Over 10 crore Indians, according to a recent news report, are cryptocurrency owners. In all likelihood, the crypto trading number will increase in the coming years.
Cryptocurrency trading is nevertheless rife with dangers and pitfalls, just like trading in stocks and commodities. Market enthusiasts must create strategies that can make trading exciting and secure at the same time if they want to reap the long-term rewards of cryptocurrency trading. Let’s start by going over some methods that can give you favourable results.
Using this trading method, positions are opened and closed on the same day. When engaging in such a trade, a trader’s goal is to book profits during intraday price fluctuations in the cryptocurrency of his choice. Investors frequently use technical indicators to determine the best times to enter and exit a trade for a particular cryptocurrency.
Market participants also rely on seasoned analysts, who daily provide support and resistance levels. A resistance level is a price that is higher than the current price because “resistance” refers to the limit where the price may rise. As a level below which a cryptocurrency price is not expected to fall, a “Support” level is always lower than the current price.
Increased trading volume is used in this trading strategy to generate profits. Even though there is risk, a wise trader observes the margin requirement and other key regulations to prevent negative trading outcomes. Scalpers examine the cryptocurrency asset, historical trends, and volume before deciding on an entry and exit point within a day.
High-Frequency Trading (HFT)
Quant’s traders use a type of algorithmic trading strategy called HFT. This entails creating trading bots and algorithms that facilitate quick entry and exit from a cryptocurrency asset. Such bots require the development of complex market concepts as well as a solid foundation in mathematics and computer science. As a result, experienced traders would benefit from it more than newbies.
Dollar Cost Averaging
It is best to assume that timing the market is nearly impossible when trying to find the ideal entry and exit points in a crypto market. Dollar Cost Averaging is a sensible way to invest in cryptocurrencies (DCA). DCA is the term for regular, fixed-amount investments. By using this strategy, investors can avoid the laborious task of market timing and create long-term wealth.
Exit strategy, though, could be challenging in the DCA style. It necessitates researching market trends and comprehending market cycles. Reading technical charts can also aid in determining when to leave. Before making a decision, cryptocurrency investors should keep an eye on oversold and overbought areas. For a better understanding of the technical charts for different cryptocurrencies, consult the WazirX live charts.
Create a Balanced Portfolio
The world of cryptocurrency trading is still developing. While many nations encourage cryptocurrency trading, some still have their doubts. Since central banks all over the world are attempting to better regulate digital currencies, trading in cryptocurrencies is frequently a risky endeavour. However, there are methods that can assist investors in avoiding high volatility.
The volatility could be greatly reduced by creating a balanced portfolio that includes a variety of cryptocurrencies like Bitcoin, Dogecoin, and Ethereum.
Additionally, investors can keep a set amount of regular investments in a variety of cryptocurrencies. In doing so, you’ll gradually increase your appetite for risk, which will benefit your portfolio’s long-term returns.
Do Not Trade Based on Hype
One of the mistakes new investors frequently make is relying solely on social media for cryptocurrency news. Never make investment choices based on the hype generated on social media. Since the subject of digital currency is so popular, false information tends to spread quickly.
Primary research is one of the most crucial trading tactics. To carry out primary research on the value of the asset you want to buy, you don’t need to be an expert trader. This entails staying current on all news pertaining to the cryptocurrency industry. Some exchanges facilitate this by compiling all the news stories you must read before beginning your day.
Additionally, you should assess your personal finances and establish an investment goal before betting on a volatile asset class like cryptocurrency. You can research various cryptocurrencies on WazirX, such as Bitcoin, Ethereum, Tron, Ripple, and Litecoin.
The trading strategy known as arbitrage involves buying cryptocurrency on one market and selling it on another. Spread is the term for the difference between the buy and sell prices. Trading volume and liquidity differences present opportunities for traders to make a profit. To take advantage of this opportunity, you must create accounts on exchanges where there is a significant price spread for the cryptocurrency you are trading.
Betting on the Volatility of Bitcoin
It is well known that one of the most volatile asset classes currently traded is cryptocurrency. Recently, the price of bitcoin changed by almost 30% in a single session. Trading Bitcoin futures allows you to place a bet on volatility. The best course of action is to purchase both a call and a put option at the same time. Additionally, the strike price and expiration date must be comparable. You must sell both the call and put options at the same time if you want to get out when cryptocurrency prices fall or rise sharply.
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