9 Crypto Trading Strategies to Profit from Crypto-Markets

Oct 3, 2020
man climbing pile of money

Updated April 28, 2021

Do you want to level up your crypto trading strategies? Or maybe you are wondering if this is the time to enter markets for day trading?

If you are a crypto trading enthusiast that feels lost in the world of complex trading strategies and uncertain markets, this article will take away any confusion. The world of crypto trading might seem foreign and complicated in the beginning. Still, after understanding the different trading strategies and the tools at hand, it is not that hard after all.

In this post, I set out to discover the top 9 cryptocurrency trading strategies which you can quickly learn and apply to your trading on Multi HODL and beyond. 

I also have a bonus for you! Make sure to read through all parts of the article. I have listed a fantastic passive income source for you to combine with any trading strategy you wish.

1. Scalping

When appropriately executed, Scalping can be the best cryptocurrency trading strategy that you have adopted in your lifetime. Scalping is all about making small trades with a minimal time duration while taking in small profits. 

The time duration has to be small, ideally less than an hour at max. The biggest asset for scalpers is volume; the number of trades is more important than the profit in one transaction. Scalpers will never aim for big profits and cannot afford to wait for the market to reverse to reduce losses.

On Multi HODL, you are free to open up multiple positions at the same time for as long, or as short as you want. 

Scalping should never be done during uncertain times, and the best market for a scalper is a calm market with limited volatility. 

2. Reverse trading

Reverse trading is considered one of the best trading strategy for cryptocurrency and is based on the reversal of the general trend in the market. To understand this in detail, the strategy is all about finding the exact moment when a trend is about to be reversed. If a coin has been bullish for some time, a reverse trader will look for the time when it will reverse the trend and bank on it.

Another interesting version of reverse trading is trading by predicting the day's high/low and making money on that prediction. The risk involved in the strategy is the general risk of making the wrong prediction of timing the reversal.

To predict the exact reversal moment, reverse traders also look at support and resistance levels, although the range trading strategy (explained in strategy #7) uses this method as well. If a cryptocurrency is trading near a support level, the crypto price will likely bounce up from the support level. The opposite is true for resistance levels. Combine this information with market trends to determine your trades.

3. Momentum trading

(Source: Exchange Trade Volume by blockchain.com)

One of the most straightforward crypto trading strategies in the list, momentum trading is all about understanding the momentum of the market/coin and riding the wave.

This is also considered as one of the riskiest and the most challenging strategies to master as predictions can go both ways. The major component of this strategy is volume. The momentum is defined in the volumes that a trend is generating.

Traders ride the wave till the moment the volumes remain above a particular level and then exit. The hard part is of judging the right moment to exit the market and analyzing the volumes changes based on various indicators.

4. Fading trading

Fading is the strategy of betting against the trend in the market. It is also one of the riskiest strategies in crypto as making the wrong predictions can result in huge losses. 

Contrary to that, making the right move will result in huge profits, and this strategy is about betting on a few trades to make significant profits. 

The best time to execute this strategy is when there is a lot of volatility in the market. This usually happens before significant news or some countries talking about implementing or banning the use of cryptocurrency.

5. Day Trading Using Volatility

Volatility in cryptocurrencies gives birth to a lot of opportunities for traders. Volatility in the market exists for a reason, and during this time, the direction of the market can go to any side. One of the most effective crypto trading strategies in these times is cashing in on small trades that happen before a significant change in the market.

A lot of small trades in this time results in big profits, and this strategy does not include predicting the direction of the market after the volatility has settled down.

Read our full guide about getting started with day trading!

6. Buy Dips and Hold

The times when the price of Bitcoin and other cryptocurrencies are down, it might seem time to remain away from the market, but that is one of the best times to enter a market. Just like the trend is in stocks, the cryptocurrency market overall is strong and regains prices after significant falls due to news.

The cryptocurrency market is one of the most volatile ones and can change directions quickly. There have been hundreds of instances when the price of bitcoin has fallen significantly and recovered after a specific time. This cryptocurrency trading strategy is also one of the safest ones but involves time and limited profits relatively.

If you want to pursue this strategy, we recommend using a notification tool to alert you when a crypto’s price has dropped sharply. For instance, you want to set alerts that get triggered when the price of Bitcoin drops by 15% within a time span of 10 or 30 minutes. You often see a rapid bounce after a sharp drop because many traders try to buy some cheap cryptos before the price bounces up again. Therefore, it’s crucial to quickly detect price drops in a relatively small time span. The bounce up happens minutes after a price crash. You don’t want to receive a notification one or two hours after the crash has happened.

(Source: TradingView BTC/USD)

The above image shows a recent example from April 18th, 2021, when Bitcoin experienced a crypto flash crash that wiped out $300 billion in less than 24 hours.

Here are some pricing points from the flash crash that illustrate buying opportunities:

  • April 18, 3:12 AM (UTC): $58,464
  • April 18, 3:33 AM (UTC): $52,131
  • April 18, 3:42 AM (UTC): $53,815
  • April 18, 3:57 AM (UTC): $55,432

If you feel very confident about your strategy, you can build a trading bot that detects dips and automatically buys them. However, it’s not easy to create rules that can predict the exact nature of crypto crashes. We prefer to react to alerts so you can evaluate the situation and determine the right moment to buy the dip.

Recommended read: Strategy for Crypto Trading: “The Big Short” with Multi HODL

7. Range trading

Range trading is heavily dependent on the concept of support and resistance used in stocks and forex trading. The first thing to learn to master this strategy is candlesticks charts. These charts have been used for centuries to make models of support and resistance, which are basically two price ranges which are the predictions of the volatility of a coin in a range.

You are supposed to buy the currency at the support levels and sell it when it nears the resistance levels. The idea behind the strategy is that the price will remain in the range and if it increases beyond a particular level it will be considered as breaking the limits which happen less frequently and is the only risk involved in this strategy. 

Therefore, it’s a great strategy for beginners.

Many people trade according to these price targets, which makes reverse trading even more predictable. Of course, a crypto’s price may break through a previous support or resistance level. As mentioned above, it happens less frequently. Often, a cryptocurrency will bounce a few times between support and resistance levels before deciding upon a new direction.

If we take a look at the example above, we initiate the following trades according to our reverse trading principle:

  1. Short when reaching support level (actually resistance level which will become support level) → Wrong
  2. Long when bouncing up from previous support → Correct
  3. Short when reaching next support level (if this is known) → Correct
  4. Long when reaching previous support level again → Correct
  5. Short when reaching resistance level → Correct
  6. Long when reaching support level → Wrong (breaks support level)
  7. Short when breaking support level → Correct

This gives us five correct trades and two incorrect trades. We have to admit that this heavily depends on the predictability of the crypto and the number of times the price bounces between resistance and support levels.

Next? Our crypto trading guide explains how you can use support and resistance levels to maximize crypto trading profits.

8. High-frequency Trading (HFT) or Algorithmic Trading

High-frequency trading is the most complex strategy in this list, but it is also one of the most profitable for many traders all over the world. Algorithmic trading is all about automating all the steps of a strategy and automating your strategies without having to do it manually.

HFT is making a lot of trades in seconds, and most HFT consists of making trades in a few milliseconds. Now, that is not possible by humans, and you can create your own rules which will be executed on auto-pilot.

It involves a lot of back-testing and repeating small trades after raking in small profits and leveraging on volumes of trades. It’s important to know that it’s not that straightforward to find a profitable crypto trading algorithm that you can use.

That’s why so many crypto trader prefer to use Multi HODL. It has all the wonderful, automated benefits of algorithmic trading, but with a more hands on, user friendly experience to help one profit from market volatility. 

Check out this article on the traps to avoid while trading in crypto!

9. Golden Cross and Death Cross Trading

(Source: TradingView via Investopedia Death Cross definition)

The golden cross and death cross is quite an exciting cryptocurrency trading strategy, and you have to understand both these terms to execute it properly. The golden cross is basically defined as the time when a short term average of a particular cryptocurrency crosses the long term average. The short term average is generally defined as the 50 days average, and the long term is defined as the 200-day average.

The death cross, on the other hand, is the exact opposite of the golden cross and is defined as the moment when the short term average goes below the long term average.

Confirming the occurrence of these trends is done by analyzing the change in the trading volume. Some traders also use other indicators like RSI and the MACD, but volume is considered one of the best indicators. 

The strategy revolves around buying at the golden cross and selling at the death cross.

Bonus; Crypto trading strategies without the hassle

Now is the time to talk about the bonus. I am sure there are many instances when you have spare money and look for lucrative investment options. Being in the crypto world for so long has given me the privilege of getting to know about unique opportunities, and this is one such instance.

Youhodler provides you with a crypto earnings option to earn 12% APR on your passive crypto assets. Furthermore, you can also take out crypto loans at a loan-to-value ratio of up to 90% which is the highest in the crypto lending space!

Last but certainly not least is YouHodler’s popular Multi HODL tool. Multi HODL brings all the benefits of margin trading without the hassle. Simply choose a crypto to multiply, pick a direction (up or down) and set your multiplier (up to x30). From there, you can follow along with the price of your crypto and watch your multiplication in real time. There are even risk management tools like setting Take Profit and Margin Call so you know you are always exiting the market at the perfect time.

Click here to put these tips to use and try our Multi HODL tool today!

Want to learn more? Check out the following posts:

Get YouHodler Crypto Wallet App

An efficient and innovative tool powered by crypto-backed loans to help you capitalize on market volatility

YouHodler is regulated in  Switzerland and the EU

Partnership with regulated EU/Swiss payment providers

YouHodler S.A. Regulated Financial Intermediary and Pawn Broker

YouHodler Italy S.R.L. OAM Registration

VASP Registration wth the Bank of Spain