Trading Guides


Different cryptocurrency trading strategies

What cryptocurrency trading strategies can you adopt to increase your holdings? In this guide, we cover leveraging, short trading, and dollar cost averaging

Plenty of people who are looking to invest in cryptocurrencies – mainly altcoins – do so in order to later multiply their Bitcoin holdings.

There are a great deal of crypto-investors, especially retail investors, who opt to buy-in to altcoins or IEOs in the hopes the coin increases in value versus Bitcoin.

However, since the ICO boom of 2017, there are fewer quality opportunities for investors to take advantage of. Some are still holding on to their bags, but most have already sold at a loss for Bitcoin.

Are there other day-trading strategies for traders that could be applied so that crypto-investors have a chance to increase their portfolios?

Leverage and margin trading

Some of the most popular crypto leverage trading platforms include BitMEX, Kraken, and Bybit.

With leverage or margin trading, you are essentially borrowing funds in order to leverage (or increase) your position. In essence, each percentage point gained is multiplied by the number of times you’re leveraging your holdings. If you’re using, for example, 10x leverage, it means a 1% change would be equal to 10%. Of course, when the market moves the other way around, each percentage point loss is also multiplied. And depending on how much leverage you use, there’s a chance you could liquidate your entire holdings. The higher the leverage, the higher the chances of liquidation.

Simply put, if you leverage trade, don’t get too greedy. Otherwise, there’s a high probability you might lose everything.

Short trading

Popular exchanges for short trading include BitMEX, Bybit, and eToro.

When a trader uses a short strategy, it means they are betting against the price of an asset. This means you would use this strategy if you were anticipating a Bitcoin bear market, for example.

Short trading can be tricky thanks to the volatility of cryptocurrencies. Even on the way to record highs, short trading can be a good strategy. Of course, there’s a lot of risk given the market cycle.

This strategy is mostly used during bear markets – or when traders anticipate one – given it’s easier to just go with cycles rather than against them.

The most widely used tools to short trade Bitcoin are margin trading (leverage), derivatives, and futures contracts.

Dollar cost averaging

Regarded as the “safe haven” of long-term investors, what dollar cost averaging means is simply to buy Bitcoin, or any other cryptocurrency, on a recurrent basis. This can be every day, week, or month. Usually, advocates of the above strategy prefer to set certain days to make purchases and stick to their schedule – almost like a direct debit. Purchases are made at roughly the same hour so that the asset is always bought independently of the short-term price.

This “dollar cost averaging” strategy is regarded as one of the safest, as it helps investors and traders to get less emotionally connected to their investments. It’s way easier to buy a bit of something every week than a lot of something in a single transaction.

If you want to calculate how much you could have earned just by saving $50 a week, check this link.

Safe trades!

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.