A trading strategy is a process of buying and selling assets that are followed systematically. Trading strategies are based on preconceived concepts and criteria that are utilized to make business choices.
Trading strategies can be simple or complex. It all depends on the things you are considering to make the trade and what your style of investment is. Experience traders consider factors like market cap, technical indicators, fundamental analysis, industry segment, portfolio diversity level, time horizon or holding period, Risk tolerance, leverage, tax considerations, etc.
The important thing is that the trading strategy is formulated using complete analysis to get implemented efficiently. There’s still a need of reviewing trading strategies from time to time and changing them as market conditions or your targets change.
How to Start Trading Cryptocurrency
Choose a Trading Platform
Before planning a cryptocurrency trading strategy, choose a platform that will help you trade. For example, Bitcoin Prime enables both new and advanced traders to trade financial assets in the online global markets more effectively. The software is easy to use, fast, secure, and reliable.
It is best for cryptocurrency trading as well as a diverse portfolio of other assets.
Registration with Bitcoin Prime is free and fast. You do not have to share your personal information to get started. Once you’ve assembled, it’s time to start planning your strategy.
Make a Fundamental as well as Technical Analysis
Fundamental Analysis will provide you with an in-depth analysis of the factors that find out the value of an asset, and lets you know if it will make a good investment or notKnowing the company finances and manufacturing reports are all the fundamental analysis you need when you are trading with other traditional assets like stock. But the case is not the same with cryptocurrencies that often lack the utility or central authority that values assets.
Instead, the value of cryptocurrencies is dependent on their availability, or the value of each cryptocurrency as traded on the blockchain network.
You can still consider some basic approaches like considering a project white paper or a product support team.
If you are going for long-term entries, fundamental analysis is for you. The case is different with technical analysis which is more for traders who only want a competitive edge in the market.
Technical analysis helps such investors study and analyze chart patterns, indicators, and oscillators, which helps them figure out the price of assets such as stocks, cryptocurrencies, forex, etc.
Indicators for the Cryptocurrency Trading
Your trading platform will help you scan the list of indicators available, which is usually hundreds of technical analysis ones.
Once you have learned how these indicators work, they can help you gain a competitive edge in Forex, commodities, stocks, etc. We’d like to add that the time you will spend learning everything you can to sharpen your trading skills will be worth it once those profits start pouring in.
Developing a Trading Strategy
Trading strategies can be of different types but all of them are mostly based on technical or fundamental principles Both analyses are dependent on measurable data which needs to be tested for accurate information. Technical trading strategies are dependent on technical signals to give trading information. Technical traders say that the price of a cryptocurrency holds all the information about its security and it all depends on the trends.
Fundamental analysis will help you make fundamental trades. For example, an investor might be screening opportunities with his own set of criteria. His standards are created by looking at things like sales growth and profitability.
Factors to Consider when Choosing the Best Trading Strategy
Before we discuss the most popular Forex trading strategies, you need to first know the factors to consider when choosing a trading strategy. In this procedure, there are 3 important factors to consider.
It is important to find how much time you can give to trading according to your schedule. A trader with a 15-minute chart is different than a trader with a weekly chart. For example, a scalper focuses on minute market changes and sticks to short frames of time but a swing trader likes to make profitable trading opportunities therefore their schedule is a 4-hour chart and a daily one. Your schedule can vary depending on how long you want to stay in the trade.
Number of trading opportunities
The trading strategy largely depends on how often you want to open positions. If you are a scalper, opening a large number of positions will be your go-to thing. There are traders who prioritize the analysis of macroeconomic reports and fundamentals by spending more time and resources there. This is why they do not spend more time on charts. Their time frames are high and they like to open large positions.
You must be wondering what the size of the position as mentioned earlier has to do with strategy. Well, finding the right trade size is crucial. If you want to be a successful trader, you to be aware of your risks appetite. Never take more risk than you can bear because trading sometimes can lead to huge losses.
There’s a bit of popular advice that tells you to set risk limits on each trade. For example, some traders set a 2% limit on their trades. They will never risk more than 2% of what’s in their account.
Types of leverage and advance orders such as stop-loss orders can help traders reduce risk and maximize profits. With the platform’s built-in charting tools and a plethora of helpful technical analysis indicators, all of the above profit-making strategies are available in just a few clicks, all without the need to leave the platform.