Crypto Paper Trading Strategies: From Beginner to Advanced

Trade Smart: Beginner to Advanced Crypto Paper Trading Strategies with Altrady

The cryptocurrency market is so far the most volatile in modern times. Naturally built on concepts of decentralization, it is accessible for everyone to participate.

Volatility can be attractive to traders who develop consistent crypto strategies, as it offers opportunities for significant profits. This market is driven by assets from a broad group of industries, including traditional industries.

Influenced by technologists, the crypto market is also the most rapidly changing field, and the exchange platforms are the most innovative companies in the finance world. The wide range of products offered by exchanges provides this market with a dynamic not seen before in any other: DeFi, liquidity pools, high leverage, margin collaterals, etc.

Crypto assets class can be traded with fiat money as well as crypto for crypto. For example: BTC/USD (bitcoin liquidated in American dollars) and BTC/ETH (bitcoin liquidated in Ethereum coin). Have you ever heard of trading gold for barrels of petroleum? I think you haven’t.

Getting into any speculative market requires a disciplined approach, but this is even more true when it comes to the cryptocurrency market. Being profitable is not something a trader may aspire to overnight; it is a consequence of something more: to be consistent.

Consistency is a major key to open the doors to successful trading strategies. This concept will minimize risks associated with volatility. Adopting specific strategies is only possible if a trader can be consistent with the rules of those strategies. In trading it is common to read or hear that “there are no bad strategies but inconsistent traders”.

Some strategies require time to serve positive effects. To go from one strategy to another could be a signal of indiscipline, hence failure while adopting the strategy more than the strategy in itself.

Key Takeaways

• There are various strategies dated from traditional markets, here you will learn those strategies designed for the crypto market according to its conditions.
• Altrady is an all-in-one platform that will help improve any strategy, from swing to day trading to scalping. Advanced charting tools will make the analyzing experience desirable; automation will save traders time; tracking will give investors insights into the performance.
• When selecting a strategy, a trader should think about his or her risk aversion, the desirable risk/reward ratio, the emotional and psychological strength, and the period is willing to wait for effective results.
• Risk management is the best friend of the capital. Undisciplined management will reduce capital to zero; traders must learn risk management to thrive.

Overview of Crypto Trading Strategies

A crypto strategy is a set of market concepts tailored to gain a probabilistic advantage over the price movement of a financial asset.

The objective is to successfully speculate on how much the price will trade in the next seconds, minutes, days, months, or years.

Crypto trading strategies provide a framework that helps to make coherent decisions in favor of the capital and its sustained growth.

A trader can decide to take an investor focus or purely a speculative view; in the best of cases, both. Therefore, distinguishing between these two is important.

Long-term trading demands creating and managing a portfolio that carries several assets from different industries. Managing a portfolio is a safer strategy than short-term trading, therefore returns will not come quickly.

Short-term trading is the ideal strategy when a trader looks for quick returns but is riskier. A short-term strategy could be day trading or scalping. Swing trading could also fall into this group for this article.

Classifying trading strategies based on the difficulty and trading level:

Popular Crypto Trading Strategies

Intra-day can be seen as the shorter-term approach within the group of day trading, but it’s not just scalping. Intra-day operations may not last more than a few minutes; or seconds if such is the case, depending on market volatility.

Day trading can take longer, for hours, within a day, through one or two sessions: from a European session to an American session, for example.

From our previous table, let’s see:

1. Trend trading (day-trade): catch a trend formation or follow one from a previous day session. In this strategy, the trader has to manage risk and equity (potential profits and losses). The trader could sell part of the position or ‘add more’; or sell and then enter again, averaging the price and margin costs associated with the orders for that trading day.
2. Momentum trading (intra-day): it is a high-risk/high-reward strategy; a trade in this mode could last 5 to 15 minutes, the idea is to catch momentum in the price movement driven by a specific event in the market, like a candlestick pattern, volume increment, or technical indicator signal. RSI and MACD indicators could be used to forecast a momentum signal. The trader will exit the position when the contrary happens: volume decreases, technical indicator gives a signal or there is a new pattern aiming a reversion.

Scalping: Taking advantage of small market moves frequently

• Tick Scalping: This strategy is associated with algorithmic concepts and high-frequency trading that aim to profit from the micro-movement of price action. It can be executed by humans but often relies on automated systems; you can dive into algorithmic trading with this guide of the Altrady platform. Even though humans can execute this strategy, the effectiveness of it depends on the management of multiple orders, which can be overwhelming for a trader.
• Volume Scalping: This method will aim for a high-volume signal to perform several operations of small profits. Indicators like Volume Profile, Tick Volume, and On-BalanceVolume can be used
• Price Scalping: In this approach, the scalper will look for opportunities based on price action concepts. This strategy can be integrated with supports and resistances and their breakouts, supply, and demand zones, or chart patterns like the double top, double bottom, and pin bar candlestick patterns.

Swing Trading: Capitalizing on market momentum over several days or weeks.

Swing trading strategies come well for low-risk tolerance operators or simply for more safer and sophisticated risk and capital management. Following a major trend is very common in this type. Getting into a trend, up or down, will allow you to maintain the trade for days or weeks. Even adding more to a winning position.

Position Trading: Long-term strategy based on fundamental analysis.

Long-term strategies forecast a good return on an investment that will be held over months or years. This method is mostly based on portfolio management. Fundamental research about the assets is more important than short-term technical analysis. The long-term strategy turns a trader into an investor who will put capital in position trusting the fundamentals of a project.

End-of-Day Trading

This is a popular strategy and quite versatile. It can be part of the day trading category and can be also considered a scalping strategy. However, it has a swing version too for overnight holdings. As its name points out, it will look for opportunities at the closing of the day. In the same way, the opening of a session comes with high volume activity, the closing comes too. That is the goal of this strategy: to take advantage of the last high volume price movement of a trading session.

News Trading

As the name indicates, this strategy will try to take advantage of news events. News releases like IPC, FOMC meetings, crypto project updates, or exchange announcements can move the price of an asset significantly.

Trend Trading

As was mentioned previously, trend strategy is part of the arsenal of day trading methods as well as swing trading and long-term investment. A popular saying in the trading world states that “the trend is your friend”, so keeping an eye on the trend of any crypto asset is a must.

Using Altrady for Effective Trading

If you are wondering how you can start developing these strategies, the good news is that Altrady is a powerful platform. Offering a full suite of tools, from charting analysis to position tracking, any trader can start building a set of strategies and measuring their performance.

Altrady has FREE paper trading, automation tools, bot trading, portfolio tracking, Trading view webhooks, Grid Bot, signal bot spot and futures, and much more.

Charting tools of Altrady cover a wide range of needs. One of the most interesting and advanced for market analysis is the QuickScanner. This admits a set of custom rules to identify rising or dropping markets.

In combination with the Market Explorer, a trader can conduct deep research easily about an asset and then pass it through the scanner to find trading opportunities.

Altrady allows to make bots for automated trading, these bots will follow signals to execute a determined trade.

A trader can set price alerts in the charts to keep up with the movement of prices of a crypto asset.

If a trader has positions distributed across multiple accounts on various exchanges, now the trader can merge all of those accounts into a global portfolio with all the necessary tools to track and improve that portfolio.

If a trader wants to start day trading or scalping, the Smart Trading bundle of Altrady will make the daily execution comfortable for anybody. Advanced Take-Profit and Stop-Loss options will increase the confidence of the trader.

Also, for swing trading strategies you can use price alerts and automation for when the price reaches a target, an entry or exit point, so you can be sure orders will be executed at the right price and time.

For the long term, Altrady’s DCA Bot will take control of the growth of your capital, averaging the costs automatically.

In any case, remember to use the Risk Reward Calculator to avoid management errors and optimize performance.

Risk Management in Crypto Trading

Without risk management, no capital will survive the market. It’s mandatory to stick to a risk framework favorable to preserve rewards and not become a “donator”, a trader that gives back profits to the market after winning.

Some techniques:

1. Avoid participating in a market you don’t know.
2. Don’t break the rules of a strategy. Avoid gambling, look for probabilities.
3. Stop chasing the price when you are not able to place a trade at the right moment.
4. Keep a consistent risk-reward ratio. Do not expand the stop loss, and don’t add more capital to a losing position.

Stop losses are very important to not fall into a big loss. When a trade is winning you can trail and move stop to safer favorable prices.

Maybe letting the gains run could be an option, but do not abuse this since the crypto market can be very volatile. Use take-profit orders to ensure gains.

You can set various take-profit orders: one for exiting 60% of the winning trade, and the rest 40% can take a little more risk.

For swing trading and long-term strategies, diversification is not just an optional concept but a beneficial one.

Diversification strategies will offset any pullback in a position with the rise of others. If you are in a trend in an asset, and some news is released affecting it, maybe other positions couldn’t be affected.

Note: take into account that Bitcoin has dominance over the crypto market, so most assets move in the very same direction. However, there are exceptions: go to charts and look for recent movements by Solana (SOL) or meme coins like Pepe (PEPE). You’ll find something interesting.

This type of strategy has to balance the percentages of capital allocation to give the best results.

Developing and Testing Your Trading Strategy

To get a real insight into the strategy that you are testing, it is important to test on full-scale.

It means:

1. Managing risk.
2. Using stop-loss and take-profit.
3. Calculating the position as if it were your real capital.
4. Stick to a plan and give it time.
5. Do not break strategy rules.

Know and study the chosen strategy. This will boost confidence in what you are doing, and if you stick to the rules, you will find what works for you and what does not.

Know your risk tolerance and test your concentration. Remember it is not the same to try volume scalping compared to try trend trading.

Altrady has FREE paper trading to start testing strategies and boost your confidence.

Conclusion

Choosing a trading strategy will depend on your approach and desired results. Choose and plan those that match better with your trading experience, risk tolerance, and psychological and emotional strength.

It is said that constantly changing strategies is not good practice. However, this does not mean you should stop learning, testing, and exploring more advanced strategies to expand your trading arsenal and be prepared for different market conditions.

Altrady is a friendly platform with all the resources, tools, and documentation to optimize, empower, and boost your trading capabilities among a vast range of crypto markets and methods.

Sign Up now for FREE and start a successful professional trading experience.