In this episode of the BeInCrypto video game, host Jessica Walker will introduce our top three cryptocurrency trading strategies for beginners. Next week we will cover 3 more advanced strategy traders who want to move to the next level, so stay tuned!
Remember that no cryptocurrency trading strategy will ever be successful, successful traders are not successful in all trades. Experienced traders only employ techniques that allow them to make a profit most of the time.
Average cost in dollars
first is dollar cost averaging (DCA), which is the practice of making regular, usually smaller purchases of an asset over time. For example, let’s say you want to buy $ 1,000 worth of Bitcoin and hold it for several years, as you think it will continue to appreciate.
You can buy $ 1,000 today at any price today, or expect a significant drop, assuming you think it’s looming. Buying all at once or gradually are fair options, but largely dependent on uncertainty, chance, and fate.
An alternative to this is the dollar average cost. In this scenario, you take the same $ 1,000 and buy, say, $ 100 per month for 10 months. Or about $ 20 a week. In this way, you can significantly offset market volatility. This means that while you probably haven’t bought the best lows, you probably haven’t bought all the highs either. It never hurts to have a little more peace of mind.
Fundamental analysis of cryptocurrencies
Fundamental analysis or FA has traditionally been used to look for the intrinsic value of crypto projects. This is different from technical analysis, or TA, where traders only work with price action.
Get started analyzing a project by knowing the team behind it. Ideally, they should be transparent about their credentials and history. If you give this team your money and they disappear, how will you find it? So, in general, it is very important to learn at least a little about the main players of a team before investing in something. Stay away from projects that lack title names and faces, as losing these things is a huge red flag.
A good project also has pretty solid and clear documentation available, presumably from a team website or community repository. See what people are saying on social media, especially on and Reddit. So ask yourself if you understand what kind of resource this is and if there is a real demand for it. This is also when you want to see some tough numbers.
In general, there will be no “earnings reports” as for a traditional company. But even if there are, they may not be as relevant to project validity as they are to stocks. However, it may be important to look at the current price, current supply, market capitalization, and trading volume.
Moving on to technical analysis, divergences are the most popular technical approach according to many traders, used all the time and with many other indicators. In this case, we will talk about the Relative Strength Index (RSI), which is a popular indicator that basically tracks the buying and selling momentum in the market.
Assuming you already know how to spot and plot trend lines, a divergence occurs when the trend line you drew for price action does not correlate with the trend line you saw on the RSI. Price action was still hitting lower lows, but the RSI was starting to hit higher lows. All in all, divergences are what you are looking for, be patient as they arise under certain conditions and there is no guarantee that the market will give you one right away.
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