term trader, on the other hand, will refrain from trading frequently and will aim to make substantial profits in the future as the price of crypto appreciates.

Other kinds of traders will mix both of these techniques. They will invest in cryptos that will allow them to reap profits in the future and also make frequent short-term profits.

You can also do the same. You can also mix the two by investing long-term and trading short-term to maximize the profit potential.

Short-term crypto trading

Short-term trading can be highly lucrative and, at the same time, risky. These trades can last for a few minutes to a few days, exploiting the volatility of the crypto. As a trader, you must understand all the risks involved and also make use of the risk management techniques at your disposal.

We will explore how to spot good short-term crypto trades that will ensure substantial profits.

Moving Average: The average price of a particular crypto is observed over some time. The most ideal time frames to observe these moving averages popular with professional crypto traders are 15, 20, 30, 50, 100, and 200 days. Try to look out for cryptos whose average prices are appreciating within the chosen timeframe for a long position.

If you wish to hold a short position, then go for those cryptos whose average prices are declining.

Understanding patterns or overall cycles: Certain patterns can be observed while trading in cryptos, and you must understand them. For example, if there is any development in the crypto market, then the prices are sure to surge. Bitcoin is about to go bullish as the next halving occurs in April 2024. If you observe the previous data, Bitcoin was always bullish as the halving period approached.

Understand market trends: It is advisable to go short and buy less when the crypto market sentiments are negative. As the odds of making profits are substantially low, it is no use to invest in a crypto that will bear fewer profits when market sentiments go positive.

Different short-term trading styles

Now that we understand the factors to consider when choosing good crypto for short-term trading, we will now look for different short-term crypto trading styles that are popular with professional crypto traders. 

Scalping: In this technique, frequent small trades are carried out within a day. Each position is kept open for a few seconds to a few minutes. Since the profit made on such trading styles is low, crypto traders will trade in bulk to maximize their profits.

It is one of the most favored trading styles, as maximum profit potential can be reaped in the shortest frame of time.

Day trading: Each trade is opened and closed within a day. No trades are left open for the next day to avoid paying the overhead charges. The trade is closed, regardless of profit or loss. Each position is kept open for a few minutes to a few hours.

Unlike scalping, where cryptos are traded in bulk, the profit potential is higher in day trading as the chances of price appreciation are high due to the inherent volatility of the cryptocurrency.

Crypto traders will trade frequently after each trade, but not as frequently as scalpers.

Swing trading: It is a medium- to long-term crypto trading style compared to the above ones. Each trade is kept open for a few days to a few months. Since the duration of each trade is huge, the chances of making a huge profit are assured. For this trading style, enough research is done, and entry and exit of the crypto market are strategized. Crypto traders keep a close watch on the latest developments in the crypto market to exploit the possible profit potential.

Each trade is kept open for a few weeks to a few months before closing.

Long-term crypto trading

As the name suggests, crypto traders will keep each position open for a longer period, and substantial profits are assured. As per the US market, any crypto held for more than a year is considered long-term.

Various charts, graphs, and historical data are used to maximize profit potential. Some crypto traders will make use of both technical and fundamental analysis to assure huge profits when they are ready to close the trade.

Position trading: Crypto traders will invest in particular cryptos that assure good returns in the future. These cryptos are held for an extended period, generally ranging from a few years to even decades. The main goal of opening up a position is to profit from major trends instead of short-term price movements. Compared to all the major short-term crypto trading styles, this style of trading is the least active.

Most crypto traders rely on fundamental analysis while selecting undervalued or overvalued cryptos and holding up the position when an appropriate window of opportunity presents itself.

Crypto traders will then rely on technical analysis to identify the best entry and exit positions to maximize their profit potential.

Tools used for crypto trading

You might ask, Which tool is more effective, fundamental analysis or technical analysis? Such a question is difficult to answer, as each is designed for specific trading styles. Technical analysis allows crypto traders to trade cryptos for the short term, compared to fundamental analysis, where cryptos are traded for the long term.

If you, as a crypto trader, only rely on fundamental indicators for short-term crypto trading, then the chances of those trades going wrong are high since they do not take into account various factors that affect the short-term price volatility of that crypto.

If the crypto trader wishes to go for a medium- and long-term crypto investment, then a combination of both technical and fundamental analysis will help. 

As the price movement of a crypto in a crypto market is highly unstable, where price fluctuation at extreme ends can be observed, sticking to one crypto and learning more about it can be fruitful.

Several crypto brokers and brokerage firms offer a free demo account where you can practice your crypto trading skills without losing any real money if you make a mistake while trading.

Using a demo crypto trading account will also help you get familiar with the different tools used for technical and fundamental analysis.

Which crypto trading style offers the optimum profits?

We have already discussed earlier that it is you who has to decide the crypto trading style. You must remember that instead of relying on others' advice, you need to check which can provide you with greater returns.

Each one of us is unique and has a different mindset regarding how money should be utilized and spent. The style of crypto trading also depends on the risk you are willing to take.

Although you do not require a huge amount of money to invest and start trading in the crypto market, you still need to realize that the entire success of your trade depends on how quickly you learn the different financial indicators and interpret them.

We have mentioned two short-term, one medium-term, and one long-term crypto trading style. Each one of them is unique and has its rewards and risks.

As mentioned earlier, short-term trading guarantees a quick and high return when you play your cards well, while long-term trading provides you with a huge profit, but it takes time to reach a substantial price.

If you could combine both of these trading styles, then you would be hedging your risks and ensuring optimal profit.

Different ways to invest in cryptocurrencies

Besides directly trading cryptos, you can also invest in some crypto derivatives that are directly or indirectly linked to the crypto market.

Crypto Futures: You, as a crypto trader, can invest in Bitcoin futures and get huge returns. Since the crypto market is highly volatile, massive swings in the fast-paced crypto futures can assure you the maximum return on your investments.

Crypto Funds: The crypto market offers crypto funds, and the advantage of price volatility means enough opportunity to make substantial profits. These funds allow you to place your bets on Ethereum and other altcoins, not just Bitcoin. It offers one of the easiest methods of buying crypto via fund-like products.

Crypto Exchange or Broker Stocks: You can take advantage of surging cryptocurrency by investing in a well-positioned firm, and regardless of who wins, you can still profit.

Blockchain ETFs: You can invest in firms and get exposed to blockchain through a blockchain ETF. These publicly traded companies have invested a bit in blockchain. As a result, the price volatility associated with the cryptocurrency market has no direct impact on you. When you invest in such a firm, your exposure to the pure crypto market gets diluted. As a result, you can still make a substantial amount of money.

The above-mentioned Cryptocurrency trading strategies can further boost your profit potential. Depending on how much risk you wish to expose yourself to, you will also make profits.

Final Thoughts

Although you do not need a large sum of money to enter the crypto market and begin investing and trading, you should invest low initially before you get the hang of it. It is advisable that you not let go of your day job and pursue trading in the crypto market until you get the hang of it.

Like any trade, you are bound to make mistakes, but what will assure your success is learning from them.

The crypto market is open throughout the year, so it offers you enough time to come up with a well-researched strategy.

Now that you have taken crypto trading seriously, you should also be aware of the various scams and frauds associated with cryptocurrency.

As most of the reputed crypto exchanges are going bankrupt due to poor management, you should invest in a cold crypto wallet to safeguard your interests. In recent months, we have seen many prominent crypto exchanges go bankrupt, and they have also not paid crypto investors and traders the money that was kept in their accounts.

Be on guard with which social media influencers you follow; most will give you financial advice only to be cheated, as many have rug-pulled their fans.