Cryptocurrency offers traders several opportunities to make profits. Knowing the relevant strategies used by the pros, like the brokers at Saxo Bank, will help you succeed in your new trading career. Let’s look at the five primary strategies when day trading crypto.
- Use technical analysis to identify trading opportunities.
- Trade based on news events.
- Trade with trendlines.
- Scalp trades for quick profits.
- Use price action to make informed trading decisions.
Use technical analysis to identify trading opportunities
Cryptocurrency is a volatile asset class, and prices can move quickly. This makes it essential to use technical analysis to identify trading opportunities. Technical analysis involves using charts and indicators to identify patterns and trends in the price data. It can assist in making more informed trading decisions and increase your profits.
Trade based on news events
News events can have a big impact on the price of cryptocurrencies, so it’s essential to stay up-to-date on the latest news developments. When a major news event occurs, you can often expect to see big price moves in the cryptocurrency markets. You can trade based on these news events by buying or selling cryptocurrencies as soon as the news breaks.
Trade with trendlines
When you trade with trendlines, you draw lines along with a particular cryptocurrency chart’s price highs and lows. When these lines are broken to the upside, they can act as support. On the other hand, when lines are broken to the downside, they can act as resistance. If prices bounce off of trendlines (or previous support/resistance levels), this could be an opportunity for traders.
Scalp trades for quick profits
Margin trading allows traders to make large profits in relatively short periods. This is because trader’s have access to funds that allow them to go “long” or “short” on assets without paying 100% from their own pockets. To scalp trades successfully, traders must time their trades correctly using technical analysis. Using leverage is risky business, though, so only use it when you are an experienced risk user or if this is your first time trading in financial markets.
Use price action to make informed trading decisions
Price action is the study of market data, such as candlestick charts and order book activity. Through studying past market data, traders can learn how different price actions can signal trends or reversals. Price action can help you find new trading opportunities by looking at previous trends in the market. It might also help you plan out potential entries and exit points for future trades.
Which analysis tools are suitable for crypto traders?
If you want to succeed at trading Cryptocurrencies, you need to know which technical analysis tools are available for your favourite platforms. Because even if they all share some basic principles, there are still huge differences between the programs of different providers on their possibilities and how they represent the charts.
For this review, we chose four standard Technical Analysis protocols: Tradingview, Metatrader 4 (MT4), Ninja Trader, and CryptoTrader.
Unfortunately, no crypto charting application runs natively under Linux at the moment. So we used VMWare Player for running a Windows 10 virtual machine under Ubuntu 16.04 LTS (Xenial Xerus) to test the mentioned applications.
All four programs provide a wide range of tools to analyze charts, and you can find detailed descriptions on their websites. We want to give you just a short overview of what these programs offer:
Tradingview is probably the most popular charting program for cryptocurrencies with a great community, providing free charting for everyone. It offers basic technical analysis features like trendlines, channels, Fibonacci and Elliot Waves, and indicators and oscillators. The program is also web-based and can be accessed from any device with an internet connection.
Metatrader 4 is one of the most common trading platforms and has a vast user base. It has an extensive set of features for technical analysis, but you need to pay a monthly or yearly fee depending on what web trader you want to use. A Desktop installation is possible as well.
NinjaTrader is more for “prosumers” and enterprise users, offering plenty of features primarily based on technical analysis. It has an excellent charting engine with all the essential tools, enables automated trading, and provides APIs for developers. This program supports Linux but only with its Virtual Machine image provided by NinjaTrader.
CryptoTrader offers everything an experienced trader needs, including real-time data, indicators, oscillators (also custom ones), trading strategies like eAuction orders, and much more. The base version is 100% free.
These are just some strategies you can use to trade crypto. Be sure to experiment with different strategies and find what works best for you. Remember, the key to success is patience and discipline.