5 Popular Crypto Trading Strategies Explained

If you want to trade successfully, you will need to adopt a strong trading strategy with a proven record of success. There are many types of crypto trading strategies out there that will suit different traders depending on their needs. To help you choose the best one, we will take a look at 5 of the most popular crypto trading strategies that you could practice today.

Scalping

Scalping is a popular trading strategy that involves buying and selling cryptocurrency assets at very short time intervals, usually 1-5 minutes. The goal of scalping is to make small but consistent profits through many trades. This strategy requires excellent market knowledge and understanding as well as quick reflexes in order to be successful.

How to Start Scalping?

The first step is to identify a cryptocurrency that is volatile and has high liquidity. You will then need to set up your trading software with the necessary technical indicators such as moving averages, Bollinger Bands, etc. Once you have done that, you can start scalping!

When scalp trading, it is important to always trade with a stop-loss in place in order to minimize your losses if the market moves against you.

Day Trading

Day trading is another popular crypto trading strategy that seeks to profit from cryptocurrency price fluctuations within a single day. This technique involves buying and selling cryptocurrency assets multiple times within the space of a day in order to take advantage of the small price movements. Like scalping, day trading also requires good market knowledge and understanding in order to be successful. 

How to Start Day Trading?

Similar to scalping, day traders use technical indicators to set up their trades.  They also set up stop-losses and take-profits in order to limit their losses and maximize their profits.

One key difference between day trading and scalping is that day traders usually hold onto their positions for a longer period of time, from several hours to even a few days.

To day trade successfully, you will need to find a platform that  allows you to place orders quickly and easily. You will also need to have a good understanding of the cryptocurrency market, as well as the ability to read charts and make decisions quickly.

Swing Trading

Swing trading is a cryptocurrency trading strategy that takes advantage of short-term price swings in the market to make profits. This technique involves holding onto cryptocurrency assets for a period of time until there is a price swing that enables the trader to make a profit. Swing trading can be used on any timeframe, but most traders use it on the 1-hour or 4-hour chart.

The difference between swing trading and day trading is that swing trades typically span for more than just one day. In fact, some swing traders will hold their positions for months. Swing traders seek to take advantage of price movement over a longer time frame and often reap larger profits due to this. However, it’s important to remember that with large profits comes a bigger risk of loss.

How to Start Swing Trading?

Swing trading is usually recommended for beginners because it involves less emotion. To start, conduct analysis into currencies that you may want to trade.  You will need to identify the general trend of the market as well as support and resistance levels.

Arbitrage Trading

Arbitrage trading is a cryptocurrency trading strategy that seeks to exploit price differences in different cryptocurrency exchanges. This technique involves buying cryptocurrency assets on one exchange and selling them immediately on another exchange for a higher price. In order to be successful at arbitrage trading, you will need to have an account on multiple cryptocurrency exchanges and access to real-time market data. You will also need to be quick in order to take advantage of the small price differences.

How to start arbitrage trading?

The first step is to identify cryptocurrency assets that are being traded at different prices on different exchanges. You will then need to set up accounts on the different exchanges and have enough funds to cover the trade. Once you have done that, you can start arbitrage trading!

Buy and Hold Trading

Buy and hold trading is a cryptocurrency trading strategy that seeks to profit from long-term price appreciation of cryptocurrency assets. This technique involves buying cryptocurrency assets and holding onto them for a period of time, even if there are short-term price fluctuations. Buy and hold traders believe that the market will eventually correct itself and they will be able to make a profit in the long run.

How to start buy and hold trading?

The first step is to identify cryptocurrency assets that you believe have long-term potential. You will then need to purchase the assets and store them in a safe place. You can hold onto the cryptocurrency assets for as long as you want!

There are many different cryptocurrency trading strategies that you can use to make profits. It is important to do your own research and find a strategy that suits your needs and risk appetite. Remember, cryptocurrency trading is risky and you could lose all of your investment. So trade wisely!

Our top tip for beginners:

If you are new to trading and are unsure of which strategy to choose, we suggest joining a crypto trading community. SokuSwap has an active Telegram and Discord channel on which traders can seek advice and connect with others. This is a great way to get a feel for what works and what doesn't in the market.

Frequently asked questions

What is the best trading strategy for beginners?

There is no one-size-fits-all answer to this question. Every beginner trader is different and will have different needs. However, we generally recommend swing trading for beginners because it is a less emotionally-intensive strategy.

What is the best cryptocurrency trading strategy for experienced traders?

Again, there is no one-size-fits-all answer. Some experienced traders may prefer to use arbitrage trading to take advantage of cryptocurrency price differences across exchanges. Others may prefer to use day trading or scalp trading strategies to take advantage of short-term price movements.

What crypto is good for day trading?

There are many different cryptocurrencies that can be day traded. Some popular options include Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

How to start day trading crypto?

The first step is to choose a cryptocurrency exchange that offers real-time market data and has low fees. You will then need to create an account and deposit funds. Once you have done that, you can start day trading cryptocurrency!