7 Best Cryptocurrency Trading Strategies in 2024

Source: Pinterest.com

With so many cryptocurrencies that are promoted as the next significant investment from Apple or Amazon shares, Bitcoin continues to stand out as the most important one, the one that leads this nascent market. There are currently more than 1,200 cryptocurrencies. The options are overwhelming, which makes it much harder for investors to find out which of these digital assets will allow them to make huge profits. If you want to generate wealth from Bitcoin, bitcoinpro can help you with that.

Source: Hacker Noon

1. “Buy and hold” strategy

When finding a good project to invest in, it is a good idea for the investor to buy a cryptocurrency that has good fundamentals and accumulate it during its lowest price as its value decreases. It is a common practice for traders and investors to withdraw part, if not all, of their investment, which substantially lowers the price.

If this is a project that you believe in, stay in it, and keep your investment during bad times while waiting for things to improve. Wise advice is to buy a currency that has already experienced its first fall. Sometimes this will cause the price to fall to an even lower level than the initial cost of the ICO.

2. Breakdown strategies to operate with cryptocurrencies

These types of procedures can limit trader risk and provide immense benefits if applied correctly. It is widely used by operators in multiple markets, in addition to cryptocurrencies, which are actively negotiating and seeking to enter the market in the initial stages of a trend. Breaking strategies are quite simple in their concept and can be used by both beginner and experienced operators.

When operating with these methodologies, the operator looks for precise entry points where the price is about to make strong breaking movements, such as support and resistance zones or trend lines that are about to be crossed in a new direction. In the case of cryptocurrencies, the price of the digital currency is expected to break a significant resistance (ceiling) to open a buy position or break vital support (base) to open a sale position.

Source: CoinWire

3. Trend tracking strategies for cryptocurrencies

All markets move up and down at least 30% of the time, and cryptocurrencies are no exception. That is why trend tracking strategies have proven their effectiveness over time. They can be highly profitable, especially when the operator manages to enter an excellent long-term trend. Market trends can last for days, weeks, months, and even years, hence trend tracking operations may be the most profitable.

The best trading systems of this type incorporate filters whose purpose is to ensure that we enter only the most influential trends so that we can reduce the number of false signals and, therefore, possible losses. For example, the ADX indicator, which measures the strength of the pattern, is usually used as a filter in trend tracking systems.

Despite this, when applied with good risk management and monetary management practices, these strategies can be very profitable if they are used correctly when operating with cryptocurrencies.

4. The strategy of “average cost in dollars”

That is a strategy that does not take much time or knowledge for its implementation. The dollar averaging strategy is to buy a fixed amount of cryptocurrency at specific intervals, while the price action moves up or down.

In this investment scheme, all purchases are made within established intervals (usually months), so that these purchases can be averaged at an average price. In general, this price ends up being a price point much higher or lower than that obtained if the purchase had been made in a lump sum in a single time interval.

Source: Merehead

5. The balanced portfolio strategy

That is the ideal type of investment strategy for investors who want to balance their portfolios. A balanced portfolio strategy includes the purchase of several cryptocurrencies in the cryptocurrency markets.

Suppose you have a budget of $ 10,000. Therefore, you should invest $ 2000 in each currency by distributing your investment evenly. In this way, the investor is distributing the risk in all areas.

That is an excellent way to test different cryptocurrencies, especially when the investor is not sure which will be profitable and which will not. In this way, you will quickly discover which coins have the best chance of success. From there, you may want to invest only in one or two cryptocurrencies that have given you most of the profits.

The only drawback of this strategy is that, for example, if one of the currencies produces a profit of 10%, while others provide a loss of 5% each, the investor will run out of benefits. However, this rarely is the case.

Tip: make sure that each currency in which you invest presents different utilities.

6. The unbalanced portfolio strategy

This investment strategy is to select a series of cryptocurrencies and designate a certain percentage of investment, solely based on how the investor considers that each digital asset will perform. Therefore, you will assign the highest rates to cryptocurrencies that you believe will have the best performance.

For example, if Litecoin has shown the highest profitability, then that is the digital currency in which it will invest the most.

Assume then that you have the following unbalanced investment portfolio. The default investment percentages are those that the investor will use in each subsequent purchase of cryptocurrencies.

This investment methodology is more suitable for those investors who have conducted extensive research on each currency. You can change the investment percentages in each coin, but it is essential to make sure you have a justified reason before doing so.

The main drawback of this strategy is to be able to mispredict investment percentages and lose the best profits or incur high losses by buying inappropriate cryptocurrencies.

Source: Sebfor

7. Invest the benefits in other cryptocurrencies

So it has made a steady profit with the strategies mentioned above and has succeeded in building a cryptocurrency portfolio full of profits produced in this market. Now is the time to select other potential currencies that show enormous potential.

For this, it is recommended to take half of the profits you have obtained with each currency in which you have invested and start investing these benefits in other currencies that have high-profit potential. That will allow you to leverage your investment in cryptocurrencies to produce more profits on your return and create a well-diversified portfolio. For this, you can look for periods when your earnings are parabolic (due to intense price spikes). That generally implies that the price is unsustainable, and therefore it is a good time to withdraw money and reinvest in another cryptocurrency before the price falls.

Therefore, what strategy should we use?

With all the strategies we have covered above, you need to choose one and stick to it. You can try other strategies later, once you have a little more experience. All your plans must change and grow over time.