Cryptocurrency has always been a lucrative option for the new generation of investors. With the impressive performance of Bitcoins in the pandemic, cryptos are now hogging the limelight. Along with Bitcoins, other cryptocurrencies like Dogecoins are also gaining popularity and many people are investing in them. To know how to trade dogecoins in detail, visit InsideBitcoins. But, at the same time, the risks of investing in cryptos cannot be undermined. So, to trade cryptos, as a beginner, you need to follow some tried-and-tested strategies. There is no perfect trade strategy but there are some commonly used methods which beginners can benefit from:
- Dollar cost averaging: This is a technique for trading which is seen to perform best when conducted over longer time-periods. In this strategy, rather than investing all the funds into one crypto, you split it into tiny amounts and buy the coins only on scheduled days. For instance, you may have $5000 which you wish to invest in Bitcoins. So, you divide it into 10 lots of $500 and select a weekday; Tuesday, for instance, to buy Bitcoins. When you buy at regular intervals across a longer time-period, you can minimize effects of market volatility. The chances are you will earn more BTC than if you had spent the entire amount at one go. DCA is also preferred by newcomers because it can be automated through trade bots.
- Golden cross/death cross: This strategy uses 2 MAs or moving averages. This is an indicator line on a crypto chart which indicates a crypto’s mean average price across a set time-period. To do this, you can consider crossovers between a 50 MA or average prices over last 50 days and 200 MA or average over 200 days. Since this strategy focuses on price activities spread across long time-periods, this is seen to be effective after 18 months. Crossovers can be convergence or golden cross and divergence or death cross. When it is convergence it means short-term momentum crosses long-term momentum; this is a signal to buy. So, buyers return to markets and push prices higher. Divergence is the reverse where short-term momentum falls compared to long-term momentum; this is sell signal.
- RSI divergence strategy: This is a tad technical but perfect for getting the timings of trend reversals right before these actually happen. Reversal is when prices start to move in the reverse direction, like from an uptrend to a downtrend. RSI means Relative Strength Index and is an indicator measuring momentum. It calculates average losses and gains in a 14-day period. The line will oscillate between 0-100 and is used for highlighting when a certain asset is “oversold” or “overbought”. When indicators line breaks out of the normal 30-70 channel and goes above 70, it means the crypto is “overbought”. The prediction is prices will come down. If asset breaks through channel and falls below 30, it means it is “oversold”. This suggests that prices will probably rise. This is a straightforward strategy for a newbie but may yield false results. The RSI divergence strategy may be used for identifying when trends will change a direction before that happens. Usually, both prices and RSI will be following the same direction. But, there may be occasions when RSI rises while prices fall, and vice versa. This indicates that the momentum may be on the threshold of reversal.
Using these 3 strategies a first-timer may be able to trade cryptos like a pro. Crypto trading is always laden with risks and you should research well and understand strategies before diving into it. Proper research will help you find the right platform that lets you trade seamlessly; you can check out https://coincierge.de/bitcoin-boersen-vergleich/libertex/, a trading platform that provides a great trading experience and the chance of high trading profits.