Cryptocurrency Trading: Intermediate Strategies Guide

Published on 7 August 2023 9 min read

Understanding Cryptocurrency Market Indicators
How to Analyze Trends in Cryptocurrency
Strategies for Short-Term Trading
Strategies for Long-Term Trading
How to Use Risk Management in Cryptocurrency Trading
How to Avoid Common Trading Mistakes
How to Choose the Right Cryptocurrency Exchange
How to Keep Your Cryptocurrency Investment Safe

Imagine standing in front of a cryptic billboard filled with numbers — that's how cryptocurrency trading can feel when you're starting out. But don't worry, we're here to decipher those numbers for you. In this guide, we'll explore intermediate cryptocurrency trading strategies. We'll break down market indicators, analyze trends, and delve into both short-term and long-term trading strategies. Let's get started.

Understanding Cryptocurrency Market Indicators

Market indicators act as a compass in our cryptocurrency trading journey. They keep us informed about how the market is behaving — whether it's bullish (upwards trend) or bearish (downwards trend). Let's decode some of these indicators.

Volume: This tells you the amount of a particular cryptocurrency traded within a certain period. High volume often points to high interest from traders and could suggest a start of a new trend.
Market Cap: This refers to the total value of all coins in circulation. It's calculated by multiplying the current price by the circulating supply. A high market cap usually means a cryptocurrency is more stable and less prone to drastic fluctuations.
Price Change: This is the difference in a currency's price over a specific time period. While it's tempting to buy when prices are rising, remember, what goes up must come down. So, make sure you have a solid intermediate cryptocurrency trading strategy in place before you jump in.
Order Book: An order book lists all buy and sell orders in the market. The 'bids' represent the demand and the 'asks' represent the supply. It's a great tool to gauge the market sentiment at any given time.

Now that you've got the basics, it's time to put these indicators to work. Don't forget, the key to succeeding in cryptocurrency trading is understanding and interpreting these indicators correctly. Your interpretation will dictate your trading decisions, so make sure you're clear on what each indicator means for your intermediate cryptocurrency trading strategies.

How to Analyze Trends in Cryptocurrency

Got your compass ready? Great, because we're about to start reading the map. Trend analysis forms the cornerstone of any intermediate cryptocurrency trading strategy. It's all about spotting patterns in the market's past behavior to predict where it might go next. Here's how you can do it.

Identify the Trend: Look at the price chart of your chosen cryptocurrency. Does it show a steady upward climb? That's an uptrend. A downhill slope? That's a downtrend. A flat line? That's a sideways trend. Identifying the trend helps you decide whether to buy (in an uptrend), sell (in a downtrend), or hold (in a sideways trend).
Use Technical Analysis: This is where you use tools and indicators to help predict future price movements. One popular tool is the moving average, which shows the average price over a certain period. If the current price is above the moving average, it's a bullish signal. Below it? That's bearish. These tools aren't foolproof, but they can give you a good idea of where things might be heading.
Consider the Big Picture: Don't get so caught up in the minute-to-minute fluctuations that you lose sight of the bigger picture. Look at longer timeframes as well — they often reveal trends that shorter timeframes might miss.
Stay Informed: Keep up with news and developments in the crypto world. A new regulation, a major hack, or even a tweet from a famous CEO can send prices soaring or plummeting. So, stay on top of the news and be ready to adjust your strategy accordingly.

Remember, trends are your friends in the world of cryptocurrency trading. By learning to spot and analyze them, you're well on your way to mastering intermediate cryptocurrency trading strategies. But don't just follow the crowd — do your own research and make your own decisions. After all, it's your journey. Make it count!

Strategies for Short-Term Trading

Time to switch gears a bit. Let's talk about short-term trading strategies. This is all about making quick decisions, staying on top of the market trends, and, dare I say it, a bit of thrill-seeking. But remember, with great rewards come great risks. So let's dive in and see how you can navigate these choppy waters.

Day Trading: This is the fast-paced world of buying and selling within a single day. Your goal here is to profit from short-term price movements. It requires a lot of time and attention, but it can be profitable if you're good at spotting trends and acting quickly.
Scalping: Scalping is a super short-term trading strategy where you make numerous trades to gain small profits throughout the day. It's like day trading on steroids. Be prepared to spend a lot of time looking at charts and making quick decisions.
Swing Trading: This involves holding onto a cryptocurrency for a few days to a week to capitalize on price 'swings'. You're looking for bigger movements than in day trading, but it's still a short-term strategy.
High-Frequency Trading (HFT): This is a more advanced strategy that uses algorithms to make lightning-fast trades, often in fractions of a second. It's not for everyone, but if you have the skills (and the computer power), it can be very profitable.

Remember, short-term trading can be exciting, but it's also risky. It's not just about making quick money; it's about making smart decisions. So before you jump in, make sure you understand the risks and have a solid plan in place. And most importantly, never invest more than you can afford to lose.

Strategies for Long-Term Trading

And now onto the other side of the coin—long-term trading. This is for those of you who prefer a slower pace, who like to plan ahead, and who don't mind waiting for their investments to grow. So let's check out some intermediate cryptocurrency trading strategies for the long haul.

Buy and Hold: This strategy is as simple as it sounds. You buy a cryptocurrency and hold onto it for an extended period—months, years, even decades. The idea here is that over time, the price will go up. It’s like planting a seed and waiting for it to grow.
Position Trading: This is a strategy where you hold onto a position for a long period, but unlike buy and hold, you're actively looking for trends and making trades based on those trends. It requires a good understanding of market indicators and a lot of patience.
Fundamental Analysis: This involves analyzing the fundamentals of a cryptocurrency—its technology, its use cases, its team, and so on—to make long-term investment decisions. This is for those who believe in the future of cryptocurrency and are willing to put their money where their mouth is.
Dollar Cost Averaging (DCA): This strategy involves buying a fixed dollar amount of a cryptocurrency at regular intervals, regardless of its price. It's a good way to spread out your investment and reduce the impact of price volatility.

Long-term trading is a marathon, not a sprint. It requires patience, discipline, and a willingness to ignore short-term price fluctuations. But if you play your cards right, it can be a great way to grow your wealth over time. And remember, as with all investments, never put in more than you can afford to lose.

How to Use Risk Management in Cryptocurrency Trading

Stepping into the world of cryptocurrency trading is a bit like exploring a jungle—full of exciting possibilities, but also potential pitfalls. That's where risk management comes in. Done right, it can be your trusty guide, helping you navigate the twists and turns of intermediate cryptocurrency trading strategies. So, let's dive in!

Diversify Your Portfolio: You've probably heard the phrase "Don't put all your eggs in one basket." Well, the same applies to crypto. By investing in a variety of cryptocurrencies, you can spread your risk and potentially increase your chances of making a profit.
Set Stop Losses and Take Profits: These are tools that automatically sell your cryptocurrency if the price drops to a certain level (stop loss) or rises to a certain level (take profit). They can help protect your investment from sudden market swings.
Only Invest What You Can Afford to Lose: This might sound obvious, but it's surprising how many people ignore this rule. Cryptocurrency trading can be unpredictable, and prices can drop as quickly as they rise. So, always remember to invest sensibly.
Keep Up with Market News: Cryptocurrency prices can be influenced by a range of factors, from regulatory changes to technological advancements. By staying informed, you can make better trading decisions and manage your risk more effectively.

Risk management might not be the most exciting part of cryptocurrency trading, but it's certainly one of the most important. By taking the time to manage your risk, you can help ensure that your trading journey is a successful one. So, remember: trade smart, not hard!

How to Avoid Common Trading Mistakes

Even the most seasoned traders can make mistakes. But don't worry; learning to avoid these common pitfalls is a key part of mastering intermediate cryptocurrency trading strategies. Let's look at some of the most common mistakes and how you can avoid them.

Chasing After Losses: Seeing the value of your investment drop can be nerve-wracking. But trying to 'make up' for a loss by making rash trades is a recipe for disaster. Stay calm, stick to your strategy, and remember that ups and downs are part of the game.
Ignoring the Market: Trading isn't just about buying low and selling high. It's also about understanding the broader market trends. If you're not keeping an eye on market news and analyses, you might miss important cues that could affect your trading decisions.
Not Having a Plan: If you're trading without a clear strategy or goals, you're essentially gambling. Define your objectives, set clear rules for when to buy and sell, and stick to your plan.
Letting Emotions Rule: Fear and greed are two emotions that can wreak havoc on your trading strategies. Learning to keep your emotions in check and make rational decisions is a key part of successful trading.

Remember, everyone makes mistakes, and that's okay. The important thing is to learn from them. With time, patience, and a little bit of trial and error, you'll get the hang of it. Happy trading!

How to Choose the Right Cryptocurrency Exchange

Choosing the right cryptocurrency exchange is like finding the perfect pair of shoes. It has to fit your needs, be easy to use, and—let's be honest—look good, too. The right exchange for you depends on various factors, including your trading goals, technical knowledge, security needs, and more. Here are some key points to consider when choosing a cryptocurrency exchange as part of your intermediate cryptocurrency trading strategies.

Security Measures: Safety first, right? Make sure the exchange has robust security measures, like two-factor authentication, withdrawal whitelists, and cold storage for funds.
Trading Volume: An exchange with a high trading volume means it's popular, which usually means it's trusted. Plus, more trading volume can lead to more accurate prices.
Supported Cryptocurrencies: Some exchanges only support a few popular cryptocurrencies, while others offer a wide variety. If you plan to trade less-known cryptocurrencies, make sure the exchange supports them.
User Experience: A confusing interface can lead to costly mistakes. Look for an exchange that's easy to use, with clear instructions and a clean design.
Customer Support: If you run into any issues, it's good to know that there's a responsive customer support team ready to help you out.

Remember, there is no one-size-fits-all when it comes to cryptocurrency exchanges. Consider your specific needs and do your research before making a decision. And once you've found the right exchange for you—well, that's when the real fun begins!

How to Keep Your Cryptocurrency Investment Safe

Alright, so you've chosen your perfect exchange and you're ready to dive into the world of cryptocurrency trading. But wait, there's one more thing you need to think about—how to keep your investment safe. Cryptocurrency transactions are irreversible, you see, and there's no central authority to help you out if things go wrong. So, let's talk about some steps you can take to keep your digital coins safe and sound.

Private Keys: Your private keys are like the keys to your house—except if you lose them, there's no locksmith who can help. Always keep your private keys private and stored securely.
Two-Factor Authentication: You know how your bank sends you a text with a code when you try to log in from a new device? That's two-factor authentication, and it's a simple way to add an extra layer of security to your accounts.
Software Updates: Remember how your mom always told you to eat your vegetables? Well, in the world of cryptocurrency, regular software updates are the equivalent. They help protect your digital assets from hackers who exploit outdated software.
Wallet Security: If you're storing your cryptocurrencies in a digital wallet, make sure it's a secure one. Look for wallets with a good reputation and positive user reviews.
Scam Awareness: As the saying goes, if something seems too good to be true, it probably is. Always be skeptical of get-rich-quick schemes in the crypto world.

Whether you're an experienced trader or just starting out with intermediate cryptocurrency trading strategies, safety should always be at the forefront of your mind. After all, the most successful traders are not only those who make good trades, but also those who avoid bad losses.

If you're ready to take your cryptocurrency trading skills to the next level, don't miss the workshop 'Crypto For Creators, Part 1: The Backbone Of The Digital Economy' by Tom Glendinning. This workshop will provide you with a deeper understanding of the cryptocurrency space and how it can benefit creators like you. Expand your knowledge and stay ahead in the ever-evolving world of digital currencies.