Top Crypto Trading Strategies Used by the Professionals
What is swing trading for cryptocurrency?
Swing trading is a type of short term investment strategy where profits are earned by keeping positions open for a period ranging from overnight to a few weeks. The strategy involves holding positions for longer to capitalize on a larger price movement than would be possible from a day trading time-frame, while using calculated position sizing to reduce exposure. To achieve this, you need to utilize technical analysis, tracking price trends to pinpoint cryptocurrencies with short-term momentum. This strategy is meant for those opening smaller positions, as larger trades would be too risky to enter and on a volatile market.
Swing trading can be applied to all types of cryptocurrencies and there is a wide array of web resources, from e-books and videos to webinar tutorials, full online courses and social media groups dedicated to swing strategies. It requires a substantial time investment and the live strategies that work require consistent oversight.
Swing trading can definitely be risky, particularly if you are trading on margin and using leverage, where you can lose more than your initial investment. However, there are plenty of tools available to help you reach your crypto trading revenue potential. These include automated algorithmic trading bots, Expert Advisor software, as well as dynamic trading charts.
How to read crypto trading charts
A crypto trading chart offers a graphical representation of price changes, aggregating all buy and sell transactions over a given trading period, from 15 minutes, to a day, a week, or a month. It can help analyze price shifts, manage risk and identify patterns, depicting changes in supply and demand.
The three most popular types of price chart are line, bar and candlestick charts. A line chart visualizes a line between one closing price and the next to show the cryptocurrency’s price trajectory over a chosen time-frame. While easy to follow, offering the big picture by clearly showing trends between different time periods, a line chart tends to be thin on detail, only presenting the price at the close of the given period and not the highs and lows within that period.
In contrast, a bar chart shows opening and closing prices, in addition to highs and lows. The vertical bar shows the crypto pair’s overall trading range. The top of the bar shows the peak trading price for the time frame, the bottom of the bar shows the lowest price at which the cryptocurrency was bought and the bar size indicates the degree of volatility. Attached horizontal lines signal the opening and closing prices.
In addition, we have candlestick charts, which are a great technical analysis tool for identifying market reversals. They show the same data as a bar chart, but in a different graphic format. The price range is also shown by a vertical line but the central main block shows the range between opening and closing prices. Different bullish and bearish trends are indicated by color, with a “filled” middle block signaling a lower closing than opening price for the currency pair.
Whatever crypto trading strategy you choose to implement, knowledge is power and using charts to keep a finger on the pulse of your chosen currency pair is essential.
Scalping strategy in cryptocurrency trading
One trading strategy that has gained increasing popularity with cryprocurrency traders in recent years is scalping, which involves earning from small price shifts, taking as many mini-profits as possible as opposed to going for the big wins. These minor price changes tend to occur after a trade when there is a short-term price increase. With scalping, the main principle is to limit risk through brief exposure to the market, capitalizing on smaller scale price movements, which happen with greater ease and frequency.
To implement this strategy, you need to commit time to your trading as you will be using a live feed, and focusing on the screen, working with one-minute charts. Scalping is particularly valuable when the market is stuck in a narrow range. If a longer time frame reveals no visible trends, a shorter time frame can offer opportunities for scalping.
By taking a small profit near the 1:1 risk to reward ratio, your earnings will equal the size of the stop order used for the setup. For example, if your €50 scalp trade is set up with a stop at €45, exposing you to a €5 risk, you will take your profit at €55 for a 1:1 risk to reward ratio.
A great risk management strategy, scalping offers a safe way to make a steady return, even if the return is low and means you are unable to maximize the revenue potential of the highly volatile crypto market.
Crypto-arbitrage strategy in digital currency trading
One strategy that enables crypto traders to reap the benefits of digital currency market volatility, while reducing risk to close to zero, is crypto arbitrage. A single cryptocurrency can be offered at different prices across the various crypto exchanges at any given time. The way crypto arbitrage works is that you scan multiple exchanges to find price differences for the same digital currency, buying at the lowest available price and then selling at the highest available price to make a profit on the spread. Exposure is minimal and revenues can be substantial when the volume of trades is high.
A crypto arbitrage strategy can only really be successfully implemented through the use of an automated trading bot. It would be virtually impossible for an individual to scan multiple exchanges at once, instantly executing buy and sell trades simultaneously to take advantage of fleeting price differentials before they get resolved.
At ArbiSmart, not only are we fully licensed and regulated, which is essential if you are trusting your capital to any online player in the crypto space, but our automated AI-based platform is integrated with over twenty different exchanges, and it can process a huge volume of trades at once, so you can optimize your profits. This also means that unlike the other time intensive strategies we’ve been exploring here, you will be able to get on with your day, while the platform makes you up to 45% returns a year!
Lastly, soon we will also offer a secondary revenue stream for our crypto investors, with our new ArbiSmart wallet. Up to now, most wallets have just offered a mode of crypto storage, while you wait for trade opportunities or HODL your crypto, hoping for it to appreciate in value. However, with ArbiSmart’s wallet you can make anywhere from 10.8% to 45% interest, ensuring that your capital isn’t just sitting idle but is working for you on a daily basis. Your interest level will depend on the size of the investment and the type of savings account you open, with a locked account earning higher returns. In addition, converting your crypto into RBIS, the ArbiSmart native token will push your daily and monthly profits even higher.
If you’d like to learn more about the risks and benefits of crypto arbitrage, you can check out our arbitrage page. Alternatively, if you feel ready to take your crypto trading to the next level, you can or sign up here.