6 Basic Trading Strategies for Crypto Beginners

Is there anything basic about trading? No. You can't just buy Bitcoin off the bat and hope for the best. But you can find basic trading strategies that should make life easier. Still, even with a basic understanding, the market can consume you. It'll definitely consume your time, anyway.

Below, we'll explore four foundational strategies that can serve as a starting point for crypto beginners and give some extra tips along the way.

Dollar-cost averaging (DCA)

Dollar-cost averaging (DCA) is particularly beneficial. By investing a fixed amount consistently, you avoid the pitfalls of trying to time the market. Those pitfalls are challenging for seasoned traders.

DCA's strength lies in its simplicity and the psychological ease of investing. Beginners can start with small amounts and gradually build their portfolio over time.

This strategy can be especially effective during market downturns.

Understanding and Utilizing Technical Analysis

For beginners, diving into technical analysis can seem daunting, but understanding its basics is a valuable skill in crypto trading. Start with fundamental concepts like identifying support and resistance levels, trend lines, and basic chart patterns. Familiarizing yourself with volume indicators and oscillators like the MACD (Moving Average Convergence Divergence) can provide insights into market momentum and trend reversals.

Technical analysis is a powerful tool, but it's not foolproof. Combine it with other analysis methods.

Day Trading

Day trading is one of the most popular strategies - but it takes a lot of work. The goal is to capitalize on short-term price movements.

Day traders rely heavily on technical analysis and market indicators to make quick decisions. It's a high-energy strategy that requires constant market monitoring and a good understanding of market trends. Not everyone has the time or the mental capacity to do that - don't underestimate how much of your day staring at moving numbers and candlesticks can consume!

Day trading can be profitable, but it's one of the more risky trading strategies.

Swing Trading for Crypto Enthusiasts

Swing trading is also one of the most popular. It's a strategy where trades are held for several days to capitalize on expected upward or downward market shifts. But it doesn't always work out. Crypto can swing the wrong way and ruin your day.

This approach is less time-intensive than day trading but requires a good understanding of market trends and technical analysis. Swing traders look for 'swings' in currency prices to determine entry and exit points. Again, you can always swing the wrong way and ruin your own day.

This strategy is suitable for those who can't monitor the market continuously but still want to actively trade.

Trend Trading in the Crypto Market

Trend trading is a strategy involving holding positions over more extended periods. That can range from several weeks to months and benefit from a trend in the market.

This approach is based on the idea that cryptocurrencies will continue to move in a particular direction (upward or downward) over time. Trend traders use tools to identify these trends. It explores moving averages and trend lines - something you can learn about in more detail online.

This strategy is less about quick profits and more about realizing the potential of a longer-term trend.

Learn from Experience and Keep Evolving

Experience is invaluable. It's not all about strategy. You won't get far without it.

Start with small trades to understand the market dynamics without risking too much. Don't be discouraged by losses - unless it's a big one. That will sting. But perhaps it happened because you didn't learn from your mistakes. View them as opportunities to grow and refine your strategies.

Trading Strategies to Avoid as a Crypto Beginner

Navigating the volatile world of cryptocurrency requires knowing what to do and what not to do. People are just less likely to listen to what not to do. Here are some key strategies to avoid:

1. Excessive Trading: Going in and out of the market too frequently can rack up fees and lead to missed opportunities.
2. Emotional Decisions: Avoid making trades based on fear, excitement, or FOMO (Fear of Missing Out). Emotional responses often lead to irrational decisions.
3. Ignoring Risk Management: Neglecting to set stop-loss limits or investing more than you can afford to lose increases your risk exposure. Stop-loss' is excellent.
4. Chasing Losses: Trying to recover losses by making increasingly risky trades can compound your financial setbacks. It's like betting on football and hoping the accumulator comes in because your last one didn't - it doesn't work.
5. Following the Crowd: Blindly following hype or tips without research? Don't do it.
6. Overcomplicating Strategies: As a beginner, stick to well-understood strategies instead of complex trading methods that are hard to manage. Apparently, these are the most basic strategies we've listed in this article.

Basic. Is that the right word to use now? It's no more complex than forex or stock trading, but something about crypto makes everyone want to try without experience. Perhaps it's more mainstream and accessible - which is trying. You can download a crypto wallet and exchange with a few clicks. For some reason, it doesn't seem as easy for stocks or forex.

Still, mastering these 'basic' strategies provides a solid foundation for successful trading.

Remember, every trading decision should be based on research and a clear understanding of the market dynamics. Once you get more experience it will become easier. You won't be crying over candlesticks all your life.