In this article I show you 5 different, yet simple ways for trading cryptos profitably. Of course there are many other ways and strategies out there but I will go over some of my favourite tactics that I use on a daily basis. Implement these simple strategies and tips properly and you will be on your way to crypto success. There’s no 100% guarantee, as yet it is not possible to predict any currency with a 100% accuracy (otherwise surely we’d all be millionaires by now). But these tips and strategies give you the basic understanding and once you have that, trading cryptos becomes fascinating and also fun. But most importantly – highly profitable.
Support & Resistance
Support & Resistance is definitely one of the fundamentals when trading any sort of asset. It naturally applies to cryptos as well. Let me first simply explain what Support & Resistance means. Support & Resistance is a technical term and I think the easiest way to explain this is – try and imagine the price as a ball that keeps bouncing around. Now, luckily it’s not an atom that goes wherever it wants. It is restricted by a floor and ceiling. Support & Resistance essentially works as this floor and ceiling. These levels are not permanent – there can and will be breakouts, when the price breaks through its Resistance level, that same level then becomes Support.
Why these levels occur is simple – trading is mainly a psychological thing. People tend to buy and sell at the same levels, this is why these levels become stronger. Then traders look at previous situations where certain strong levels are formed and then act accordingly, making these levels even stronger. So in the sense Support & Resistance levels work so well is because we believe they do and continue to act accordingly. It becomes a self fulfilling prophecy.
How to use these levels ?
Study the charts depending on what time frame trades you are looking to do. See what levels keep repeating itself and then act accordingly. With Bitcoin it seems pretty easy so far – all of the levels are around nice and round numbers. The bottom this year has been at and around $200. So when the price reaches $200 you can with great confidence start buying because you know that the price can only go back up. And it is because of this confidence that most of the traders will do this and that is what is making the price go up. The next level was at $250, the one after that at $300 and we just recently reached $500 and the price is making another pullback from this new awesome high.
This works with other currencies as well, just look at where the price has bounced back previously at least twice or more and you can find the levels where to buy and sell.
Another thing that you always need to keep in mind with cryptos and any other assets are news announcements that can and will make its price move. I encourage any trader to start their day by reading financial, economic and other news before they start their trades. You can have a great strategy but if there’s an announcement of great importance that can make the price go in the opposite direction. Also trading news is a strategy in itself. You predict a positive announcement and buy just before or at the beginning and then just see the outcome. And cash in! The latest best example is the EU ruling Bitcoin exempt from VAT. If you successfully predicted that you would’ve made a 66% profit in just a few days. Whether you are using news as a strategy or not keeping yourself informed will definitely help you along.
Exponential Moving Averages
One of my favourite technical indicators to use with cryptos. As cryptos are still very young there’s no need to try and implement difficult strategies with many various indicators. It just won’t work. Keep it simple. So what I often do is:
- Firstly look at the 200 EMA, this will tell you what the current trend is. Above the 200 EMA line and you’re on an uptrend, below and it’s a downtrend.
- Then set 2 EMA lines with the values of 12 and 26 – when these 2 cross, it is time to buy.
- Set a Stop-loss a little bit under the crossing of these EMA-s in case things start to go south.
- Cash out and sell when the price touches the 12 EMA line again.
HitBTC has also added EMA tools on the charts – just making things a bit easier for you. No need to have multiple charts and indicators open at the same time.
As there’s a lot of new cryptos out there and many more are born every month it makes sense to snoop around on forums. You can find valuable information about coins, also valuable and timely info that will make the prices move. You need to be careful though – there will be a lot of people saying things to make people buy into a coin and then they might do a pump and dump. This is essentially talking up a coin, getting the price up and immediately selling out, making the coin essentially worthless. Some coins are created solely for this purpose. So firstly – do your research. A great coin will continue.
There are a lot of different services that can give you a reasonably accurate forecast on the future prices. Most of them charge you, but there are plenty that also give you some free predictions. I wouldn’t say you should believe one forecast and invest everything accordingly. But looking at many different ones and seeing what comes up statistically can turn out to be very accurate. Also try and analyse the data – why might they be predicting this ? Look around for events around the dates that many forecasts are predicting a jump in price. From there you can do more research and come to your own conclusion about whether you should buy or not.
Start trying out one or why not all of my suggestions. There’s no 100% guarantee in trading. But these tested tips and strategies do work when done right. I encourage you to start learning and practicing to see what works best for you. Of course you have to accept that there will also be losses. Main thing in trading is to keep your losses low and learn from them. If you have the will to learn you are on your way to success. You can practice on our demo to find your favourites.
Start taking advantage of the markets here!
Even though I try to give you the best advice possible, please understand that trading is risky and might result in the loss of some or all your investment. Never trade with capital you can’t afford to lose.