How To Trade Cryptocurrency For Profit: Advanced Tips?

The crypto market is, and has always been, like a wild ocean – it’s fast-moving, unpredictable, and often extremely ruthless. However, if you know how to trade cryptocurrency or at least have a solid strategy by your side, you won’t just survive these waves but ride them for profit as well. 

But the question is – how can you do it? 

When I started trading crypto, the first thing I aimed to learn was how the market works. See, unlike the stock market, which usually opens at 9:30 AM and closes at 3:30 PM, the cryptocurrencies operate 24×7.  

And the price swings, in this market, tend to be even more volatile. So, you can either win a large amount of money with small investments or lose your life savings within an hour. Yes, luck will be a deciding factor here, but in crypto trading, following specific cryptocurrency trading strategies and being disciplined matters much more. 

Let’s discuss. 

The Basics Of Trading Cryptocurrencies 

Creating a cryptocurrency trading strategy is all about understanding supply and demand. The prices in the market always move based on speculation, divisive market trends, and, in some cases, just plain hype. I mean, look at the ups and downs of dogecoin pricing every time Elon Musk says or tweets something about it –  

Source: ResearchGate 

And this is the story of every crypto coin, as long as it’s not Bitcoin or any other stablecoins (such as DAI, USDC, Athena, etc.).  

Anyway, when it comes to understanding the basics of how to trade cryptocurrency, I want you to focus on three things – choosing the right exchange, using proper tools, & buying a solid wallet. 

An exchange is a place where the trade will happen. So, you’ll want to choose an option that has lower fees, excellent security, and can make faster transactions. As you’re only starting out, Coinbase should be the best option for you, But Kraken is still better in terms of security. 

There are several technical analysis tools, such as indicators, price charts, and sentiment analysis, which can offer insights into the market to help you tweak your strategies. You can also try using techniques like short-selling to make small profits continuously – but they can be a double-edged sword sometimes due to how risky investing in some coins can be. 

Finally, if you want to trade every day or actively, it’s important to have two types of wallets – hot and cold. The first one will always stay connected to the internet, so you can use it to make quick transactions on the go. However, they can also be hacked. 

A cold wallet is a physical object, which stores your private and public keys securely offline. Hence, if you want to access them, you need to offer your fingerprint or verify your identity through some other form of biometric technology. 

Advanced Trading Techniques 

The basic tips I have shared in the previous section are great for beginners, but they can only take you so far when creating a strategy. After all, they are not “trading techniques’ per se, right? So, the real discussion begins now.  

Scalping is a short-term trading strategy, which focuses on making small and quick trades over time. In this case, you have to choose a specific coin and monitor its price variations from the beginning to understand when its cost goes high and when it drops again. 

Source: Investopedia

When the price seems to be dropping, that’s the right time to buy coins, and then you can sell them again when they start rising. The scalping ecosystem is very fast and difficult to predict – but if you’re following the trends & making the right movements, it can be profitable too. 

Swing trading, although being a short-term trading technique, focuses on waiting for the right moment. For this strategy, you need to wait for a coin’s price to drop to its support level first (low risk of falling further in pricing) and then buy it. 

Source: ResearchGate 

Once its price moves to the resistance level again (higher risk of dropping in price), you can sell the coins to make a profit. This strategy works really well when you are trading volatile currencies, like meme coins or low-cap altcoins, but you have to be aware of trends related to them too. 

Sometimes, the price of a specific crypto coin can keep moving sideways for a while before it explodes. As a breakdown trader, you have to look for these consolidations and be ready to strike when the volume spikes suddenly.  

Source: Investopedia

However, as the crypto market is volatile and difficult to predict correctly – what do you do if the price of a coin suddenly falls instead of reaching sky-high? In this case, using a stop-loss order would be great. The image below represents how it works – 

Source: The Motley Fool

Risk Management In Crypto Trading – Tips And Tactics 

So, now that you have a fundamental idea of different cryptocurrency trading strategies and when to use them, let’s talk about how you can manage risks while using them.  

There are three types of risk management techniques you can use to avoid losses, including – stop-loss orders, the 1-2% rules, and portfolio diversification. However, as I’ve already given an overview of the first one, let’s talk about the other two.  

When it comes to trading cryptocurrency, you should never bet on a single coin and hope for a 10x return. The 1-2% rule is all about spending one or two percent of your fortune on one investment and seeing if the coin’s price is going up or down. 

Portfolio diversification, on the other hand, can be an amazing strategy if you’re trying to get more returns while not going bankrupt. You can use the 1-2% rule and this strategy together to invest in, for example, 15 different cryptocurrencies. This way, even if you lose money from one investment, you can always recover from the other 14.  

The Bottom Line – Crypto Trading Is All about Being In Control 

The urge to buy coins when their price has suddenly started going up is definitely too strong to deal with. However, almost 63% of people also end up losing their money or messing up the “perfect” strategy they created due to FOMO. So, as a beginner trader, it’s important NOT to chase green candles and then sell your coins in a panic. Instead, use a stop-loss order strategy to save yourself from losing a large part of your investment and have control over your emotions.  

Market volatility management isn’t just about aiming to win a lot of money by manipulating the trading system, it’s also about surviving in the game long enough to make winning inevitable.