As a potential crypto trader, there are many things to get used to, not to mention the fact that this new market is fraught with uncertainty and volatility.
Undoubtedly, the current crypto market, no matter how bearish, has matured with many opportunities. Therefore, a good trading strategy can be the difference between losing everything and actually making a profit. Here is a list of different crypto trading strategies to help you in your future endeavors as a crypto trader.
Arbitrage trading is a relatively clear trading technique that involves the simultaneous purchase and sale of assets to ensure a profit from discrepancies in its price. In the context of crypto trading, arbitrage involves buying cryptocurrencies from a crypto exchange and then selling at a higher price in another market (or another cryptocurrency exchange).
This method usually involves the trader constantly paying attention to these price discrepancies (something that is quite common in the cryptocurrency market due to the amazing volatility). The success of crypto arbitrage is also highly dependent on the speed that can be achieved.
If done correctly, this method can be very profitable. Therefore, merchants who are interested in this method should consider using the services of bots for crypto trading. These bots automate the process and increase execution speeds. Another advantage that these bots have is the fact that they can monitor the market for longer periods of time, as they do not have to sleep or interrupt work, which is why the human factor is excluded.
Swing trading is another method that aims to take advantage of the instability of the crypto market. This is by no means an easy way to trade, as it depends a lot on the trader’s ability to “read” the market. In short, swing trading involves a trader holding a cryptocurrency for a period of time (several days or even weeks). During this time, the trader tries to determine the trend of his cryptocurrency based on the general upward or downward trend.
Trading based on the fundamental value of a digital asset is one of the most modern trading methods out there. Not only that, but this method usually involves acquiring an asset and holding it for a period of several years. Because the crypto market is not that old, this method comes with its own risks.
The method involves traders who have to look at different indicators and try to determine whether an asset is currently overvalued or undervalued. The method, conceived by Benjamin Graham and popularized by Warren Buffett, is mainly used by companies. However, with a little work, it can be applied to almost any digital asset.
There are various other strategies that can be used to “beat the market”. The most important aspect to consider with regard to any of the trading methods listed above is that there are risks that come with all of them. Especially in the crypto market, where volatility is a key element.
The Top 5 Cryptos to Watch in 2021
Cryptocurrencies have taken over the financial world at an unprecedented rate.
While in the genesis of virtual currencies, investors wondered if this alternative to fiat money would survive at all, at present the question marks in the industry are more about the scale of evolution.
Skeptics worry that the new force rising in the world of finance suffers from chronic volatility, is decentralized and is a convenient channel for money laundering.
Although many companies have banned the use of digital currencies, the rapid growth and widespread adoption of technology has provoked large global corporations to look in that direction.
Among the companies involved in blockchain technology are names such as Facebook, JPMorgan, Microsoft, Shopify, Tesla and many others.
But which cryptocurrencies dominate the market?
Here is a list of the largest digital currencies to watch for in 2021 by size of their market capitalization.
Bitcoin – 156.52 billion USD.
Bitcoin became the first cryptocurrency in 2009, and has so far been the face and flagship of the entire market. The technology has eliminated the intermediary in foreign exchange transactions, replacing it with innovative blockchain technology.
About 75% of all bitcoins pledged have already been mined / excavated. This means that the price of the asset should become more stable in the near future and eliminate the biggest irritant for investors – its unprecedented volatility.
Еthereum – 17.50 billion USD
Debuted long after the advent of bitcoin, etherium joined the cryptocurrency market in 2015. While bitcoin offers a currency based on a peer-to-peer system, etherium specializes in so-called smart contracts (where a user can set specific conditions for to start a transaction).
Ethereum has a wide field of application, attracting users who want to use virtual currencies for more than just financial transactions.
XRP – 9.80 billion USD
Ripple is a cryptocurrency that never intended to be an alternative to cash. The system is used by corporate institutions rather than individual investors.
Sending money from one wallet to another takes seconds, but unlike competitors, the XRP currency is much more centralized, as Ripple Labs controls the availability and circulation of XRP.
Bitcoin Cash – 5.76 billion USD
Bitcoin Cash, sometimes called Bcash, is a currency that split from bitcoin in 2017. Then developers provoked the separation of blockchain technology behind bitcoin, which led to the creation of the new currency.
Bitcoin Cash applies lower transfer fees and faster transaction time compared to bitcoin. This makes the virtual currency popular with investors.
Bitcoin SV – 5.51 billion USD
Bitcoin Satoshi Vision is one of the new players on the market. Ironically, the cryptocurrency emerged after splitting the Bitcoin Cash blockchain. The developers behind BitcoinSV have stated a desire to restore the original Bitcoin protocol instead of continuing with the blockchain system of Bitcoin Cash. The key difference between Bitcoin, Bitcoin Cash and BitcoinSV is the block size. While Bitcoin Cash has a block size limit of up to 32 MB, BitcoinSV sets a four times the size limit per block of the blockchain system – 128 MB.
How to protect your trading account: A brief overview
Diversify your Passwords
Probably the simplest way to have your password stolen is by using the same combination of username and password for access to different websites, including your trading platform account. For instance, let’s suppose account A has been hacked, and the programmers got your username and secret password. They can then attempt to sign into banking features or primary emails with the details obtained.
The answer to this is to use different passwords for your various accounts or even better – utilize a password manager. That way the only password you need to remember is the one that locks the password manager itself. Password managers typically log you into your online accounts automatically, which means they not only help keep you safer, but also increase your efficiency and productivity as you use your computer because you no longer have to type your logins.
Don’t allow remote access
We all know how helpful remote access application can be, especially when you are trying to solve an issue with your computer, but you aren’t that adept technically. It is so much easier for technical support agents to simply get access to your desktop or laptop through application such as TeamViewer, Any Desk and like and sort it our remotely for you.
Well, this however, is exactly what you should be avoiding at all costs when it comes to managing your trading account. Remember it is your money and no one should be able to access them under whatever conditions, let alone a supposed account manager, you have never met. If it is absolutely necessary for a transaction to happen this way, please make sure you are familiar with the other party and accept the risk. But really – don’t do it.
Avoid Guidance over Instant Messages
It’s always good to receive a helping hand. That is if you asked for help from someone you know. In a dynamic world such as online trading, many suspicious individuals will try and approach you with the wrong intentions. And just to seem friendly and close to you, they might approach you through instant messaging services like WhatsApp, Messenger, Viber and the like.
While it could seem enticing to receive a secret tip or advice in a private message, you should actually disregard those. The informality may make you feel like you gain an edge by learning something few others know. However, the reality is you are probably getting exploited and will soon be asked for a deposit or an up-front amount of money, which is always concerning.
Last but not least, trading involves risk and should be done with eyes wide open. The best way to do so is to always aim to stay informed and check important trading news at least on a daily basis. This might not be helpful on a specific day, but it will create a valuable habit of always looking for relevant information and double-checking your sources.
Markets move frequently move very intensely and while it is hard to predict, which way will prices go, staying on top of the relevant news flow will help you see the bigger picture with. And when you have enough background knowledge on a certain topic or market, you might just be able to prognose fluctuations with some success!