Cryptocurrencies have created more millionaires than any other type of investment instrument in recent years and it is the most lucrative asset class, but also the most volatile. Experts believe that its growth will continue in the future. However, while there is a lot to be made from cryptocurrencies, your chances of doing so are slim if you don’t design and implement a proper strategy.
“Profits for Bitcoin traders forget that they are other people’s losses. When someone makes $500,000 worth of BTC in a day, that means someone else has lost the same amount, in the same amount of time. Extreme volatility means extreme risk and opportunity. Striking the right balance between the two is absolutely imperative. A sound trading approach is certainly the most practical way to achieve this,” say the experts at StormGain, an international cryptocurrency trading platform. .
There are two main strategies and choosing the most appropriate depends on the level of risk that one is willing to assume:
Tether Cost Averaging
This simple strategy comes from the world of traditional investing and has been used by stock investors for decades, where it is known as Dollar Cost Averaging (DCA).
According to the experts at StormGain: “This strategy is perfect for both cautious new and advanced investors because it protects from market ups and downs while providing an attractive average return. For example, if the investor I would have bought $150 worth of Bitcoin, once, every Monday starting January 1, 2018, spending a total of $26,700 and resulting in 5.07 Bitcoin (worth $190,217), if I had spent $26,700 in Bitcoin in one go on January 1, 2018, you would have ended up with $64,080 worth of Bitcoin (1.6 BTC).”
RSI Divergence
For slightly more ambitious investors, who want to try their hand at intraday trading, this is a good option. The Relative Strength Index (RSI) tells when an asset is overbought or oversold. That gives an idea of whether it is likely to go up or down, respectively.
Here’s what StormGain experts have to say: “The RSI Divergence Strategy goes further by looking at discrepancies between the price and the RSI indicator, allowing you to identify when the price trend will change direction, before it actually happens. Usually both the price and the RSI move at almost the same time, however, the price can occasionally trend down while the RSI rises and vice versa, this means a subtle change in trading volume. buy or sell and is a strong signal that momentum is in the early stages of a reversal.Four-hour or daily charts are the best places to look for divergences, because they show stronger changes in trend over the medium to long term ” .
