Everyone is thinking of investing money in the crypto industry. Many people have started mining crypto to earn their living. But mining cryptocurrencies is getting difficult day by day. Unless you have a large mining rig, it’s nearly impossible to mine efficiently. For this reason, smart investors are trading digital assets like Bitcoin, Dash, Ethereum, Ripple, etc. In the past, people used to think that just by buying cryptocurrencies they can earn money. Things have changed a lot since then and you can trade the major cryptocurrencies in the global market with the help of reputed companies like bigX.
Learning to trade is not an easy task. When it comes to cryptocurrencies you need to be aware of the high level of market volatility. Unless you have a robust trading strategy, it will be nearly impossible to ensure a decent ROI in this industry.
So, how can we develop a trading strategy?
It’s obvious that to trade cryptocurrencies, you need to develop a unique trading strategy. Some of the investors often buy professional trading method from the experts and blow up their trading account. You need to develop a trading strategy based on your personality. If you follow the rules mentioned in this article, developing a perfect crypto trading strategy will not be difficult. Let’s dive into the details.
Learning technical analysis is the first step to becoming a cryptocurrency trader. You should have the ability to speculate the price movement based on the raw price data in the trading platform. Instead of relying on traditional indicators, learn about the support and resistance level. Support is a place where the price of a certain asset starts to trade higher in the global market. On the other hand, resistance is such a place where the price starts to fall. Once you learn to find the critical support and resistance level, you will be able to trade with an extreme level of accuracy.
To make things easier, let’s see an example. Assume the price of Ripple has fallen to a great extent. After hitting the support level, the price has formed a nice bullish trade setup. So, it’s a perfect time to buy XRP with a stop loss just below the critical support. Set your profit target to the nearest resistance.
You should also learn about the fundamental analysis to assess the volatility of the market. Based on the market dynamics, the professional traders usually determines the stop loss and take profit level. When the volatility is high, the traders usually focus on a high risk to reward ratio. So, start learning about the major news since it gives critical information regarding the future of cryptocurrencies. Some of you might think understanding the major news and trading the crypto is a very hard task. Though it’s true to a certain extent but once you start to deal with the major news, you will be placing the trades with an extreme level of accuracy.
Development of your strategy
After learning technical and fundamental analysis, it’s time to develop your trading strategy. Most of the time, naive traders jump into the real market without having a valid trading plan. Eventually, they blow up the trading account and blame the market. To develop your strategy, you should start trading the demo account. Trade the major cryptocurrencies and see how it goes. Losing or winning doesn’t matter as long as you learn from it. Fix the bugs in your trading approach and try to create a perfect trading method.
Managing the risk exposure
Having a perfect trading strategy doesn’t mean you will be able to earn a huge amount of money without facing any losing trades. Losses are very common in the crypto trading business. Learn to trade the market with low risk so that you don’t have to lose too much money when the market goes against you. Follow a conservative approach to keep your funds safe.