Top 5 Cryptocurrency Trading Strategies

Top 5 Cryptocurrency Trading Strategies

By Oliver Carding - min read
Updated 26 February 2021
Man draws trading strategies on a blackboard

Cryptocurrencies have been the talk of the town lately, with everybody and his uncle sharing how their Bitcoin and Altcoin endeavours have turned profitable. Now if you’re reading this, you’re probably wondering how come your trading activity hasn’t been as exciting as everyone else’s. Fear not – by finding the right strategy for you, you’ll soon be able to start trading like a pro.

The best part? It doesn’t take much to learn how to trade Bitcoin and other cryptocurrencies. All you’ll need is a reliable wallet provider and an excellent broker offering fast execution, low spreads and commissions. And, if it offers a free demo account, all the better! Remember that profits and losses are both possible outcomes when it comes to trading, but if you approach the market smartly, your profits will outweigh your losses by far.

Let’s begin. These are the top 5 trading strategies for cryptocurrency traders:

1. Fundamental Analysis

Fundamental analysis uses economic indicators to determine when to exit and enter the markets. A technique that has been used by traders all over the world for decades, fundamental analysis is based on news reports and announcements which often have a direct, immediate and lasting impact on market prices. Moreover, cryptocurrency news can come at any time, without prior notice.

Traders should know what news events can impact the asset they’re trading on, have an efficient system to be notified of breaking news stories, and be prepared to open a position as soon as the news is announced. Naturally, positive news will result in bullish sentiment for cryptocurrencies and negative news may see prices slipping. Since the prices of Bitcoin and other cryptocurrencies are strongly linked to major currencies like the US Dollar, political news that weakens Forex currencies may also strengthen the cryptocurrencies concerned.

2. Swing Trading Cryptocurrencies

By analysing chart patterns, swing traders are able to identify movements and understand when a correction or reversal is likely to take place. Swing traders often use technical indicators such as Bollinger Bands to mark support and resistance levels on their charts.

Typically, a swing trader opens a position every one to three days and may keep them open for a week or longer. This strategy is an attractive option for traders who don’t have much time to dedicate to watching the charts, while still earning quite a large profit! To ride the market swings, traders still need to know what’s going on in the news as prices can change direction in a moment.

3. Day Trading Cryptocurrencies

If you’re looking for short-term profits, day trading cryptocurrency could be the right choice for you. The volatile nature of cryptocurrencies such as Bitcoin means that market movements occur often, creating opportunities to profit even within 24 hours. What’s more, the cryptocurrency markets never close, so if you’re trading after office-hours there’s still a good chance for you to profit.

Put simply, day trading means that any positions you open will be closed within the same day. This strategy can be quite demanding, however, as traders need to remain alert during the period in which their positions are open. If this isn’t possible, using stop-loss orders and take profit orders on your positions can prevent you from losing funds.

4. Scalping Cryptocurrencies

Arguably one of the most profitable trading strategies for digital currencies, scalping is a fast and high-frequency method of trading. It involves opening and closing positions in a very short time span, resulting in more trades with lower profits. The thought behind scalping is that the smaller profits will add up nicely at the end of the trading day, while losses are kept to a minimum. When using this technique, it’s important to find a broker that doesn’t charge high commissions or wide spreads as this would mean that your funds will get eaten up by the broker’s fees. Rather, go for a 0% Commission broker such as CedarFX to make the most of your funds!

5. Buy & Hold Strategy

The buy and hold strategy is considered to be more of a long-term approach as it allows for profits to build up over a period of time. It can be viewed as an investment strategy if the asset being bought is likely to increase in value over time. However, if the trade goes wrong, it may also result in losses.

Ready to try out these cryptocurrency trading strategies for yourself? Create a free demo or live 0% Commission account with CedarFX, the world’s first eco-friendly broker. Start trading today at

Sign up