Common stock trading strategies that are profitable in crypto markets

Common Stock Trading Strategies That Are Profitable In Crypto Markets

Cryptocurrencies have taken over the trading market in a few years of their presence. If an adult who is not into the trading business is asked about cryptocurrencies, they would answer due to its advertisements everywhere on social media. With the new trading strategies and around twelve hundred cryptocurrencies in the market, a trader is not going barehanded certainly. The wide range of choices makes it difficult for a trader to choose and invest. 

Cryptocurrencies are digital assets with some consensus algorithms attached, and the digital ledger stores all the transactions. It is secured by cryptography to protect the investors from double-spend. These are decentralised networks that work on blockchain technology. The first cryptocurrency to be traded was Bitcoin, still the most popular form of cryptocurrency. 

As these are most widely used, several strategies could be taken into consideration while stock trading.

Chinese influence on Cryptocurrencies  

If we analyse the stock trading of china in the past couple of years, they are casually not more into cryptocurrency, keeping its economy off it. But, no one could say when it comes to China’s trading practices. They still influence the stock trading of cryptocurrencies and their price in the market. Since 2013 China has been an enthusiastic participant in cryptocurrency, with one of its companies accepting bitcoin. Baidu, the search engine of China, also accepted bitcoin as a trading instrument as these are free of government control and an excellent benefit for a hedge against inflation. As a result, the popularity of trading crypto increased. 

But, Chinese regulators have put some restrictions that ban financial institutions and payment companies from providing their services to cryptocurrencies—making a crackdown on digital coins. In addition, the People’s Bank of China and other associations in a joint statement have decided to not issue any financial product or savings in cryptocurrencies. 

They have come up with this decision to save the economy of China, as the People’s Bank of China is planning to launch its currency due to the threat to its Yuan currency by crypto trading. That’s why China is implying the stock trading strategies to be in the stock trading market. 

Traders of China prefer to trade on Chinese exchange platforms that are relocated abroad. This has made China’s over the counter market busy. Moreover, the crackdown strategy of China has made it difficult for individual traders to purchase cryptocurrencies with various payment methods, which makes it harder to exchange cryptos for Yuan. They have adopted this strategy to make Chinese people invest in China’s exchange, and the government to have a transparent picture of people’s savings and investing habits. 

China has one of the important cryptocurrency markets but is unfriendly and has a unique environment for stock trading. They have imposed some restrictions, which imply that they are not into Crypto trading, but they still are active traders. Bitcoin is the market leader as per Chinese trading, followed by Ethereum. China had been a leader in trading Bitcoin till 2017; after its crackdown, the prices of Bitcoin were impacted for some time. However, Bitcoin is not banned in China, and China’s Central bank in 2019 had provided an infographic to shed light on Bitcoin. 

China has remained a significant trader and part of bitcoin trading; its decision still impacts the global market. China is also an essential player of Ethereum mining; its national blockchain platform, Blockchain Service Network (BSN), incorporates both Ethereum and EOS. 

Common Stock Trading Strategies 

Common stock trading strategies could be used to stay in the market. For example, a Chinese firm or an individual can have these points checked while trading in stocks. A stock trader can use these crypto trading techniques to get better results in the long or short run of crypto trading. Usually, it is noticed that short-term movements on stock trading are more beneficial than long-term. Below mentioned are the best crypto trading strategies.

Scalping 

Best crypto trading strategy in stock trading, Scalping focuses on small trades in a minimum period. Time is the key factor in this trading strategy where the trader needs to keep it less than an hour of trading—a technique where the trader profits off small price changes and makes a profit by reselling. The small differences in asset price are of great benefit for a stock trader in the long run. Scalpers follow a strategy of exiting the moment they notice unfavourable trade. Then, to keep profits intact, they exit the market. Thus, they focus on the frequency of their success rather than maximising their profits in the long run. 

In simple terms, they take advantage of the small movements in the market by quickly entering and exiting the market. For them, the number of trades is more important than profit. They focus on reducing the losses and maximising the trades. As a result, the winning and losing ratio remains the same. The trader in this strategy avoids uncertainty because of the unpredictability of the trade. A thin market with less volume is the best for trading using this strategy. The trader buys on one side and sells on the other and earns profits through gaps. It is safe because of its limited time frames. It requires disciplined trading and patience; trading bots are used for more smooth trading using scalp. 

Reverse Trading 

Reversal trading is an advanced day trading strategy based on a reversal trend in the market. Reversal is the change in price direction, which can occur upside or downside. It works opposite when there is an uptrend; then the reversal would be a downtrend and vice versa. The trading is based on overall price direction and not on a day’s chart pattern. 

A trader needs to study and understand the market in detail to recognise the reversal trend easily. The trader has to wait for trend reversal when the coin is in a bullish market. Moreover, the highs and lows are also predicted for money-earning. 

The trader needs to be alert to avoid making wrong reversal decisions. Moving average oscillators help in finding out the reversal trends. The reversals happen quickly in a day or over weeks and years. As they occur in different time frames, the trader needs to be conscious. Trends reversals are identified based on the price directions. Indicators could also be used for trend reversal.

Momentum Trading 

A trading strategy where the investors buy securities when they are rising high and sell them when they reach the peak. They are purchasing the stocks in short term uptrends in the uncertain market to sell them off when they lose the momentum. Working on the saying, Buy low and sell high. Richard Driehaus was the one who made this into a strategy. 

The strategy is to take advantage of the volatile market. Short-term investments help the trader earn higher by selling off the stock at the peak moment. This process requires risk management quality to overcome as a winner in the volatility, overcrowding and traps. The essential elements of momentum trading are selecting equities, risk management, getting into early trade, position management and exit points. In addition, a trader must choose liquid securities when dealing in momentum trading. 

Dips and Holds

Buying dips and holds is a top strategy of stock trading based on the buy low and sell high technique. The buy dips are purchasing of assets when they are down; this means that the asset’s price is low for some time and will bounce back higher—a short term strategy where the price dips and traders take it as an advantage. For example, gold prices go low sometimes, but still, people buy it as they know it will rise high. The same is the case in the trading of stocks, Bitcoin or Ethereum. Buy the dips refers to buying the commodity at low prices, holding it until it makes an uptrend move, and selling it when it reaches its peak. A  simple trend which we all apply in our daily lives.   

Risk control should be used while trading. A trend may go wrong sometimes, so traders must be ready with all precautions. In addition, the market is erratic, and Bitcoins also sometimes have low values. Finally, as we have earlier mentioned, changes in the Chinese market or its economic decisions affect its value in the crypto market. 

As it takes some time to earn profits through this technique, a trader needs to be patient while trading. 

Trend Trading 

The trade is simple here; the trader follows the trend of the market. If the trend is upward, then the trader invests in the long run, and if the trend is downward, then short term trade is preferred. Here the gains are captured using the analysis of assets in a particular direction. It does not work on swings. 

The trend assumes that the trend will follow the same direction for some time. It has the provision of take-profit/stop-loss to lock the profit and ignore the losses. It is used by all types of traders in the short term, long term and intermediate.

The trader can use indicators and price direction methods to know about the trend and then invest. Also, should be well prepared for a sudden price change or trend reversal.  

Fade Trading 

A trading style where the trader trades against the trend. Risky trading should be used by professional traders who understand the market. The predictions could lead to huge losses. But, if the move is correct, then the profit is more than double the investment. The strategy should be used during more uncertain situations in the market. 

This ideally occurs when countries ban cryptocurrencies trading, similar to how China banned coins in 2017 to prevent its trading and economy. The strategy they used there was fade trading to increase their value in the market. 

Range Trading 

This strategy is used for trading stocks and forex trading, depending on the support and resistance concept. The first requirement of this strategy is to master the art of candlestick pattern reading. A trader must know all the patterns of candlesticks and chart reading. In range trading, the trader buys the securities at the support level and sells them at the resistance level. 

It is the range of securities between consistent highs and lows of the market. The top provides price resistance, while the bottom of the trading range is supported. 

Conclusion 

Trading in Cryptocurrencies requires a deep understanding of the stock market. China has a vast knowledge of these structures; that’s why it can influence the market without stock trading. It has applied all the top strategies for holding a market position. From momentum to fade trading, it has used the technique to affect and earn in the market. With their speech on trading or any decision on financial markets of their country, the leaders of China affect the price range of the trading market. The market is volatile, and traders must be ready to take risks. So, to keep a higher foot in the stock trading market, the above-stated strategies should be adhered to as per the market trend. 

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