Crypto traders are using a variety of strategies in the current market environment, which some are calling “Crypto Spring.” Some traders are finding success with breakout strategies, while others are using the “moonbag” strategy to profit from projects that are showing signs of growth. Still, others are using correlated arbitrage to take advantage of price spreads between different assets.
Here are seven crypto trading strategies that are being used today:
Adrian Zduńczyk, who runs a trading group called The Birb Nest, uses breakouts to enter trades. He has a set of rules and signals that he follows, and he finds that these signals are lighting up more often in the current market environment. Zduńczyk keeps a tight stop loss on all of his trades, and he lets the winners run.
Wendy O, former CoinDesker and host of The O Show, uses the “moonbag” strategy to profit from projects that are showing signs of growth. When a project that she’s invested in starts to “moon,” she begins taking profits and then recoups her initial investment. Whatever is left is her moonbag, which she owns free and clear. She sometimes stakes her moonbag to earn passive income.
3. Correlated Arbitrage
Paweł Łaskarzewski, who runs the hedge fund Nomad Fulcrum, uses correlated arbitrage to take advantage of price spreads between different assets. He says that Tesla, for example, tends to move in the same direction as NASDAQ. Traders can draw two price curves, one for Tesla and one for NASDAQ, and then look for opportunities to profit from the spread between them. This same principle can be used for the forex market or in crypto.
4. Wyckoff Method
Christopher Inks uses the Wyckoff Method to guide his trading setups. The Wyckoff Method is a set of technical analysis tools that can be used to identify market cycles and potential trading opportunities. Inks says that his edge is his understanding of market psychology and his ability to read price action and volume.
5. Trading other assets
Many crypto traders are also stock traders and forex traders. They hunt for the best trading setups wherever they may appear. Łaskarzewski says that there is no need to limit yourself to the crypto market if you can also make money elsewhere.
Leverage can be used to amplify your profits, but it can also amplify your losses. Wendy O and Łaskarzewski both caution against using too much leverage. Łaskarzewski says that over-leverage is one of the ways that rookie traders get crushed.
Scalping is a trading strategy that involves making small profits on multiple trades throughout the day. Nomad Fulcrum uses scalping to profit from small price movements.
There is no one-size-fits-all crypto trading strategy. The best strategy for you will depend on your individual risk tolerance, trading style, and goals. It is important to do your own research and backtest any strategy before using it in a live trading environment.