Technical analysis is a must-have for successful crypto trading. But there are so many different indicators to take into account that it may be too challenging for beginners. Fortunately, there are strategies that can be used by newbies. Despite the fact that they are simple, they are no less effective for cryptocurrency trading. But if you want to make crypto trading easy for you, try using a bot that is fully automated. One of the proven bots that helps beginners to avoid risks and errors that can lead to huge losses is https://stoic.ai/. You don’t need to rack your brains on what strategy to use as the bot is based on effective algorithms and strategies that have been designed after careful data analysis.
Even if you are going to use a bot for trading, it will be of great use to you to learn about the most popular strategies that can be used even by beginners. With the help of indicators, crypto traders can find the optimal entry points to the market and receive signals to buy and sell cryptocurrency with a certain accuracy. Based on the indicators, traders create their own strategies. As a rule, indicators are combined for more accurate signals so that the trader can see a more comprehensive picture of what is happening in the market.
Let’s have a look at the popular trading strategies and explain how to use them in crypto trading.
- Scalping. It isn’t the easiest strategy for novice crypto traders, but with proper risk management, it can bring good results. The essence of scalping is to make many trades throughout the day for a small profit of up to a few percent. However, cryptocurrencies are highly volatile assets, and their price within one day can change by 10% – 50% or more. But this carries increased risks for traders, especially beginners.
This means that it is important for a trader to determine at least two key parameters: support/resistance levels and the direction of the trend. With the help of support and resistance levels, a trader can determine when it is best to open/close positions. When the price bounces off the lower boundary, it is a buy signal, and a bounce off the upper boundary is a sell signal.
- Trend trading. Another popular strategy among novice traders is trend trading using Free crypto coins. In this case, it is necessary to determine in which direction the price is moving at a given time. Trends are local and global. Global trends are suitable for medium to long-term trading. During an uptrend, the price moves like a ladder in a narrow channel and may slightly go beyond it. Moreover, as a rule, each local minimum is higher than the previous one. So, when you have determined that the trend is upward, then you need to highlight the key levels of support and resistance.
- Breakout. This strategy is used when a new trend has not yet formed, but a breakout of a key level may indicate a change. Over a period of time, the price can bounce off support and resistance levels for a long time. But sooner or later the market forces are outweighed in the other direction: the price cannot move in only one direction.
How to Determine That the Trend May Change?
When approaching this moment, the price amplitude begins to decrease, that is, the price is in a sideways movement or in a flat. A breakdown of the resistance level may indicate the beginning of an uptrend. Before that, sellers “push” the price closer and closer to the resistance level.
One of the characteristic signs of a trend change can be observed when the resistance level practically does not change, and the support level approaches it, closing the chart in the form of a kind of wedge. At a certain moment, a breakdown of the resistance level occurs and the price begins to rise, indicating the emergence of a new upward trend. At the same time, it is important that the price does not immediately roll back to the previous level – this phenomenon is called a false breakout.