The Crypto Trading Strategies: A Beginner’s Guide 

The constantly evolving cryptocurrency market has become increasingly competitive with fluctuating prices and strict advertising rules on big platforms like Google and Facebook. The world of digital currency can feel overwhelming for beginners trying to understand its complex mechanisms and terms such as trading, scalping, HODLing among many others. 

So what are the best crypto trading strategies, especially for amateurs? This guide will help you navigate your way through free crypto trading strategies optimised to give you the best understanding of how to maximise your potential to earn through basic crypto trading. 

The concept is simpler than you might think. There is no “one best strategy” but a combination of several basic crypto trading strategies that depend on your attributes and conditions like time, determination, personality and tolerance for risk. 

The best crypto trading strategies will allow you to modify your investment plan according to your requirements and not just what looks good on a reddit thread.

The Set-and-Forget Strategy: HODL & DCA

The foremost important rule to remember when you step into the world of crypto is that you stick to its principle. HODL meaning buy and hold is a long-term position crypto trading strategy. You invest in a crypto asset like Bitcoin or Ethereum that you believe has long-term potential and you hold it, ignoring the daily price fluctuations.

This basic crypto trading strategy is perfect for those with busy routines and limited spare time to spend over charts and numbers daily. While this approach minimises emotional decisions, it does tie up your capital for a prolonged period of time and might make you miss out on short-term gains.

Dollar-Cost Averaging (DCA)

Dollar-Cost Averaging (DCA) is one of the most effective crypto trading strategies for beginners. This method allows you to invest small fractions at regular intervals instead of putting your entire capital at stake in one go. It minimises risk and reduces impact of fluctuating prices, particularly in an unstable market. 

How it helps: When the price of a digital asset you are interested in investing is high, you can buy it for as little as $100 and when the price decreases, it’ll allow you to buy a larger share. This will balance your average cost and prevent you from buying when the market is at its absolute peak.  

The Active Strategies

Catching the Swings

Seasoned investors who can afford to spend time up to a few hours per week can utilise this crypto trading strategy to target crypto assets famous for short-to-medium-term volatility.

Swing Trading

Swing trading focuses on identifying a price trend, entering the trade for a short period of time and exiting when the prices begin to lower and the momentum starts fading. Investors typically hold positions for a few days to a few weeks.

The Basics: When looking for the “swing” in the market; the goal is to determine whether the coin is moving towards a high point (resistance) or a low point (support). The strategy is simple; buy near the support and sell near the resistance. 

Tools to Learn: It’s important to understand some basic terms and technical analysis (TA) tools to effectively apply the best crypto trading strategies.

Moving Averages (MA): Used to identify the overall trend and smooth out price fluctuations. Commonly used MAs for swing trading include the 50-day and 200-day moving averages.

Relative Strength Index (RSI): Identifies if the coin is “Overbought” (high 70s+) or “Oversold” (low 30s-). This type of signal can help a “swing” trader detect a potential reversal or pullback opportunities.

​Who it’s for: Swing trading is ideal for part-time traders who check charts once or twice a day to plan their trades and revisit later to manage their entries and exits.

Day Trading & Scalping

Day Trading is a fast crypto trading strategy and refers to the buy and sell position on the same day. Similarly, scalping is one of the fastest crypto trading strategy where profits are made on trades focusing on capturing very small price movements over seconds to minutes.

These are high risk, high reward strategies and require strong determination, understanding, time and complete focus to compete against professional algorithms and expert traders.

An ambitious and dedicated trader who can invest several hours daily to monitor charts and execute trades quickly and efficiently will benefit highly from these crypto trading strategies. However, the skill level for trading in a fast paced environment requires familiarity with fast-reacting technical indicators and price action tools.

The Ultimate Risk Management Rule

Success in crypto trading does not only rely on which crypto strategy is being applied in a trade but also depends highly on risk management such as a stop-loss order.

A stop-loss order is an order you set in advance to automatically sell your asset when its price falls to a certain point. This acts like an insurance policy. For example, if you buy a coin at $1.00 and set a stop-loss at $0.90, the maximum you will lose on this trade is 10%. This strategy protects your account from being wiped out by one bad trade.

Market fluctuations can not be predicted with a 100% certainty. The best way to protect your capital and earnings is by managing the maximum amount you can lose versus how much you can win if the trade carries through as expected.

A stop-loss order allows you to decide the maximum loss you can afford instead of losing all in a bad trade, which could damage your entire portfolio.

A Simple Trading Plan Checklist

Answer 4 basic questions before making any investments

1. Entry: Why am I buying now? Has the price hit a key support level or is this a DCA strategy in play
2. Exit (Profit): When will I get my profit? For example, when the prices regain its value.
3. Exit (Loss): Where’s my Stop-Loss order ? For example, 5-10% below the expected/entry price.
4. Position Size: How much of my investment should I be dedicating to one trade. A common rule is to never risk more than 1-2% of your total capital on a single trade.

Finding Your Best Crypto Trading Strategy

To find the best crypto trading strategy to suit your needs, make sure to define your goals. Is the aim to build wealth long-term? Start with the basics like HODL & DCA and familiarise yourself with the digital market. If you only want to trade for a few weeks or months to try and beat the market quickly and effectively, focus on swing trading and learn about some of the core technical indicators that will help you reach your goal quicker.

The best crypto trading strategies prevent emotional and unplanned trades. Small steps and appropriate risk management will help you invest money you can’t afford to lose.