trading

The Pros and Cons of Crypto Investing and Trading

Trading
Cryptocurrency
• Digitex
May 5, 2021

Wondering how to capitalize on the crypto bull market’s gains?

To achieve that, you can choose between two main methods: to invest in digital assets for the long run or day trade crypto to generate short-term profits.

In this article, we will explain the main differences between the two approaches while introducing the pros and cons of each.

What Are the Pros and Cons of Long-Term Crypto Investments?

One of the easiest ways to gain exposure to the crypto market is by investing in digital assets for the long term.

With this strategy, you buy and hold cryptocurrencies for at least several months (or even multiple years) and later sell them for a profit after their prices have increased to a satisfactory level.

While the investment approach doesn’t take short-term price movements into account, it requires investors to leverage fundamental analysis, in which they carefully research digital assets to select the most promising ones.

Since crypto investing is a long-term strategy, it comes with only a few monthly or yearly trades, which can save you time as well as provide tax benefits in some jurisdictions. For the same reason, less paperwork is required to report investment-related income.

Also, it’s easier for beginners to get started as they don’t have to learn how to use various technical analysis tools and implement them into their crypto trading strategies.

Moreover, investment strategies like dollar-cost averaging (DCA) – in which one invests a fixed amount of funds in an asset at regular intervals (e.g., $100 on the first day of each month throughout a year) – can remove the extra legwork needed for attempting to time the market.

On the flip side, investing for the long-term in crypto is not suitable for making regular or a full-time income.

While crypto investment is usually considered safer than day trading, you face higher risks with this strategy if you fail to research projects properly (or if you don’t do any research).

Furthermore, while you can make a decent income in the long run with this strategy, crypto investors usually miss out on multiple short-term profit-making opportunities.

What Are the Pros and Cons of Day Trading Crypto?

Unlike investing, day trading crypto involves entering and exiting positions more frequently with the goal to generate profits on short-term price movements.

For that reason, this approach requires increased time to monitor markets, especially if you are using a high-frequency trading strategy like scalping.

On the other hand, unlike with investing, you can leverage day trading to capitalize on short-term opportunities to make profits.

And, if you are a successful trader, you can even use this strategy to generate regular, potentially full-time, revenue.

Instead of fundamental analysis, traders incorporate multiple technical analysis tools and indicators into their crypto trading strategies to study trends as well as identify and interpret signals.

For that reason, mastering day trading is often a more challenging task than learning how to invest in cryptocurrency in the long run.

Unlike investors who can just wait out short periods of volatility, traders are more affected by emotions like fear, greed, and hope, which often influence their decisions negatively.

Day trading usually involves more risks than long-term holding, so it’s crucial for traders to learn how to manage and minimize them to maintain profitable trades.

That said, with effective risk management and the ability to keep your emotions under control, day trading crypto can become a lucrative strategy to capitalize on the rising digital asset market.

On top of that, day traders can amplify their gains from successful trades by trading Bitcoin with leverage.

Invest and Trade Crypto on Digitex

Both investing and day trading are viable approaches to gain exposure to the fast-growing digital asset market.

While investment focuses on generating long-term revenue, day trading aims to capture profits from numerous short-term trades.

In addition to its Bitcoin futures exchange, the next-generation crypto trading platform Digitex has recently opened access for its users to spot markets as well.

As a result, you can now leverage both investing and day trading strategies to generate potential profits on cryptocurrencies on Digitex.

Oh, and we almost forgot to mention: since Digitex completely eliminates trading fees, you can keep 100% of your profits on the platform.

Sounds fantastic, right?

Open an account at Digitex now!

May 5, 2021
Trading
Cryptocurrency

The Pros and Cons of Crypto Investing and Trading

Digitex
trading

Wondering how to capitalize on the crypto bull market’s gains?

To achieve that, you can choose between two main methods: to invest in digital assets for the long run or day trade crypto to generate short-term profits.

In this article, we will explain the main differences between the two approaches while introducing the pros and cons of each.

What Are the Pros and Cons of Long-Term Crypto Investments?

One of the easiest ways to gain exposure to the crypto market is by investing in digital assets for the long term.

With this strategy, you buy and hold cryptocurrencies for at least several months (or even multiple years) and later sell them for a profit after their prices have increased to a satisfactory level.

While the investment approach doesn’t take short-term price movements into account, it requires investors to leverage fundamental analysis, in which they carefully research digital assets to select the most promising ones.

Since crypto investing is a long-term strategy, it comes with only a few monthly or yearly trades, which can save you time as well as provide tax benefits in some jurisdictions. For the same reason, less paperwork is required to report investment-related income.

Also, it’s easier for beginners to get started as they don’t have to learn how to use various technical analysis tools and implement them into their crypto trading strategies.

Moreover, investment strategies like dollar-cost averaging (DCA) – in which one invests a fixed amount of funds in an asset at regular intervals (e.g., $100 on the first day of each month throughout a year) – can remove the extra legwork needed for attempting to time the market.

On the flip side, investing for the long-term in crypto is not suitable for making regular or a full-time income.

While crypto investment is usually considered safer than day trading, you face higher risks with this strategy if you fail to research projects properly (or if you don’t do any research).

Furthermore, while you can make a decent income in the long run with this strategy, crypto investors usually miss out on multiple short-term profit-making opportunities.

What Are the Pros and Cons of Day Trading Crypto?

Unlike investing, day trading crypto involves entering and exiting positions more frequently with the goal to generate profits on short-term price movements.

For that reason, this approach requires increased time to monitor markets, especially if you are using a high-frequency trading strategy like scalping.

On the other hand, unlike with investing, you can leverage day trading to capitalize on short-term opportunities to make profits.

And, if you are a successful trader, you can even use this strategy to generate regular, potentially full-time, revenue.

Instead of fundamental analysis, traders incorporate multiple technical analysis tools and indicators into their crypto trading strategies to study trends as well as identify and interpret signals.

For that reason, mastering day trading is often a more challenging task than learning how to invest in cryptocurrency in the long run.

Unlike investors who can just wait out short periods of volatility, traders are more affected by emotions like fear, greed, and hope, which often influence their decisions negatively.

Day trading usually involves more risks than long-term holding, so it’s crucial for traders to learn how to manage and minimize them to maintain profitable trades.

That said, with effective risk management and the ability to keep your emotions under control, day trading crypto can become a lucrative strategy to capitalize on the rising digital asset market.

On top of that, day traders can amplify their gains from successful trades by trading Bitcoin with leverage.

Invest and Trade Crypto on Digitex

Both investing and day trading are viable approaches to gain exposure to the fast-growing digital asset market.

While investment focuses on generating long-term revenue, day trading aims to capture profits from numerous short-term trades.

In addition to its Bitcoin futures exchange, the next-generation crypto trading platform Digitex has recently opened access for its users to spot markets as well.

As a result, you can now leverage both investing and day trading strategies to generate potential profits on cryptocurrencies on Digitex.

Oh, and we almost forgot to mention: since Digitex completely eliminates trading fees, you can keep 100% of your profits on the platform.

Sounds fantastic, right?

Open an account at Digitex now!

Latest News

Speculating

What Is the Difference Between Speculating vs. Trading vs. Investing?

Digitex Futures
• Luke Green
March 20, 2020

Becoming financially literate is perhaps one of the most important skills you can learn on the path to financial freedom. With so many ways to put your money to work, it’s important to understand the mechanics behind each approach. With that in mind, let’s take a deeper dive into the difference between speculating, trading, and investing.

Difference Between Speculating, Trading and Investing?
Speculating

When you think about it, we are actually doing this most of the time, be it about the weather, the cast of a hotly-anticipated film or what Facebook might be doing with our data. In essence, it’s simply taking what you know now and predicting the likelihood of a certain outcome.

Despite being a fantastic conversation starter, in the investment world, speculating essentially puts cold hard cash on the line for those hunches. It can be both highly risky and highly profitable.

As the well-known band, Faithless once sang in their song Reverence, you don’t need eyes to see, you need vision. And nothing could be more important when choosing this approach to your wealth management. The most successful speculative investors, sometimes known as Angel Investors, are often highly inquisitive. They constantly imagine future opportunities within their fields of expertise.

This “vision” and forward-thinking not only allows them to be entrepreneurial with their own business ideas, but it also lets them connect the dots and spot companies with huge upside potential, very early within their success trajectory.

This allows them to inject capital into vastly undervalued assets before they become widely known. Jeff Bezos, the founder of Amazon, for example, was an early Angel investor in a fledgeling internet search company called BackRub (oh the irony). It went on, of course, to be known as Google.

While many Angel Investment opportunities remain in the domain of a privileged few, speculative investment has now become much more mainstream and accessible. Initially through fundraising platforms like Kickstarter, Indigogo, and Seeders. But in recent times, via new investment vehicles like ICOs or STO offerings.

These new ways to raise capital have somewhat leveled the playing field exposing a whole new class of mainstream retail investors to the exciting and potentially lucrative world of speculative investment.

Trading

It’s crazy to think that our earliest ancestors were traders, bartering goods between tribes back in prehistoric times. To put this into some kind of perspective as to how deeply embedded into the human psyche it is, that’s around the same time as the first-ever human communication some 150,000 years ago!

But fast-forward to 2019 and you’d be forgiven for being confused by the huge variety and complex methods by which you can perform this ancient and simple action.

For all its apparent modern sophistication, trading, specifically in relation to stocks, shares or cryptocurrencies, is simply the act of buying something for one price and selling it for another, with the goal of making a profit.

While trading does indeed involve an element of both investment and speculation, it differs from both in that its proponents may not even care or understand what it is they are buying or selling.

As Adam pointed out during the TraderCobb Podcast. He managed an 8-month winning streak on Betfair without any knowledge of horse racing at all. He just knew what he could buy the bet for and what he could sell it at.

Want to try your hand at trading commission-free on the Digitex Futures exchange? With the beta version handling insane volume, you can practice your skills on our trading ladder interface and hone your strategy before the mainnet release on April 27, 2020.

JOIN NOW
Types of Trading Strategies

Depending on the type of trading being undertaken, there are a number of different trading strategies that can be employed. What tends to separate them is the timeline over which the trade takes place alongside the type of analysis deployed, specifically to judge the risk and reward.

The Digitex online futures trading platform will finally make it viable for retail traders through commission-free trades, to pursue a trading style called scalping.

In this approach, the gap between the trader buying the asset and selling it may be no longer than a few minutes; perhaps even seconds.

But by employing tools such as order flow, ladder trading interfaces or algorithms (automated futures trading programs called bots), traders can execute lots of trades quickly. With a commission-free platform, disciplined traders will be able to turn small profits into large gains over time.

Investing

Investing is of course, fundamental to both trading and speculating, as, by definition, it represents the “what” you risk when pursuing these strategies. However, in the general sense, the difference between speculating vs. trading vs. investing is that investing represents money-making strategies that are generally over much longer timelines. These can often be years, and with much lower volatility and risk/reward profiles.

The vast majority of people who invest are doing so for long-term goals, such as retirement, or future financial freedom. As a result of this, making an investment is almost always based on something that has a solid (and preferably a long history) of stable growth and returns. This is a critical difference between trading vs. investing, as traders make money in down markets, whereas investors tend to rely on growth markets.

As with many financial services, investment as a financial vehicle has experienced a Cambrian explosion of innovation, driven in part by the cryptocurrency and fintech industries.

This has lead to a dizzying amount of ways you can invest and made it easier than ever before to do so. From more traditional markets like stocks and shares, tracker funds or ETFs to cutting-edge uses such as Crypto Asset Lending; there’s no shortage of places to put your money.

Ultimately, whichever investment instrument you choose, your goal is to gradually build wealth over an extended period. If you are sensible and have time on your side, it can be a very stress-free way to manage and grow your wealth, often insulating you from the impact of short-term market fluctuations.

Wrapping It Up

When comparing speculating vs. trading vs. investing, there is certainly one aspect that is common to them all. That’s taking full responsibility for judging your risk vs your reward.

Of course, what you’re willing to risk for what reward is just as unique as your personality. But truly analyzing this and how you make these judgments can be highly revealing on a personal level.

Any time you take to learn and understand this is perhaps the most worthwhile investment you can make. It will help you make not just better financial judgments, but better decisions all round.

With the upcoming Digitex mainnet release, we are committed to producing successful traders. Commission-free trades and a provably fair matching engine with market makers programmed to lose will level the playing field more than ever. So whatever investment strategy suits you best, there is a place for you on the exchange.

Do you want to stock up on DGTX tokens ahead of the mainnet launch? You can head over to the Digitex Treasury for a trustless transaction with zero slippage and completely KYC-free now.

BUY DGTX
March 20, 2020
Digitex Futures

What Is the Difference Between Speculating vs. Trading vs. Investing?

Luke Green
Speculating

Becoming financially literate is perhaps one of the most important skills you can learn on the path to financial freedom. With so many ways to put your money to work, it’s important to understand the mechanics behind each approach. With that in mind, let’s take a deeper dive into the difference between speculating, trading, and investing.

Difference Between Speculating, Trading and Investing?
Speculating

When you think about it, we are actually doing this most of the time, be it about the weather, the cast of a hotly-anticipated film or what Facebook might be doing with our data. In essence, it’s simply taking what you know now and predicting the likelihood of a certain outcome.

Despite being a fantastic conversation starter, in the investment world, speculating essentially puts cold hard cash on the line for those hunches. It can be both highly risky and highly profitable.

As the well-known band, Faithless once sang in their song Reverence, you don’t need eyes to see, you need vision. And nothing could be more important when choosing this approach to your wealth management. The most successful speculative investors, sometimes known as Angel Investors, are often highly inquisitive. They constantly imagine future opportunities within their fields of expertise.

This “vision” and forward-thinking not only allows them to be entrepreneurial with their own business ideas, but it also lets them connect the dots and spot companies with huge upside potential, very early within their success trajectory.

This allows them to inject capital into vastly undervalued assets before they become widely known. Jeff Bezos, the founder of Amazon, for example, was an early Angel investor in a fledgeling internet search company called BackRub (oh the irony). It went on, of course, to be known as Google.

While many Angel Investment opportunities remain in the domain of a privileged few, speculative investment has now become much more mainstream and accessible. Initially through fundraising platforms like Kickstarter, Indigogo, and Seeders. But in recent times, via new investment vehicles like ICOs or STO offerings.

These new ways to raise capital have somewhat leveled the playing field exposing a whole new class of mainstream retail investors to the exciting and potentially lucrative world of speculative investment.

Trading

It’s crazy to think that our earliest ancestors were traders, bartering goods between tribes back in prehistoric times. To put this into some kind of perspective as to how deeply embedded into the human psyche it is, that’s around the same time as the first-ever human communication some 150,000 years ago!

But fast-forward to 2019 and you’d be forgiven for being confused by the huge variety and complex methods by which you can perform this ancient and simple action.

For all its apparent modern sophistication, trading, specifically in relation to stocks, shares or cryptocurrencies, is simply the act of buying something for one price and selling it for another, with the goal of making a profit.

While trading does indeed involve an element of both investment and speculation, it differs from both in that its proponents may not even care or understand what it is they are buying or selling.

As Adam pointed out during the TraderCobb Podcast. He managed an 8-month winning streak on Betfair without any knowledge of horse racing at all. He just knew what he could buy the bet for and what he could sell it at.

Want to try your hand at trading commission-free on the Digitex Futures exchange? With the beta version handling insane volume, you can practice your skills on our trading ladder interface and hone your strategy before the mainnet release on April 27, 2020.

JOIN NOW
Types of Trading Strategies

Depending on the type of trading being undertaken, there are a number of different trading strategies that can be employed. What tends to separate them is the timeline over which the trade takes place alongside the type of analysis deployed, specifically to judge the risk and reward.

The Digitex online futures trading platform will finally make it viable for retail traders through commission-free trades, to pursue a trading style called scalping.

In this approach, the gap between the trader buying the asset and selling it may be no longer than a few minutes; perhaps even seconds.

But by employing tools such as order flow, ladder trading interfaces or algorithms (automated futures trading programs called bots), traders can execute lots of trades quickly. With a commission-free platform, disciplined traders will be able to turn small profits into large gains over time.

Investing

Investing is of course, fundamental to both trading and speculating, as, by definition, it represents the “what” you risk when pursuing these strategies. However, in the general sense, the difference between speculating vs. trading vs. investing is that investing represents money-making strategies that are generally over much longer timelines. These can often be years, and with much lower volatility and risk/reward profiles.

The vast majority of people who invest are doing so for long-term goals, such as retirement, or future financial freedom. As a result of this, making an investment is almost always based on something that has a solid (and preferably a long history) of stable growth and returns. This is a critical difference between trading vs. investing, as traders make money in down markets, whereas investors tend to rely on growth markets.

As with many financial services, investment as a financial vehicle has experienced a Cambrian explosion of innovation, driven in part by the cryptocurrency and fintech industries.

This has lead to a dizzying amount of ways you can invest and made it easier than ever before to do so. From more traditional markets like stocks and shares, tracker funds or ETFs to cutting-edge uses such as Crypto Asset Lending; there’s no shortage of places to put your money.

Ultimately, whichever investment instrument you choose, your goal is to gradually build wealth over an extended period. If you are sensible and have time on your side, it can be a very stress-free way to manage and grow your wealth, often insulating you from the impact of short-term market fluctuations.

Wrapping It Up

When comparing speculating vs. trading vs. investing, there is certainly one aspect that is common to them all. That’s taking full responsibility for judging your risk vs your reward.

Of course, what you’re willing to risk for what reward is just as unique as your personality. But truly analyzing this and how you make these judgments can be highly revealing on a personal level.

Any time you take to learn and understand this is perhaps the most worthwhile investment you can make. It will help you make not just better financial judgments, but better decisions all round.

With the upcoming Digitex mainnet release, we are committed to producing successful traders. Commission-free trades and a provably fair matching engine with market makers programmed to lose will level the playing field more than ever. So whatever investment strategy suits you best, there is a place for you on the exchange.

Do you want to stock up on DGTX tokens ahead of the mainnet launch? You can head over to the Digitex Treasury for a trustless transaction with zero slippage and completely KYC-free now.

BUY DGTX

Latest News

A Look at the Best Crypto Trading Strategies 1

A Look at the Best Crypto Trading Strategies

Digitex Futures
Trading
• Dave Reiter
February 11, 2020

In the world of trading and investing, there are two different methods for speculating across all asset classes.

Speculators are divided into one of the following categories: fundamental analysis or technical analysis.

Let’s examine each category and consider how they can be used to develop crypto trading strategies that work.

Fundamental Analysis vs. Technical Analysis

Fundamental analysis is most widely used among stock market traders, particularly those who invest in individual stocks. This particular method focuses on the earnings per share (EPS), price-to-earnings (P/E) ratio, dividend yield, and debt-to-equity ratio.

The main objective of fundamental analysis is to determine the intrinsic value of the individual stock. If the price of the stock is trading below its intrinsic value, an investor may want to buy the stock.

Investors use fundamental analysis with other asset classes such as bonds, commodities, and alternative investments. Regardless of the asset class, the objective is always the same — to determine the intrinsic value of the underlying asset.

If the asset is trading below its intrinsic value, the investor would be inclined to buy the security based on the fact that it’s undervalued. This can be a foundation of day trading futures strategies.

Technical analysis uses a completely different method. It’s a trading approach designed to evaluate investment flows and trading opportunities by analyzing statistical trends.

These statistical trends are gathered from various trading activities, most notably price movement and volume.

Technical analysis makes no effort to determine intrinsic value. Instead, it focuses on patterns derived from price movements and charting tools. These tools are used to appraise the strength or weakness of the underlying security or asset class and determine the day trading strategies for cryptocurrency or other assets.

Although technical analysis can be used with any asset class, it is most widely used among currency and commodity traders. Why?

Because historical research suggests that currencies and commodities generate much better performance results when traders use trend-following tools commonly found in technical analysis to develop their day trading futures strategies.

Do you want to try your hand at trading cryptocurrencies? Check out Digitex, a next-generation crypto trading platform where you can trade Bitcoin derivatives without paying any fees. With a zero-fee trading experience, you can limit your losses and maximize your gains while enjoying the benefits of a robust, beginner-friendly exchange service.

Register An Account At Digitex Now!

Cryptocurrencies Work Best With Technical Analysis

Although cryptocurrencies have only been in existence for 10 years, technical analysis has proven to generate good crypto trading strategies and a better trading experience versus fundamental analysis.

Given the dramatic price fluctuations within the crypto universe, it’s virtually impossible to accurately determine the intrinsic value of any cryptocurrency, including Bitcoin. Therefore, it’s impractical to apply fundamental analysis if the intrinsic value is unavailable. As a result, the best futures trading strategies for crypto incorporate technical indicators.

Cryptocurrencies behave in a similar manner to commodities and foreign currencies (forex). Therefore, using technical indicators is the best course of action.

While there are hundreds of different technical indicators, it can be rather difficult to select the best ones when developing your day trading cryptocurrency strategy. Some simply work better than others.

Let’s review a few of the indicators that have yielded decent results for trading cryptocurrencies. We’ll use Bitcoin in our examples, but keep in mind that the best crypto trading strategy advice can usually be used for any coin.

Pay Attention to Volume

Volume can provide several clues to the underlying strength or weakness of the market. It can give early warning signs concerning a possible change in trend.

That said, many traders don’t pay attention to volume when developing their crypto trading strategies. However, this is a mistake as the indicator provides a “snapshot” picture of how many traders are actually establishing positions at various price levels.

The best way to use this indicator to develop a day trading cryptocurrency strategy is to compare and contrast the daily volume on a big up day or a big down day. If a bullish breakout is not confirmed by record volume, it’s probably a false breakout.

Also, if a bearish breakout is not validated by record volume, the most likely outcome is a false breakout in this case as well.

Let’s take a look at a perfect example of a false breakout that occurred in March 2021.

A Look at the Best Crypto Trading Strategies 2

As you can see in the chart above, a strong resistance level formed at $51,354 on February 24 from previous support. On March 2 at 20:00, BTC entered into a short bull run, in which it surged from $47,450 to $51,681 by March 3.

However, the volume was weak (3,240 BTC divided between four candlesticks). For comparison, users traded 10,748 coins while Bitcoin gained $3,615 between February 16 and 17.

As a result, this turned out to be a false breakout, with the BTC price rolling over to the downside, eliminating all the gains from the cryptocurrency’s bull run in the next few days.

However, those with great crypto trading strategies who followed the volume indicator on March 2 and 3 were able to cut their losses very quickly.

A Look at the Best Crypto Trading Strategies 3

The volume indicator produced another signal on February 22. A sell signal occurred at $54,237 on the heavy daily volume of 17,000 BTC (users traded 3,563 BTC on the previous day).

Traders who identified the crypto trading signal and shorted BTC at $54,237 enjoyed a very profitable trade, in which the digital asset fell down to $45,309 until its price started to increase again. The volume indicator worked incredibly well on this particular trade.

A Look at the Best Crypto Trading Strategies 4

A third signal occurred on March 13. The volume indicator initiated a sell signal at $61,153 as Bitcoin’s strong surge that day was not matched by record volume (only 6,188 BTC). Therefore, this trade resulted in a false breakout, which moved the cryptocurrency’s price down to $51,344 by March 25.

As you can see, volume is a very useful tool in the world of technical analysis. For that reason, you should always pay attention to volume when developing Bitcoin trading strategies as it has the potential to generate very profitable trades.

More importantly, it can identify false breakouts, which will allow you to cut your losses very quickly. For that reason, you should never ignore the volume of the asset you are planning to trade!

Basing Your Bitcoin Trading Strategies on Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a momentum oscillator that fluctuates between 0 and 100, measuring the speed and change of price movements.

RSI is a fairly popular indicator that can be found on many financial websites and also in day trading strategies for cryptocurrency.

Typically, traders use RSI to determine if a market is overbought or oversold.

The general belief is that a market becomes overbought when RSI exceeds 70. Conversely, a market becomes oversold when RSI drops below 30.

That said, this particular strategy doesn’t work very well in the real world as markets can remain overbought or oversold for extended periods of time. As a result, RSI tends to generate many false signals.

Based on historical research, a more appropriate way to apply RSI is to use it as a confirmation indicator. For example, if Bitcoin is making a new high, RSI should also be making a new high in order to confirm the strength of Bitcoin’s breakout into new territory.

If Bitcoin is making a new low, RSI should also be making a new low to confirm the strength of the cryptocurrency’s breakout into new territory.

A Look at the Best Crypto Trading Strategies 5

The chart above displays a bullish breakout on February 8, 2021 at $46,453. Since the RIS generated a new high along with the BTC price, it confirmed that the breakout is valid, which resulted in a move upward to $57,402 by February 21.

A Look at the Best Crypto Trading Strategies 6

The same outcome occurred on January 6 at $36,843. After testing the resistance line a few times, Bitcoin generated a breakout.

And, like in the previous case, the RSI confirmed the breakout as it jumped to record highs. As a result, traders who placed an order at $36,843 could profit $4,460 as BTC surged to $41,303 before entering into a correction.

The RSI indicator works remarkably well at confirming bullish and bearish breakouts. Traders who have the discipline to follow this indicator will save money by ignoring the trades that are not validated by a new RSI breakout.

Don’t Ignore Money Flow

The Money Flow Index (MFI) is a momentum indicator that measures the inflow and outflow of money into a security over a specific period of time. It uses price and volume to calculate trading pressure.

Arguably, MFI is the surest way to determine the amount of money entering and leaving a particular security or market. And if you’re looking to develop the best crypto trading strategy, you can’t ignore MFI.

Similar to the RSI, the index fluctuates between 0 and 100. In terms of Bitcoin, the best way to apply MFI for great crypto trading strategies is to use it as a validation tool.

For example, if Bitcoin is making a new high, MFI should also be making a new high in order to confirm the strength of Bitcoin’s breakout into new territory.

On the other hand, if Bitcoin is making a new low, MFI should also be making a new low to confirm the strength of BTC’s breakout.

A Look at the Best Crypto Trading Strategies 7

As you can see on the chart above, the MFI invalidated the bullish breakout on January 29, 2021 at 8:00. While Bitcoin surged by a whopping $5,000 that day, the MFI moved just above the levels it was standing eight hours ago.

A Look at the Best Crypto Trading Strategies 8

On the other hand, the MFI did a great job at validating the bullish breakout on March 8. As soon as the BTC price broke through the resistance level, the MFI jumped 10 points while the cryptocurrency’s value surged from $51,000 to $61,218 between March 8 and 13.

True Range Breakout (TRABOS)

The true range breakout indicator (TRABOS) is designed to capture short-term price fluctuations across all asset classes. It generates several buy/sell signals in comparison to most other indicators.

For those who enjoy active crypto trading strategies, TRABOS will be very appealing to your aggressive style of trading. Furthermore, it can also be applied to day trading futures strategies; trading them daily also requires a certain amount of aggression.

The most attractive aspect of TRABOS is based on the fact that it rarely misses a big move. Why? Because trading signals are calculated on a daily basis. Therefore, the indicator is constantly searching for profitable trading opportunities. See below for more information.

Note: A sell signal was generated at $54,663 on February 22, 2021.

The trading rules for TRABOS are rather simple. You can find them below:

1.Calculate the true range (daily high minus daily low).

  1. Buy signal is the closing price plus the true range.
  2. Sell signal is the closing price minus the true range.
  3. If long, the profit target is the daily high on the day of entry.
  4. If long, the protective stop is the low on the day of entry.
  5. If short, the profit target is the daily low on the day of entry.
  6. If short, the protective stop is the high on the day of entry.

A Look at the Best Crypto Trading Strategies 9

Based on the chart above, the TRABOS didn’t generate a signal on February 21.

However, traders could identify a sell signal on February 22 at $54,663. While the BTC price closed at $57,479 on the previous day, the true range was 2,816. For that reason, a bearish signal could be observed on the next day when the cryptocurrency’s value decreased below $54,663.

Putting a protective stop at $57,572, our profit target was the low on the day of entry, which is $47,426.

This turned out to be a very profitable trade because BTC experienced a substantial decline that day and the day after. As a result, we reached our profit target at $47,426 on February 23.

After the trade has been completed, simply calculate a new buy/sell signal for the next day. You can automatically calculate daily TRABOS by using the Average True Range (ATR) indicator and setting its length to 1.

TRABOS creates 2 to 3 trades per week. The key to success is to consistently take every trade for an extended period of time.

Since TRABOS generates a large number of buy/sell signals, it is an excellent indicator for traders on the Digitex Futures platform. As Digitex is 100% commission-free, it doesn’t hurt the profitability of traders by imposing fees on their positions (a 0.10% cost would take away 10% from margin traders using a 100x leverage).

For that reason, trading on Digitex will dramatically reduce the cost of trading for aggressive crypto trading strategies that incorporate indicators like TRABOS.

Crypto Trading Strategies – Wrapping It Up

While they are definitely useful, the four indicators listed in this article are certainly not perfect. However, when taken as a group, they provide an excellent approach to trading cryptocurrencies.

No matter whether cryptocurrencies are bullish or bearish, it’s certainly possible to trade crypto successfully amid any market conditions.

However, it requires patience, discipline, and a handful of reliable indicators. While it’s easy to pick the right indicators, the hard part is being patient, disciplined, and dedicated when leveraging your crypto trading strategies.

That said, developing the best futures trading strategies will take more than just knowledge of these indicators, but they’re a good place to start.

Personal Observations

I’ve been trading commodities for three decades. In 2016, I began trading cryptocurrencies.

Throughout my trading career, I’ve used technical analysis 100% of the time and have found it to be integral to developing the best crypto trading strategy.

Based on my trading results, I’m convinced that certain price patterns are repetitive in nature. I believe in the notion that past trading activity and price movements are valuable indicators of future price direction.

I’m also convinced that technical analysis will generate superior results, particularly if the technical indicators are trend-following in nature.

Leverage Your Crypto Trading Strategies on Digitex

High fees can easily turn the profits of traders into losses.

To avoid hurting your profitability, the revolutionary Bitcoin derivatives trading platform Digitex completely eliminated fees on its platform. As a result, you get more winning trades, more often while leveraging your crypto trading strategies on the Digitex futures exchange.

In addition to keeping 100% of your revenue while utilizing a robust crypto trading platform, Digitex also features multiple rewards programs.

By yield farming the exchange’s native DGTX token on Uniswap, you can benefit from a generous 10.90% APY with the option to multiply your gains by providing liquidity for longer periods.

On top of that, Digitex also rewards users for simply trading cryptocurrency via its liquidity mining program.

In exchange for providing liquidity to the platform with unfilled orders, Digitex traders can earn up to 140 DGTX each minute. The rewards are distributed proportionally between those whose unmatched orders were the closest to the spot price at the time the system randomly takes a snapshot of the order book.

To reap all these benefits, be sure to create an account at the Bitcoin derivatives exchange Digitex.

Gaining 222% in March, DGTX is also a hot asset for both investors and traders, which you can now buy using a credit or a debit card.

Sounds great, huh?

Purchase DGTX Now!

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice, nor is it a replacement for advice from a certified financial planner.

February 11, 2020
Digitex Futures
Trading

A Look at the Best Crypto Trading Strategies

Dave Reiter
A Look at the Best Crypto Trading Strategies 10

In the world of trading and investing, there are two different methods for speculating across all asset classes.

Speculators are divided into one of the following categories: fundamental analysis or technical analysis.

Let’s examine each category and consider how they can be used to develop crypto trading strategies that work.

Fundamental Analysis vs. Technical Analysis

Fundamental analysis is most widely used among stock market traders, particularly those who invest in individual stocks. This particular method focuses on the earnings per share (EPS), price-to-earnings (P/E) ratio, dividend yield, and debt-to-equity ratio.

The main objective of fundamental analysis is to determine the intrinsic value of the individual stock. If the price of the stock is trading below its intrinsic value, an investor may want to buy the stock.

Investors use fundamental analysis with other asset classes such as bonds, commodities, and alternative investments. Regardless of the asset class, the objective is always the same — to determine the intrinsic value of the underlying asset.

If the asset is trading below its intrinsic value, the investor would be inclined to buy the security based on the fact that it’s undervalued. This can be a foundation of day trading futures strategies.

Technical analysis uses a completely different method. It’s a trading approach designed to evaluate investment flows and trading opportunities by analyzing statistical trends.

These statistical trends are gathered from various trading activities, most notably price movement and volume.

Technical analysis makes no effort to determine intrinsic value. Instead, it focuses on patterns derived from price movements and charting tools. These tools are used to appraise the strength or weakness of the underlying security or asset class and determine the day trading strategies for cryptocurrency or other assets.

Although technical analysis can be used with any asset class, it is most widely used among currency and commodity traders. Why?

Because historical research suggests that currencies and commodities generate much better performance results when traders use trend-following tools commonly found in technical analysis to develop their day trading futures strategies.

Do you want to try your hand at trading cryptocurrencies? Check out Digitex, a next-generation crypto trading platform where you can trade Bitcoin derivatives without paying any fees. With a zero-fee trading experience, you can limit your losses and maximize your gains while enjoying the benefits of a robust, beginner-friendly exchange service.

Register An Account At Digitex Now!

Cryptocurrencies Work Best With Technical Analysis

Although cryptocurrencies have only been in existence for 10 years, technical analysis has proven to generate good crypto trading strategies and a better trading experience versus fundamental analysis.

Given the dramatic price fluctuations within the crypto universe, it’s virtually impossible to accurately determine the intrinsic value of any cryptocurrency, including Bitcoin. Therefore, it’s impractical to apply fundamental analysis if the intrinsic value is unavailable. As a result, the best futures trading strategies for crypto incorporate technical indicators.

Cryptocurrencies behave in a similar manner to commodities and foreign currencies (forex). Therefore, using technical indicators is the best course of action.

While there are hundreds of different technical indicators, it can be rather difficult to select the best ones when developing your day trading cryptocurrency strategy. Some simply work better than others.

Let’s review a few of the indicators that have yielded decent results for trading cryptocurrencies. We’ll use Bitcoin in our examples, but keep in mind that the best crypto trading strategy advice can usually be used for any coin.

Pay Attention to Volume

Volume can provide several clues to the underlying strength or weakness of the market. It can give early warning signs concerning a possible change in trend.

That said, many traders don’t pay attention to volume when developing their crypto trading strategies. However, this is a mistake as the indicator provides a “snapshot” picture of how many traders are actually establishing positions at various price levels.

The best way to use this indicator to develop a day trading cryptocurrency strategy is to compare and contrast the daily volume on a big up day or a big down day. If a bullish breakout is not confirmed by record volume, it’s probably a false breakout.

Also, if a bearish breakout is not validated by record volume, the most likely outcome is a false breakout in this case as well.

Let’s take a look at a perfect example of a false breakout that occurred in March 2021.

A Look at the Best Crypto Trading Strategies 11

As you can see in the chart above, a strong resistance level formed at $51,354 on February 24 from previous support. On March 2 at 20:00, BTC entered into a short bull run, in which it surged from $47,450 to $51,681 by March 3.

However, the volume was weak (3,240 BTC divided between four candlesticks). For comparison, users traded 10,748 coins while Bitcoin gained $3,615 between February 16 and 17.

As a result, this turned out to be a false breakout, with the BTC price rolling over to the downside, eliminating all the gains from the cryptocurrency’s bull run in the next few days.

However, those with great crypto trading strategies who followed the volume indicator on March 2 and 3 were able to cut their losses very quickly.

A Look at the Best Crypto Trading Strategies 12

The volume indicator produced another signal on February 22. A sell signal occurred at $54,237 on the heavy daily volume of 17,000 BTC (users traded 3,563 BTC on the previous day).

Traders who identified the crypto trading signal and shorted BTC at $54,237 enjoyed a very profitable trade, in which the digital asset fell down to $45,309 until its price started to increase again. The volume indicator worked incredibly well on this particular trade.

A Look at the Best Crypto Trading Strategies 13

A third signal occurred on March 13. The volume indicator initiated a sell signal at $61,153 as Bitcoin’s strong surge that day was not matched by record volume (only 6,188 BTC). Therefore, this trade resulted in a false breakout, which moved the cryptocurrency’s price down to $51,344 by March 25.

As you can see, volume is a very useful tool in the world of technical analysis. For that reason, you should always pay attention to volume when developing Bitcoin trading strategies as it has the potential to generate very profitable trades.

More importantly, it can identify false breakouts, which will allow you to cut your losses very quickly. For that reason, you should never ignore the volume of the asset you are planning to trade!

Basing Your Bitcoin Trading Strategies on Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a momentum oscillator that fluctuates between 0 and 100, measuring the speed and change of price movements.

RSI is a fairly popular indicator that can be found on many financial websites and also in day trading strategies for cryptocurrency.

Typically, traders use RSI to determine if a market is overbought or oversold.

The general belief is that a market becomes overbought when RSI exceeds 70. Conversely, a market becomes oversold when RSI drops below 30.

That said, this particular strategy doesn’t work very well in the real world as markets can remain overbought or oversold for extended periods of time. As a result, RSI tends to generate many false signals.

Based on historical research, a more appropriate way to apply RSI is to use it as a confirmation indicator. For example, if Bitcoin is making a new high, RSI should also be making a new high in order to confirm the strength of Bitcoin’s breakout into new territory.

If Bitcoin is making a new low, RSI should also be making a new low to confirm the strength of the cryptocurrency’s breakout into new territory.

A Look at the Best Crypto Trading Strategies 14

The chart above displays a bullish breakout on February 8, 2021 at $46,453. Since the RIS generated a new high along with the BTC price, it confirmed that the breakout is valid, which resulted in a move upward to $57,402 by February 21.

A Look at the Best Crypto Trading Strategies 15

The same outcome occurred on January 6 at $36,843. After testing the resistance line a few times, Bitcoin generated a breakout.

And, like in the previous case, the RSI confirmed the breakout as it jumped to record highs. As a result, traders who placed an order at $36,843 could profit $4,460 as BTC surged to $41,303 before entering into a correction.

The RSI indicator works remarkably well at confirming bullish and bearish breakouts. Traders who have the discipline to follow this indicator will save money by ignoring the trades that are not validated by a new RSI breakout.

Don’t Ignore Money Flow

The Money Flow Index (MFI) is a momentum indicator that measures the inflow and outflow of money into a security over a specific period of time. It uses price and volume to calculate trading pressure.

Arguably, MFI is the surest way to determine the amount of money entering and leaving a particular security or market. And if you’re looking to develop the best crypto trading strategy, you can’t ignore MFI.

Similar to the RSI, the index fluctuates between 0 and 100. In terms of Bitcoin, the best way to apply MFI for great crypto trading strategies is to use it as a validation tool.

For example, if Bitcoin is making a new high, MFI should also be making a new high in order to confirm the strength of Bitcoin’s breakout into new territory.

On the other hand, if Bitcoin is making a new low, MFI should also be making a new low to confirm the strength of BTC’s breakout.

A Look at the Best Crypto Trading Strategies 16

As you can see on the chart above, the MFI invalidated the bullish breakout on January 29, 2021 at 8:00. While Bitcoin surged by a whopping $5,000 that day, the MFI moved just above the levels it was standing eight hours ago.

A Look at the Best Crypto Trading Strategies 17

On the other hand, the MFI did a great job at validating the bullish breakout on March 8. As soon as the BTC price broke through the resistance level, the MFI jumped 10 points while the cryptocurrency’s value surged from $51,000 to $61,218 between March 8 and 13.

True Range Breakout (TRABOS)

The true range breakout indicator (TRABOS) is designed to capture short-term price fluctuations across all asset classes. It generates several buy/sell signals in comparison to most other indicators.

For those who enjoy active crypto trading strategies, TRABOS will be very appealing to your aggressive style of trading. Furthermore, it can also be applied to day trading futures strategies; trading them daily also requires a certain amount of aggression.

The most attractive aspect of TRABOS is based on the fact that it rarely misses a big move. Why? Because trading signals are calculated on a daily basis. Therefore, the indicator is constantly searching for profitable trading opportunities. See below for more information.

Note: A sell signal was generated at $54,663 on February 22, 2021.

The trading rules for TRABOS are rather simple. You can find them below:

1.Calculate the true range (daily high minus daily low).

  1. Buy signal is the closing price plus the true range.
  2. Sell signal is the closing price minus the true range.
  3. If long, the profit target is the daily high on the day of entry.
  4. If long, the protective stop is the low on the day of entry.
  5. If short, the profit target is the daily low on the day of entry.
  6. If short, the protective stop is the high on the day of entry.

A Look at the Best Crypto Trading Strategies 18

Based on the chart above, the TRABOS didn’t generate a signal on February 21.

However, traders could identify a sell signal on February 22 at $54,663. While the BTC price closed at $57,479 on the previous day, the true range was 2,816. For that reason, a bearish signal could be observed on the next day when the cryptocurrency’s value decreased below $54,663.

Putting a protective stop at $57,572, our profit target was the low on the day of entry, which is $47,426.

This turned out to be a very profitable trade because BTC experienced a substantial decline that day and the day after. As a result, we reached our profit target at $47,426 on February 23.

After the trade has been completed, simply calculate a new buy/sell signal for the next day. You can automatically calculate daily TRABOS by using the Average True Range (ATR) indicator and setting its length to 1.

TRABOS creates 2 to 3 trades per week. The key to success is to consistently take every trade for an extended period of time.

Since TRABOS generates a large number of buy/sell signals, it is an excellent indicator for traders on the Digitex Futures platform. As Digitex is 100% commission-free, it doesn’t hurt the profitability of traders by imposing fees on their positions (a 0.10% cost would take away 10% from margin traders using a 100x leverage).

For that reason, trading on Digitex will dramatically reduce the cost of trading for aggressive crypto trading strategies that incorporate indicators like TRABOS.

Crypto Trading Strategies – Wrapping It Up

While they are definitely useful, the four indicators listed in this article are certainly not perfect. However, when taken as a group, they provide an excellent approach to trading cryptocurrencies.

No matter whether cryptocurrencies are bullish or bearish, it’s certainly possible to trade crypto successfully amid any market conditions.

However, it requires patience, discipline, and a handful of reliable indicators. While it’s easy to pick the right indicators, the hard part is being patient, disciplined, and dedicated when leveraging your crypto trading strategies.

That said, developing the best futures trading strategies will take more than just knowledge of these indicators, but they’re a good place to start.

Personal Observations

I’ve been trading commodities for three decades. In 2016, I began trading cryptocurrencies.

Throughout my trading career, I’ve used technical analysis 100% of the time and have found it to be integral to developing the best crypto trading strategy.

Based on my trading results, I’m convinced that certain price patterns are repetitive in nature. I believe in the notion that past trading activity and price movements are valuable indicators of future price direction.

I’m also convinced that technical analysis will generate superior results, particularly if the technical indicators are trend-following in nature.

Leverage Your Crypto Trading Strategies on Digitex

High fees can easily turn the profits of traders into losses.

To avoid hurting your profitability, the revolutionary Bitcoin derivatives trading platform Digitex completely eliminated fees on its platform. As a result, you get more winning trades, more often while leveraging your crypto trading strategies on the Digitex futures exchange.

In addition to keeping 100% of your revenue while utilizing a robust crypto trading platform, Digitex also features multiple rewards programs.

By yield farming the exchange’s native DGTX token on Uniswap, you can benefit from a generous 10.90% APY with the option to multiply your gains by providing liquidity for longer periods.

On top of that, Digitex also rewards users for simply trading cryptocurrency via its liquidity mining program.

In exchange for providing liquidity to the platform with unfilled orders, Digitex traders can earn up to 140 DGTX each minute. The rewards are distributed proportionally between those whose unmatched orders were the closest to the spot price at the time the system randomly takes a snapshot of the order book.

To reap all these benefits, be sure to create an account at the Bitcoin derivatives exchange Digitex.

Gaining 222% in March, DGTX is also a hot asset for both investors and traders, which you can now buy using a credit or a debit card.

Sounds great, huh?

Purchase DGTX Now!

Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice, nor is it a replacement for advice from a certified financial planner.

Latest News

Did Bitcoin Form an Important Top on 26 June @ 13,844? 19

Did Bitcoin Form an Important Top on 26 June @ 13,844?

Digitex Futures
• Dave Reiter
July 25, 2019

Cryptocurrencies suffered a brutal bear market in 2018. In fact, it was the worst crypto bear market since Satoshi Nakamoto unveiled Bitcoin (BTC) in 2009. The vast majority of coins and tokens lost 70-90% of their value during the 2018 collapse. However, in mid-December 2018, the crypto bear finally made an important bottom. As we slowly transitioned into 2019, coins and tokens began to stabilize and start to move higher. The leader of the group was Bitcoin.  Continue reading

July 25, 2019
Digitex Futures

Did Bitcoin Form an Important Top on 26 June @ 13,844?

Dave Reiter
Did Bitcoin Form an Important Top on 26 June @ 13,844? 20

Cryptocurrencies suffered a brutal bear market in 2018. In fact, it was the worst crypto bear market since Satoshi Nakamoto unveiled Bitcoin (BTC) in 2009. The vast majority of coins and tokens lost 70-90% of their value during the 2018 collapse. However, in mid-December 2018, the crypto bear finally made an important bottom. As we slowly transitioned into 2019, coins and tokens began to stabilize and start to move higher. The leader of the group was Bitcoin.  Continue reading

Latest News