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Crypto Trading Strategies You Need To Know

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This article will provide you with some basic crypto trading strategies you can use to make money on the cryptocurrency market. The strategies discussed include identifying price patterns, RSI, dollar-cost averaging, etc. Keep reading to learn more! Here are some tips and tricks that will help you be successful!

Identifying patterns in price charts

Identifying patterns in price charts can be beneficial for your crypto trading strategies. Patterns in price charts are essential for understanding market psychology and helpful in determining price movement. But the definition of a price chart pattern can vary considerably, and you should look for confirmation elsewhere. Below are some basic examples of patterns to look for in price charts.

Price pattern

Price patterns are a fundamental part of trading and are useful for generating entry and exit signals. You can use some of these patterns to identify trend reversals when an uptrend turns into a downtrend. They help investors predict the direction of prices and have unique constructions and signals. In forex trading, you don’t need to know the names of patterns, but you do need to know their stories.

price charts

Trix indicator

One crucial tool for crypto trading strategies is a TRIX indicator. It helps you identify overbought and oversold areas and strong trends. Identifying these areas and trends can help you decide whether to short or buy a particular cryptocurrency. By interpreting price charts, you can find a profitable trade. And, if you’re not a professional trader, you can always start small with a small amount and learn by trial and error.

Using moving averages

One of the most popular indicators in cryptocurrency trading is the moving average. More than 50 million traders use this indicator to guide their decisions. However, not everyone understands the concept and how to use it. This technical indicator uses historical data to determine market direction. It falls behind the price in the long term, which makes it an excellent contrarian indicator.

The more significant the gap between the short and long term moving averages, the more likely they will lag behind price. On the other hand, the short-term moving average is more relevant for predicting the trend of a particular cryptocurrency.

 Although it cannot predict the future, it can provide valuable insights and confirm existing trends. It works by calculating the average price of several candles over a specified time. Therefore, investors should use other technical tools and moving averages to understand market trends better and use them cautiously.

Using RSI

RSI in crypto trading is the same as using any other financial indicator, based on a simple mathematical formula. It uses a band of oscillation from zero to 100 to compare price changes to a predetermined level. The input parameter is the number of periods, and Wilder recommends a period of 14 to achieve the best results. However, shorter periods are not as effective and may cause false signals.

Combine with a second technical indicator

When using RSI in crypto trading, make sure to combine it with a second technical indicator. Bollinger Bands is a popular lagging indicator, which will give a signal based on activity. The RSI can produce false signals if it goes above or below its overbought or oversold levels.

 Keep a check on the prices

When the RSI rises above 70 or falls below 30, it signals the opposite of the price trend. This is because the price action has not yet exhausted its resistance or support. This strategy requires you to wait for the price to hit a lower band, which could be the perfect entry point. Combining this with day trading crypto RSI will make the signals even more solid.

technical indicator 

Using dollar-cost averaging

Dollar-cost averaging is especially beneficial in the crypto market. While it might not be for everyone, many investors are reaping the benefits of using dollar-cost averaging in their crypto trading. This strategy helps investors invest in smaller amounts over time, eliminating the risk of losing all of their money at once.

The price of Bitcoin can fluctuate rapidly, and it is hard to time the market. Using dollar-cost averaging in crypto trading spreads out your investments and reduces your emotional stress. It also increases your portfolio value by enabling you to acquire more assets at a lower price. Therefore, if you’re a new investor in the crypto market, you should consider using dollar-cost averaging in your crypto trading.

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