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Today, the topic of cryptocurrencies is very popular in the digital world, and now we will look at the main methods of how you can make money on it. But first, for those who do not know, I will briefly tell you what it is.
The high volatility of bitcoin and other digital coins makes them very attractive for earnings. Many people ask the question: "How to ensure earnings on cryptocurrency?" The answer to it may be different, it is important to decide on the appropriate way and choose a competent strategy.
A lot depends on your personal preferences, willingness to take risks or refrain from taking risks, as well as other factors.
Among the common ways of earning money are:
Investments in promising cryptocurrencies
But we will look at the main strategies for trading cryptocurrencies and I will share the methods of how you can trade.
The strategy of arbitrage trading is simple and conceptually very clear. Simply put, an asset is bought when the price is low and sold when the price rises.
For example, arbitrage trading on the bitcoin market will consist in the fact that you buy bitcoin for 60,000 USD on one cryptocurrency exchange, and then sell it on another cryptocurrency exchange platform for 62,000 USD. In this example, a trader will be able to make a profit of 2000 USD by simply buying and selling cryptocurrency. It is important to note that the price may change in the same way and in a smaller direction, in this case it is better not to sell and keep the coin until it grows.
Swing trading is a strategy by which traders seek to profit from price movements in short and medium time periods. The idea is to catch any "fluctuations" in the market that may occur over days, weeks or months.
There are two fluctuations that traders pay attention to:
The highs of fluctuations are when the market reaches a peak before the pullback, which makes it possible for a short trade.
Swing lows — when the market falls and bounces, providing an opportunity for a long trade.
Successful cryptocurrency swing traders usually use technical analysis to monitor charts of short and medium time periods in order to catch daily and weekly trends. The use of fundamental analysis is also important because economic events can often occur over several days or weeks.
The day trading strategy is aimed at exploiting market volatility over shorter time periods of several hours, rather than days and weeks.
Day traders identify market trends and trade with the prevailing mood until a support or resistance level is reached or a predetermined price point is reached.
Day trading can be time consuming and requires a lot of flexibility and the ability to respond to rapidly changing market events.
Scalping is the making of small transactions with a minimum duration of time with a small profit.
The duration of the time should be small, ideally no more than an hour. The biggest asset for scalpers is volume; the number of trades is more important than the profit from one trade. Scalpers will never seek big profits and cannot afford to wait for the market to turn around to reduce losses.
Scalping should never be done at an uncertain time, and the best market for scalping is a calm market with limited volatility.
Reverse trading is considered one of the best trading strategies for cryptocurrencies and is based on a change in the general trend in the market. To understand this in detail, the strategy is to find the exact moment when the trend is about to change. If the coin has been bullish for a while, the reverse trader will look for the time when he will reverse the trend and place a bet on it.
Another interesting version of reverse trading is trading by predicting the high/low of the day and making money on this forecast. The risk associated with this strategy is the general risk of incorrect prediction of the reversal time.
The Golden Cross and the Cross of Death
The Golden Cross and the cross of death are quite an exciting cryptocurrency trading strategy, and you need to understand both of these terms in order to implement it correctly. The golden Cross is basically defined as the time when the short-term average value of a particular cryptocurrency crosses the long-term average. The short—term average is usually defined as the 50-day average, and the long-term average is defined as the 200-day average.
On the other hand, the death cross is the exact opposite of the golden cross and is defined as the moment when the short-term average falls below the long-term average.
Confirmation of these trends is carried out by analyzing changes in trading volume. Some traders also use other indicators such as RSI and MACD, but volume is considered one of the best indicators.
The strategy revolves around buying from the golden cross and selling from the death cross.
By Terra TEAM