Published on: 06/August/2020
Whether you are trading Bitcoin, Ethereum, or any other cryptocurrency, your goal is to make money. However, following a specific trading strategy can help you make more money in the long run.
Let’s discuss some of the best crypto trading strategies that work in 2021.
First things first; these strategies aren’t guaranteed to make you rich, but they will make you more confident in your decision-making process.
Digital asset trading is a term that refers to the process of buying, selling, or trading digital assets. The digital asset trading business is mainly done online.
1. Fibonacci Retracement
First, let’s talk about the Fibonacci sequence. This is a series of numbers that are built off of the previous numbers in the sequence. This pattern occurs naturally throughout nature and can be found all over the human body – including the face. It’s also present in the financial markets, which makes it great for traders.
Many people use this charting pattern to get an idea of where price rejection points are likely to occur – usually at the 61.8% or 38.2% level of retracement. You can see these levels easily on a Fibonacci retracement chart.
2. Relative Strength Index
When trading, the Relative Strength Index is often compared to RSI. When you see RSI mentioned in a discussion about cryptocurrency trading, it’s typically referring to this technical indicator that helps traders identify when an asset has reached overbought or oversold conditions.
And while most advanced traders are familiar with how RSI works, it’s a great indicator to keep in your back pocket when trading cryptocurrencies.
The Relative Strength Index is an oscillator – much like MACD and Stochastic Oscillators – that measures the magnitude of recent price changes to indicate overbought or oversold conditions. You can find this technical indicator at most cryptocurrency exchanges, including the BitQT trading software.
3. Bollinger Bands
Another great indicator that you can use when trading cryptocurrencies is the Bollinger Band. This technical indicator helps traders identify a price channel, which can be useful in identifying a specific trading range for an asset over a particular period of time.
When the price begins creeping up or down beyond these channels, it’s often a good time to get in, out, or stay put. This is a great indicator for all traders, but particularly for those who are just getting started and want to learn more about Bollinger Bands before diving in too deep.
4. Lower Time Frames
Lower time frames can be helpful when it comes to cryptocurrency trading because they let you quickly identify support and resistance levels.
Before you do anything, you should be taking a look at the lower time frames to see where price lines are trending. These are the patterns that will usually dictate your position in the market, so it’s important to take them into consideration when trading cryptocurrencies.
Even if you don’t trade on these lower time frames, you should still stay aware of what’s going on.
5. Trend Lines
When it comes to trading any cryptocurrency, one of the most popular strategies out there is trend lines. Simply put, these are horizontal lines that connect highs or lows over a particular period of time. When the price hits these lines, they can either bounce off of them or break through them.
If the price of a cryptocurrency is moving higher, trend lines can provide support once they are tested. If the price of a cryptocurrency is moving lower, these lines can act as resistance. Before you get into any position, you should take some time to draw trend lines on the chart and see if they’re broken or held.
As you can see, there are many technical indicators to help you understand how different cryptocurrencies act in the market. While they aren’t guaranteed to make you rich, they will make you more confident in your decision-making process, which is key when it comes to trading any asset.
No matter what cryptocurrency you’re interested in trading, these indicators can be used to help you get a better idea of what’s going on in the market, and how the price is likely to change.