A trading strategy is paramount if you are a newbie in the cryptocurrency space. If you are looking to buy Bitcoin or invest in any other cryptocurrency, keep reading to understand various trading strategies and how they can help you reap good returns.
The size of cryptocurrency assets in India is about ₹ 45,000 crores with about 15 million investors, which is growing by the day. Despite the highly volatile ecosystem, everybody wants to be a part of this phenomenon. Heading into this space could be a challenging task, especially for beginners. However, you can avoid risks and pitfalls and gain long-term benefits with a bit of planning and strategy. A good plan will take you a long way and guide you in all your trading endeavors. So, what exactly is a crypto trading strategy, and how do you know which one is for you?
Think of crypto strategies as a plan of action that you need to follow to make trading safe and gain long-term benefits from it. However, remember, you cannot be an expert overnight. It is a process, and it takes patience. Read on to understand the strategies that can help you get favorable returns.
1. Choose an Exchange
Choosing the best cryptocurrency exchange should be a vital part of your crypto trading journey. Exchange liquidity, asset liquidity, and fees should be at the top of your list when looking for the right platform to buy and sell cryptos. To pick wisely, look for an exchange that has been active for the longest time. This ensures its credibility. Besides, knowing what cryptocurrencies are available to trade on the exchange will help you devise your strategy perfectly. In your quest for a reliable and transparent cryptocurrency exchange in India, ZebPay can be an ideal choice.
Day Trading
Day trading strategy means you can take positions and depart in a day. By adopting this strategy, you can reap profits within intraday price movements in the crypto of your preference. For a profitable trade, you should refer to the technical indicators and figure out the entry and exit points of the specific crypto.
Swing Trading
It means holding positions for more than a day but not longer than a few weeks or for a month. If you are a newbie, swing trading could be the perfect active trading strategy for you, as it takes longer to materialize. At the same time, they are brief enough, so it is easy to keep an eye on the trade. It gives you ample time to reflect on your decisions rationally without the need to rush in. In short, you have sufficient time to understand how the trade is faring. In this strategy, you can make decisions with ease and level-headedness.
Trend Trading
This strategy involves holding positions for an extended duration, usually for some months. They rely on directional trends. In this strategy, it is assumed that the underlying asset will keep moving towards the trend. However, be mindful that the possibility of reversal of the trend is always there. If you do your due diligence, trend trading can be perfect for a beginner like you.
2. Buy and Hold
As the name suggests, this strategy means you buy an asset and hold it for a long duration, irrespective of market fluctuations. It is simple and probably the safest way to trade crypto, especially if you are new to the scene. This strategy is generally used in long-term investments, where you get in the market without regard for entry price or timing. Since Bitcoin has been around for a while now, buying Bitcoin and holding it is a good strategy within the cryptocurrency ecosystem. However, this may not hold for other cryptocurrencies.
3. Arbitrage
This strategy means that you buy Bitcoin or any other crypto in one exchange and sell it on another. You will have to find one exchange where the price of a given cryptocurrency is relatively low and then look for another that is buying the same coin at a generous premium. The variance between the buy price and the selling price is known as ‘spread.’ So, when you’re happy with your spread, buy the coins from the cheaper exchange and then sell them on the more expensive one. It is that simple and easy for a crypto novice. However, you will need to open accounts on the exchanges you choose for your spread.
Conclusion
As a beginner, planning a crypto trading strategy that caters to your financial goals can be daunting. But, fret not. Baby steps are the key. To understand what is working and what is not, ensure to track each of your trading strategies regularly, without fail. There is no one-size-fits-all strategy. With enough trading experience, you can upgrade your strategy methods to scalping, high-frequency trading, dollar-cost averaging, among others. Building a balanced portfolio can go a long way and help you steer clear of the volatility in the industry.
For the best cryptocurrency exchange experience, start trading on ZebPay – India Ki most-loved Bitcoin Ki Dukaan.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency.
