Nov 30th 2023

Crypto trading strategies

Financial risk can be mitigated with an efficient trading strategy. It keeps you from making rash and impulsive judgments that can cost you a lot of money. If you are a beginner, you could even consider trading on the Binance Futures testnet to become familiar with the world of highs and lows.

Here are some of the common strategies that are popular among crypto traders:

Day trading

The strategy of crypto day trading entails entering and exiting a position in the market on the same day within crypto trading hours. It’s also known as intraday trading because trades are typically started and concluded within a single day. So, can you day trade Bitcoin

BTC

$67,466? Yes, day trading BTC is like playing with Bitcoin volatility throughout the day.The entire point of day trading cryptocurrency is to profit from tiny market movements. Because cryptocurrencies are volatile, day trading in the crypto market may be pretty rewarding. Trading strategies are devised using technical analysis by day traders, but it is a time-consuming and risky strategy that is mainly suitable for advanced traders.

HODL (buy-and-hold)

HODLing is an investment technique devised from a misspelling of hold, in which people buy cryptocurrencies and keep them for a long time. This permits investors to profit from an increase in the asset’s value. So, how to take profits in crypto with the HODL strategy?

HODLing lets investors take profits from long-term value appreciation when they invest for an extended period. Investors can benefit from the HODL strategy since they are not subject to short-term volatility and can avoid the risk of selling low while buying high.

As cryptocurrencies have a short history compared to commodities like gold and silver or fiat currencies like the United States dollar and euro, they are prone to fraudulent activities such as money laundering. Therefore, some countries may not support cryptocurrencies, affecting the value of digital assets.

Crypto futures trading

A crypto futures trading strategy involves entering into a contract agreement between two parties to buy and sell a particular amount of an underlying cryptocurrency like BTC at a predetermined future price on a predetermined date and time.

Futures trading strategies provide you access to a wide selection of cryptocurrencies without requiring you to own any of them. For example, individuals who hold cryptocurrencies can use futures to protect themselves from market fluctuations. So, how can you trade cryptocurrency with future contracts?

Read our guide on crypto derivatives to understand how to trade Bitcoin futures.

Arbitrage trading

Traders rely on arbitrage opportunities to earn profits through cryptocurrency or Bitcoin trading strategies. Arbitrage is a trading method in which a trader purchases cryptocurrency in one market and sells it in another. The spread is the difference between the buy and sell prices. 

Traders may be able to book profit due to the differential in liquidity and trading volume. They register accounts on exchanges with a significant price discrepancy for the cryptocurrency they’re trading to take advantage of this opportunity.