Aspiring crypto investors and traders always have this one question while joining the crypto bandwagon- would you be able to live life king-size with crypto trade? Well, now, we have heard of early crypto traders and investors who are millionaires now. You know about the teen investor who became a millionaire by investing just $1,000. Now, the crypto market is wildly volatile and hence is able to offer much higher returns in comparison to traditional trading markets. Thus, there is always higher profit potential when it comes to crypto trade.
But, given the wild volatility of the crypto world, the loss risks are also on the higher side compared to the traditional trading markets. However, you would be able to avoid losses by a great extent and turn your trade into profitable one if you are cautious of certain factors. We will discuss those tips but first, let’s check out the major trading strategies that would help you to make good cash with crypto trade.
Major Trading Strategies
Leverage trading
This one is especially for the highly ambitious crypto traders who are aiming to make it real big with crypto trade.
At times, you are aware of a bullish trend for your chosen crypto in the near future that might bring you astronomical returns but are unable to trade given lack of funds. If you want to make a large profit, you will have to open a big trading position. And you need a sizable sum of funds for that. But unfortunately, you are in shortage of funds. In that case, you need to count on leverage trading system.
In leverage trading, traders can borrow funds from crypto exchanges to boost their trading capital. In exchange, they would have to deposit margin amounts as well as pay interest to the crypto exchange. The margin amount is the money that you would need to maintain in your account for keeping your trading position active.
The profit potential is always higher in leverage trading because here you will be able to pen a bigger trading position and that too without shelling out a small fortune from your side. You can choose from a wide range of leverage, ranging from 2x to 10x to even 100x. Yes, some of the crypto exchanges do offer up till 100x leverage. So, for example, if you take 2x leverage and your margin capital is $1,000, you will be able to open a trading position with $2,000. If the market swings in your favor, you will be able to make the profit on $2,000 yet with just submitting $1,000 from your own share.
HODLing
Now, this is more of an investment than trading. However, since you will trade off your crypto holdings at the end of your HODLing term, HODLing can be classified as “trading”.
In HODLing, a crypto investor/trader purchases crypto assets hoping the price would increase in the long-term. Thus, he purchases and keeps the assets on hold for a few years. In most of the cases, the HODLers have a target price that they wish to reach after a few years and that set the HODLing period up to that. For example, BTC is now trading at below $20,000. Now, a HODLer is optimistic that BTC would be able to hit $100,000 by 2025. So, if he buys BTC now (in 2022) he would set the HODLing period till 2025. If the coin reaches that target price by that target time-period, then the HODLer will sell off the crypto assets and make profit from the huge surge.
Day trading
Are you in a rush? Do you want to see fast profits even if these are small? Not all traders have the patience to wait for years for profit. Some traders want quick profits with small investments. It could be that they are not aware of whether they would like to remain in the crypto zone after 3 years. In that case, day trading would be an amazing option for these crypto traders.
Day trading is a trading strategy where traders purchase as well as sell off crypto assets within one single trading day. They try to make profit from the little price fluctuations that happen in the crypto sphere over the course of one single trading day.
One variation of day trading is scalping. Scalpers do not stick to just one trade in one day; rather, they are always on the spree to make several trades in a few minutes. The crypto market remains open 24/7. Thus, scalpers would get plenty of time to make plenty of trades in one trading day.
Now, though these profits are not as big as profits you make from leverage trading or HODLing yet, comprehensively, they make a sizable amount.
Wrapping up
As mentioned above, we would conclude this post with a few expert tips on how to avoid losses and make crypto trade more profitable. First, you should have a profit target. Crypto market can take an opposite turn any time. Just because you are making profit now does not mean things would remain the same after a couple of hours. So, you should have a profit target. Once you reach that target, you must stop trading activities for the time being. It will help you to prevent sudden unwanted losses.
The other tip is to set a Stop Loss benchmark. It’s the same as the one above but this one deals with losses. Every trader, especially a crypto trader, meets with losses at some point in their trading journey. You might encounter losses as well. But, the goal is to minimize the loss risks as much as possible. The age-old stop loss benchmark would be a handy help here. In this case, you would simply have to set a benchmark or bar for loss. Once you reach that bar, you would stop the trade for the moment. Read more multibank.
Finally, do not invest a large amount of capital for crypto trade. The sector is still unregulated and highly volatile. The market might crash down any time and your trading aspirations would end up in fiasco. So, invest small amounts so that the loss is manageable.