How to Build a Winning Crypto Investing Strategy
Do you want to start investing in cryptocurrency? Or do you have some doubts, like “what cryptocurrency should I invest in”? If so, you’ve come to the right place! Even if you’ve already dived into the crypto area, it’s always a good idea to explore new ways to improve your investment strategy.
A few years ago, investing in cryptocurrency was considered an unreliable and insufficiently studied method. But today, everything has changed, and anyone can make a big profit from it.
Today the crypto market offers real potential for success in 2021 as it provides high volatility. Of course, this may be due to some levels of risk. However, once you become familiar with the market and its fluctuations, you can make better decisions and build your crypto investing strategy to achieve the desired results.
What is a cryptocurrency investment strategy and why do you need it?
A crypto investment strategy provides you with a set of solutions that can help you with your investment. You understand when to buy, what to buy, how much to buy, and when to sell.
It works as a specific guide. They force you, as an investor, to define goals and risk tolerance and follow a particular plan to increase your wealth. Moreover, having a strategy ensures that all risks are calculated correctly, and the maximum acceptable risk is determined even before you invest.
There are conservative strategies that focus more on managing a low-risk portfolio and aggressive strategies that focus on managing a high-risk portfolio.
If you don’t have a plan, you may be missing out on a lot of income. Moreover, it could potentially lead to a one-way ticket to the moon or the poorhouse. Therefore, a clear understanding of the cryptocurrency market is your key to success.
How do I invest in cryptocurrency?
Experienced traders can do this deliberately and systematically based on their skills, but you can join them by studying the already proven experience of long-term specialists.
Of course, there is no “perfect” cryptocurrency investing strategy. For each specialist, his method is the most correct. But the foundation of any strategy is to think about the amount you want to pay and how much time you are willing to spend waiting for the income.
Well, let’s take a look at the main basics of creating your crypto strategy to help you find the most profitable way to invest.
1) Starting point
First, decide what assets you would like to trade. If you are a beginner trader, then this is one of the most critical decisions.
When you already have an idea of your trading goals, then when choosing a digital asset, you need to study its community (or several), team, leadership, technologies, price history, and how it sees the future. This data will help you understand more about the strengths and weaknesses of a particular coin and its potential.
In addition, with the coin’s goals in mind, you can also check some other metrics, such as the number of active users or the size and frequency of transactions.
Diversification is a risk management strategy that brings together a wide range of assets to limit your risk exposure. Your cryptocurrency portfolio should consist of several coins: high-market cap, mid-market cap, and low-market cap. Since crypto markets pose particular challenges, diversity helps you plan for short-term and long-term growth without putting yourself at significant risk.
3) Trading signals
As in everyday life, you also need to know when to enter and exit a trade. Getting in at the right time can give you good returns, and getting out on time is one of the most important parts of risk management.
Thus, your investment strategy should also include an algorithmic trading bot that will give these signals. For example, in our Smart Algo platform, trading robots provide the best trading signals based on your choice of an asset, allowing you to easily identify potentially profitable trading opportunities in the financial markets.
These signals tell you where to buy or sell any asset with the best entry and exit levels without any delay.
In addition, Smart Algo will also help you prepare specific strategies to help you get started quickly and easily. And when an amateur trader turns pro, check out our How Our Robots Work section in the documentation for more information.
4) Time frame
Another critical point is the time frame. Of course, each strategy works differently depending on the time you specify. Therefore, try to choose a time frame that suits your goals.
For example, trading with short time frames profits from small price changes over short time frames but requires strict adherence to an exit strategy to avoid losses.
It is also worth considering that the higher the trading frequency, the more you will need to assess liquidity, the difference between the buy and sell prices, and trading costs. Therefore, in this case, as a novice trader, you shouldn’t use trading systems with short time frames.
The last point to consider is positions and their size. In short, it is the size of your position suitable for trades, which depends on the size of your account, goals, and risk tolerance. To determine a position, traders usually use methods such as a fixed amount in a currency, an equal percentage, etc.
A small percentage will mean that you are less likely to be hacked as your losses will be small. In contrast, a higher rate has higher risks.
With the Smart Algo statistics, you can take advantage of evaluating algorithmic trading strategies. Our robots and trading algorithms have been revealing successful trading dynamics since 2014. From then until 2017, we were working with our funds, increasing our trading skills and updating the trading software.
A coin should have its community to achieve the desired success. Your community needs constant assessment of trends. Thus, as the market capitalization of the currency grows, community participation should also increase. Participating in tech forums or social media groups will give you an idea of how active the community is and where a particular coin performs better.
Today, in addition to the main “heroes” such as Litecoin (LTC), Ethereum (ETH), and Bitcoin Cash (BCH), there are more than a thousand different cryptocurrencies on international exchanges. Therefore, if you want to make a profit, you need to position yourself strategically.
7) Avoid the hype
As with any investment, don’t get fooled by the hype and other ads related to Bitcoin. Your decisions should not be based on what others have to say. For example, a seasoned BTC investor will never make decisions based on hype and noise as it is hazardous. The price can collapse, and this will lead to terrible losses and consequences.
But if you still want to invest in Bitcoin, try to study the market carefully and then decide what to do next. Also, if you have some doubts, you can seek advice from specialists with sufficient knowledge of the bitcoin investment strategy. This will allow you to shape your strategy and filter out false information.
Popular Strategies to Invest in Cryptocurrencies
Study technical and fundamental analysis
Before you invest in cryptocurrency, it is essential to understand how fundamental and technical analysis works. The main point to keep in mind when looking for the best investment method is the price movement on the charts of your assets.
The fundamental analysis gives a complete picture of the project. This includes understanding a unique selling point, a roadmap, and macroeconomic factors to provide a general concept.
Technical analysis shows the price movement and the display of the trading volume on the chart. Using it, you can analyze the previous activity of an asset to predict its future directions.
Automate the process with a crypto trading bot
Such automated trading software is a trendy option for many traders now. You can choose either a ready-made trading robot or create your own.
Trading strategies that are integrated into bots are generally well structured. You break them down into a series of actions, and the bot starts its work.
At Smart Algo, our trading robots stand out from the competition because they are built with self-learning neural networks. In this case, while the specialists teach them basic trading, Fibonacci trading, or fractal trading, the network continues to build up its knowledge by applying data to trades and improving results.
Inside the self-learning system, some algorithms analyze charts and information using various methods to choose the most profitable and least risky trading strategy.
Apply the earnings yield technique
The goal of this strategy is to provide the token holder with financial returns in the long term. In other words, buying and holding involve buying an asset at a lower price and selling it at a higher price. Earning income consists of keeping your assets but earning passive income while holding the assets — for example, a savings account pays interest to your account.
HOLD your coins
HOLD – the name of the strategy speaks for itself. It consists of holding the cryptocurrency for an extended period without cashing it out.
This strategy is, in most cases, preferred by newbie investors as it is pretty simple and easy to implement. The method can bring you profit when the market starts to rise. In other words, you make money by holding on to your asset while its value increases.
Invest in Cryptocurrency the Smart Way with Smart Algo
As you can see, the crypto market is likely to be hugely popular for a long time to come. Choosing a cryptocurrency investment strategy can be difficult. But once you start studying the market, you will begin to recognize the best and worst practices.
First, determine your risk tolerance, investment objectives, means, and other preferences. Then do your research and get ready to achieve the desired results.
With the Smart Algo system, you don’t have to worry about your investments. We use reliable security measures that protect users’ funds because our customers are our highest priority. Our platform does not use leverage, so we never borrow money. We only trade with our funds to help clients minimize risks.
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