The Basics of Developing a Cryptocurrency Trading Strategies

Looking on how to develop a cryptocurrency trading strategies? If you are looking on how to make your own day trading strategy or midterm and long term one we got you covered in this guide.

Why is it essential to develop multiple crypto trading strategies?

Making money with cryptocurrency is hard work. To make money trading cryptocurrency, it is necessary to develop several strategies. At specific points of time, some trading strategies behave better than others. It is wise to have multiple plans instead of one. Finding a working trading strategy is one of the keys to generating a stable return on investment. Psychology is the second key that should be mastered to become a successful crypto trader.

Is choosing the best crypto exchange to trade on important?

Day trading cryptocurrency or just swing trading crypto is different from trading any other asset. Legacy markets provide much higher liquidity and regulations. It is wise to pick one of the best crypto exchanges with high liquidity to be protected during market fluctuations. 

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Choosing a crypto exchange might be done before and after developing a trading strategy. We suggest you to choose in the beginning to find out the liquidity and safety provided by a cryptocurrency exchange, as the assets (crypto pairs) your strategy will be focused on. So these are the steps: 

  • Pick a cryptocurrency. Pick multiple crypto pairs to focus your cryptocurrency trading strategy on. If you are new to the market and only learning how to trade cryptocurrency, you may want to invest in a well-known currency with a high market value, such as Bitcoin, Ethereum, Ripple or Litecoin.

If you are looking at how to make money with cryptocurrency, we recommend visiting our article on the best cryptocurrency to buy.

Cryptocurrency day trading is it worth it?

We strongly advise you do not day trading crypto. Although the strategies you will develop are day trading strategies, it is better to stick to the cryptocurrency charts with a minimum of 4-hour timeframe and bigger up to daily and weekly ones. Day trading bitcoin or any other cryptocurrency is not suitable for everyone. It is a very serious business, and only after you have gained experience and confidence, you can move on to trading cryptocurrency daily.

Long-term trading

When investing in stocks using long-term trading strategies, one can rely on historical data to make decisions. That is not always the case with cryptocurrencies because of the limited amount of data available. 

However, people who still want to conduct long-term trades will evaluate this data and recent and current activities in the market to predict the long-term performance of cryptocurrencies. This strategy may prove particularly beneficial for investing in cryptocurrencies that have existed for several years. Based on such charts, we expect that Bitcoin will go up. Long-term trading is the best way to trade cryptocurrency.

Long-term trading strategy 2D timeframe, noise eliminated.

Short-term trading

Day trading bitcoin is a short-term trade. Short-term trading aims to generate a return on investment in a short time. Ideally, you invest, the price rises, and you sell for profit.

Things to keep in mind

There are several essential things to keep in mind about the cryptocurrency market:

  1. It is a highly volatile market. The value of cryptocurrencies may fluctuate by 20-30% within a few days.
  1. Blockchain technology is a new technology that is continuously evolving. The factor driving the crypto market’s volatility is that the technology behind it (the blockchain) is unique and changing. As the value of technology to industries outside of the cryptocurrency market increases, so does the cost of the cryptocurrency.

Guide to cryptocurrency, things to consider while developing strategy

Only invest the money you can afford to lose

When you ash how to make money with Bitcoin, rarely you will find information that it is possible to lose money too. The value of cryptocurrencies rises and falls sharply. Blockchains and cryptocurrencies may be affected by hackers and vulnerabilities, and the result of these hacks and vulnerabilities may affect the price in unexpected ways. The traditional stock market is volatile too, but if you keep your position and make the right decision, you will rarely experience significant losses. But with cryptocurrency, the risk of losing money is much higher. It is better to play it safe.

Always DYOR (Do Your Own Research)

DYOR accompanies any type of investment but is especially crucial for cryptocurrencies. Research the currencies you are considering buying to make sure that they meet your investment goals and that companies support their project. Remember, an investment in cryptocurrency is an investment in the company that produced it and an investment in blockchain technology.

Diversify portfolio

You decide which token you want to invest in. And there are more than 1,500 cryptocurrencies on the market. However, just like stocks, it is recommended that you make some safe bets with any higher-risk investments you want to make.

Never FOMO (Fear of Missing Out) 

There is a lot of hype surrounding cryptocurrencies. That may cause people to buy coins at high prices, but only lose money when the value of the currency drops. Don’t invest in currency just because there is a lot of buzz around. Trade the news wisely.

Always take profit

If you pay close attention to the cryptocurrency market, you will find that the value may increase and decrease at any time. If you are making a short-term trade and see a significant increase in value, you may expect the value of crypto to increase even more. But what goes up must go down. Therefore, by formulating a day trading cryptocurrency strategy of collecting profits regularly, the possibility of obtaining a stable income will be significantly increased.

Use stop-loss

Stop-loss is when you set a specific price. If the price of cryptocurrency drops, you will sell at that price, which is useful for protecting your trade.

Technical and Fundamental analysis

Technical Analysis

Technical analysis is a method of analyzing cryptocurrencies (or other assets) by studying factors related to the value of similar assets in the past and current markets through historical transaction volume and price data.

That is a method based on the idea of ​​predicting the future price of the asset. By analyzing the past performance of the asset traders trying to predict the future performance of the stock. 

You can use a variety of available charting tools to perform technical analysis on Trading View. The best platform for technical analysis for all kinds of assets.

Fundamental analysis

Fundamental analysis aims to determine the value of crypto-based on the basic principles of the project. The challenge in applying fundamental analysis to cryptocurrencies is that cryptocurrencies are not companies. They have no public financial statements. Their survivability depends on the strength of the community in the network.

You can start a fundamental analysis by seeking the project white paper, which will outline the goals and functions. You can also find content on cryptocurrency blogs or other community forums such as Reddit.


Developing a day trading strategy or an investing strategy does not guarantee success. You need to keep abreast of the ever-changing market and any related news, execute strategies regularly, and ensure that you make the best and most informed decisions.

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