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Traders use a huge number of cryptocurrency investment strategies in the trading process. Tactics allow you to develop a sequence of actions to maximize profits, as well as constantly optimize your trading strategy. Considering the difficulty of choosing crypto trading strategies for beginners without experience in this segment, our experts have prepared a detailed guide for you.

What Does It Mean To Invest In Crypto?

Beginners ask a reasonable question: What is crypto trading? We are talking about selling digital currency on special exchanges or brokerage platforms to make a profit. Traders trade their own cryptocurrency or carry out transactions: futures, options, contracts for difference (CFDs). Based on technical analysis or various strategies, traders open a long (buy) or short (sell) position, predicting the rise or fall of a coin.

Our team’s specialists paid maximum attention to understanding how to trade cryptocurrencies with benefits for beginners. But before that, we must familiarize ourselves with the fundamentals of trading, which you will learn below.

Understanding Cryptocurrency Trading

Some users do not understand what cryptocurrency is and do not dare to enter this market in principle due to high volatility, the youth of the digital currency and the lack of a good reputation. But once you understand the intricacies, you will understand that not everything is so scary. To do this, we have compiled a list of criteria that can help in the first stages of cryptocurrency trading:

  1. Select a cryptocurrency exchange – conduct a short analysis of the platform, assessing the simplicity of the interface, connection and disconnection options, commission size, history of existence and reputation, and the current state of the exchange. Most exchanges offer short briefings and entire training sections that will make it easier for you to adapt.
  2. Create an account – to register on the exchange you need standard personal and contact information. But we recommend not to be disingenuous at this stage, entering only real information. Player information is subject to verification for the purpose of personal identification. To do this, prepare scans of documents (passport, ID card, driver’s license), selfies with them, and utility bills to confirm your address.
  3. Top up your balance – after completing verification, set up a fiat account by connecting a debit, credit card or bank account. Exchanges also offer to transfer cryptocurrency or use other types of payment systems. Now you are ready to purchase cryptocurrency, taking into account your personal preferences.
  4. Familiarize yourself with cryptocurrency investment strategies – before you start trading, you should definitely research the available strategies. Chat with experienced traders on forums, read reviews, which will reduce the risk of financial losses.
  5. Select the cryptocurrency you will trade – analyze the market, assessing the movement of value, the choice of other users, risks and popular currency pairs. Of course, choosing the top versions of cryptocurrencies such as Bitcoin or Ethereum requires significant costs. In any case, it all depends on your budget and desire.
  6. Start trading – having learned how to invest in crypto and applying the chosen strategy, start trading manually or use a bot for beginners. Do not rush to risk large sums, having honed your skills and craftsmanship. We also recommend practicing using a demo account on your chosen exchange.

No less attention should be paid to storing cryptocurrency. We advise you to transfer digital money from an exchange wallet to a non-custodial wallet. This approach is used if the trader will not return profits to the transaction without the risk of monetary loss. Non-custodial wallets are equipped with the maximum level of protection and also allow you to conveniently manage your money. And cryptocurrency for trading should continue to be saved in the exchange wallet.

Crypto Investment Strategies

Crypto investment strategy for beginners is an action plan for traders without experience who want to try their hand at trading digital assets. Our team of experts talk about some trading plan designed to minimize financial risks and bad decisions. But your plan must be flexible and responsive to market changes, preparing actions based on possible outcomes. The trading strategy is based on the following criteria:

Variability of digital currency Traders choose a specific type of cryptocurrency based on their budget, knowledge of the segment, and cryptocurrency investment strategies.
Graphic models Various tools to simplify technical analysis in order to correctly predict changes in the value of cryptocurrency
Technical analysis indicators They are able to provide the trader with more information about the movement of the asset’s value. Indicators significantly simplify the identification of patterns and signals for buying/selling cryptocurrency
Stop-loss placement This order helps traders reduce the risk of sudden monetary losses due to a fall in the exchange rate. Stop-loss allows you to set the limit value of the cryptocurrency, after which an automatic sale takes place
Determining portfolio size and correct risk assessment Balancing a crypto portfolio using a method of diversifying investments into different cryptocurrencies. This reduces potential risks in accordance with the chosen cryptocurrency investment strategies.

The development of cryptocurrency investment strategies contains other small details. Some traders plan not to trade on Fridays when they are tired or stressed. Others choose special days for trading and always close trades before the weekend. Personalized characteristics depend solely on your preferences, which will appear as you gain experience in the trading market.

Tip 1: HODLing (Hold On for Dear Life)

Most often, beginners choose simple cryptocurrency investment strategies that allow them to quickly join the “game.” The tactic involves trading on a brand basis, based on long-term investment in assets. Simply put, you buy or deposit money into an asset when the value is low and sell it when it increases. The downside of this approach is the length of time it takes to close a deal.

According to our data, such a strategy takes months or even years to implement. It is used by traders who do not want to interfere with the market. That is why it is called HODL from the word hold, when a trader invests money in a token and holds it until prices change. Unlike other cryptocurrency investment strategies, you do not have to participate in trading, observing only the exchange rate of the current currency.

Tip 2: Diversification

Experts on our site advise using diversification of cryptocurrencies to reduce the risk of investment loss. It differs from other cryptocurrency investment strategies in that traders use hedging tactics: they invest money in several crypto assets. Even if some of them did not bring profit, the crypto trader expects to receive money for other, more stable and balanced assets.

Due to the high volatility of digital money, investors want to hedge their bets and reduce the threat of losing all investments. For example, the same Bitcoin can instantly increase in price and also quickly fall. There are serious risks for traders investing in a single asset. Diversification is of interest to many traders and is often used in comparison to other cryptocurrency investment strategies due to the following factors:

  • Reduces the risk of losing money
  • Minimizes losses due to the volatility of digital money
  • Allows you to create a portfolio with high and low risks
  • Brings impressive investment results in the long term

Tip 3: Staking and Yield Farming

Staking is a strategy for holding cryptocurrency on your balance sheet in order to maintain the stability of the blockchain network and earn dividends from it. Simply put, you simply leave money in a special crypto account and receive a small fee. Based on Proof of Stake technology, this allows you to support the exchange and ensure the circulation of cryptocurrency. Staking is used to ensure the security of trading platforms, bringing passive income to traders. But at the same time, the funds involved will be unavailable for withdrawal for a certain time.

Yield Farming is a kind of lending of cryptocurrency to decentralized finance or DeFi platforms. For transferring assets to the liquidity pool (token reserves), you receive your reward. Liquidity pools maintain a normal atmosphere and are used for lending or trading. The goal of any cryptocurrency investment strategies is to make a profit. Therefore, farming allows you to earn interest by playing on changes in cryptocurrency prices.

Tip 4: Technical Analysis (TA)

When considering top cryptocurrency investment strategies, our analysts should not ignore technical analysis. It provides information about the history of a digital currency, which ultimately helps in the process of predicting changes in value. The trader simply compares past and current information, creating a market forecast based on it.

But when choosing this tactic and hundreds of other cryptocurrency investment strategies, you must be prepared to process a lot of data: various graphs and statistical materials. This allows you to evaluate the pros and cons of the chosen cryptocurrency, determining its future. The application of technical analysis depends on the following data sources:

  • Candlestick charts
  • Line graphs
  • Histograms

These charts include information that will help a trader identify rising or falling trends that will influence an investment decision.

Tip 5: Arbitrage

Due to price changes on different crypto exchanges, traders develop different tactics and cryptocurrency investment strategies. Despite the small price difference, at the moment of a serious jump in the growth of the cryptocurrency’s value, you can earn a few percent on inter-exchange arbitrage. It involves simultaneous trading on several exchanges, and also does not force traders to waste time on technical analysis:

  • Just buy cryptocurrency on the exchange at a low price
  • Sell digital assets on an exchange where the value is higher

But our experts want to dispel the myth about the simplicity of this strategy, because it requires high concentration and time, determining the commission for withdrawing money, transferring or exchanging cryptocurrency. Don’t forget about volatility, in which the value of digital money will fall, and you will lose both profits and funds spent.

Advantages of Trading Cryptocurrencies

Our team of experts have highlighted several advantages of trading using the right cryptocurrency investment strategies:

  • An excellent method to store funds

Considering the very principle of operation of a decentralized cryptocurrency, your assets do not depend on national governments, the banking system, other factors and intermediaries. This cluster becomes an ideal place to securely store assets, eliminating hacking of accounts or accounts. Blockchain technology has forced people to store money in cryptocurrency, which has already acquired the name “Digital Gold”.

  • Minimum commissions

Peer-to-peer trading without the participation of regulatory authorities and intermediaries guarantees a reduction in transfer fees. This is due to the implementation of transactions directly between users, which is impossible in comparison with other payment systems. Thus, you will not be affected by the costs of transfers, intermediary services, taxes of your country, various fees and conversions, subscription or client fees for an account or bank card. However, remember that crypto exchanges still charge a percentage for their services for transfers and withdrawals of funds.

  • Universal accessibility

Cryptocurrency is not tied to any country or specific region of our planet. If you have a mobile device and a stable Internet, the user will create a crypto wallet in 2-5 minutes and start trading. Thus, cryptocurrency erases the boundaries of the buyer/seller relationship and the need for financial instruments for transfers, allowing the exchange of digital money throughout the planet.

Disadvantages of Trading Cryptocurrencies

Like any other payment system, cryptocurrency has its drawbacks:

  • Youth of the industry

Digital assets have only been around for a short time when compared to gold, silver, securities or oil. Therefore, the infrastructure is not very developed, which complicates investment and trade. This is especially true for users who do not have experience or technical skills with applications and the Internet in general. Let us remind you that in 2017 there was a serious delay in transfers caused by scalability, phishing, and other security violations.

However, cryptocurrency exchanges are gradually developing, offering traders the latest tools for trading and investing, for example, custodial services, modern tools for fast trading. They require an infusion of additional funds, but improve trading conditions, raising the status of cryptocurrencies and promoting them on par with the largest stock exchanges.

  • High volatility

Cryptocurrency trading carries serious risks for investors, given the rapid changes in value in the market. Price is determined by the economic theory of supply and demand. However, in the world of cryptocurrencies, any news about security issues can cause the price of the cryptocurrency to plummet.

Therefore, traders are forced to monitor news and changes in global geopolitical terms. This requires time and effort, but leaves a chance to make money on volatility. Of course, when trading cryptocurrency, you risk losing significant amounts of money, given the difficulty of accurately determining the future value of digital money.

What is the Best Way to Trade Crypto?

Our experts with extensive experience in cryptocurrency trading regularly confront newcomers with questions: Can you day trade crypto? We hope the information above allows you to find the answer on your own, because trading in digital money does not stop day or night. And if you are interested in the question, why should I buy crypto, then a logical answer immediately arises: this is the future of trading and a chance to get rich quickly when choosing the right tactics for trading.

We would like to immediately dispel the myths about the existence of 100% working cryptocurrency investment strategies with maximum profit. The choice of tactics depends on many parameters, including your available time, experience in the field of digital currencies, stress tolerance, concentration and discipline, desire to develop and learn. Our experts believe that choosing the best cryptocurrency trading strategy involves using many tactics. The accumulated experience and closed transactions allow you to improve your strategy, adapting it to your wishes.

It cannot be said that there is one strategy for trading digital assets that brings more profit than others. Different traders, different approaches, characters, wishes and even free time influence the choice. Our experienced traders advise beginners to use a diversification strategy. It allows for stable, low-risk transactions and guarantees a safer trading mechanism.


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