Crypto trading in 2023: trade crypto with a strategy
By Paul Reid
27 February 2023
Crypto trading has had its difficulties over the last few years, and many traders are now wondering whether to trade crypto in 2023… or ever again. The crypto winter was long, and most of the altcoins are still frozen.
Bitcoin showed signs of life recently, despite a string of scams, exchange collapses, and regulatory restrictions. Negative sentiment has kept prices low, but before you think about buying Bitcoin, get updated on crypto trading in 2023.
Is crypto trading still worth It? Read this before you trade crypto
Crypto trading is still very much worth considering, despite the recent downturn in its overall market performance. The technology underlying cryptocurrency — blockchain — has given rise to a new wave of digital assets that are both faster and more secure than traditional payment methods.
The ledger technology has proven efficient in peer-to-peer transactions, without the need for middlemen or third parties, allowing users to take control of their transaction costs and security.
Blockchain technology is robust and surely has a place in the future of financial transactions, but mass adoption of cryptocurrencies still looks unlikely. No country will allow crypto into their economy without price stabilization and a rigorous regulatory framework.
No, for now, crypto is best as a payment transfer method, not a high street currency, but it does create a volatile trading market ideal for traders with high-risk, high-reward appetites.
Benefits of crypto trading
The benefits of crypto trading speak for themselves. Trading crypto has become an increasingly popular way to invest. Crypto’s decentralized nature allows traders to access global markets irrespective of their location. Traders and investors from around the world can benefit from near-instant liquidity and fast settlement times when trading. This is especially true with short-term strategies such as day trading or swing trading, where traders can take advantage of price fluctuations without bureaucratic delays.
Crypto trading gives traders the opportunity to take advantage of volatile cryptocurrency prices that can swing dramatically in a single day, offering the potential for significant returns for those choosing right.
Cryptocurrency trading is attractive because of its 24-hour market with low transaction fees and a wide range of options for risk management. With access to features like margin trading and stop-loss orders, traders can have greater control over their investments than when investing in traditional financial systems… especially if they trade Crypto CFDs. Overall, crypto trading offers many advantages if done carefully and responsibly with a trusted broker.
Risks of crypto trading
Some risks associated with crypto trading include lacking security, liquidity risk, and fraud. Since cryptocurrency exchanges aren’t regulated or insured, there’s a far greater risk of funds being stolen or lost due to hacking. It’s important to only use a regulated exchange or broker that offers robust security measures like two-factor authentication in order to minimize risk.
Liquidity risk is another factor to consider when crypto trading… especially for those who trade crypto through a crypto exchange. Low liquidity can cause prices to become artificially inflated or deflated if one side of the market becomes too saturated or oversold.
If there aren’t enough buyers and sellers on the crypto market, the exchange traders have difficulty converting cryptocurrency from wallet back to cash. Not the best way to trade crypto.
Finally, anyone wanting to trade crypto should also know about the potential fraud within the crypto trading industry. Scams are increasingly common as hackers take advantage of unsuspecting victims by using deceptive tactics like fake ICOs (Initial Coin Offerings) and phishing attacks aimed at stealing user credentials or funds.
It’s essential to do your research before trading crypto and always verify that you are dealing with trusted parties before partaking in any transaction. Brokers like Exness who have multiple regulatory licenses are strongly advised.
Since Exness trading accounts don’t support withdrawals to a different bank account, a compromised password still wouldn’t help the hacker. No surprise that many traders prefer CFD crypto trading.
3 Best strategies to trade crypto
For crypto trading in 2023, short-term strategies are most definitely the way to go until the next rally shows up. This means day trading, scalping, or swing trading. There are no better crypto trading strategies available when the market is barely moving.
Day trading - momentum-based crypto trading
One powerful crypto trading strategy that day traders like is a momentum-based strategy that focuses on news and price trends. Momentum traders will look for short-term price movements caused by news events or other market forces to buy and sell cryptocurrencies at optimal times.
This technique requires traders to monitor the crypto markets closely in order to identify opportunities that could produce profits quickly. Several tools, including technical analysis indicators like moving averages, can help identify such opportunities in the markets.
By taking advantage of these short-term price movements, day traders can profit from the volatility of the cryptocurrency market, regardless of whether it is bullish or bearish.
Scalping - high-frequency crypto trading
One scalper strategy for cryptocurrencies is a high-frequency trading approach, which takes advantage of small price movements by placing multiple orders over a short period.
Crypto trading scalpers make money buying and selling crypto assets quickly, taking profits when the prices go up (and losses if they go down). They normally use trading bots or Expert Advisors (EA) to help them place their trades quickly, as it would take too long for them to place each one manually.
In order to be successful, scalpers need to have access to reliable market data, good trading execution services, and the ability to react quickly when prices move. This requires a strong understanding of technical analysis so that they can identify profitable opportunities in the crypto trading markets and act on them before anyone else does.
Swing trading - trade crypto highs and lows
The most common swing trading strategy for crypto trading is one that takes advantage of volatility in the markets. Swing traders focus on taking advantage of crypto ups and downs, buying when prices are low and selling when they go up - while trying to minimize any losses they may experience.
This approach to crypto trading requires traders to monitor the market, looking for opportunities to buy into known trends and riding them out until they reach their peak. Technical analysis can help identify these trends, with indicators helping traders recognize patterns over time.
Indicators to use for crypto trading
When crypto trading, technical analysis using trading indicators can be a powerful tool in helping to identify opportunities and manage risk. There are several popular indicators used by traders for crypto trading, each offering its own unique insights into the market.
The Moving Average Convergence Divergence (MACD)
MACD indicator is one of the most widely used to trade crypto. The MACD is a momentum indicator that measures the relationship between two moving averages, helping to identify short-term price trends and potential entry/exit points.
Relative Strength Index (RSI)
Another popular indicator for crypto trading is the Relative Strength Index (RSI). This indicator measures the speed and change of price movements, providing an indication of whether an asset may be overbought or oversold. It can help to indicate when it’s time to enter or exit a position, as well as alerting traders to any potential reversals in prices.
The Bollinger Bands are another useful tool for analyzing crypto markets, primarily because they provide an indication of volatility within a given time frame. Composed of three lines (the middle line being a simple moving average), these bands expand and contract based on current levels of volatility, helping crypto traders identify potential entry and exit points.
The Fibonacci retracement tool is also very popular among crypto trading gurus who are looking for areas where support or resistance may occur. By plotting certain percentages along key pivot points – such as recent highs or lows – these retracements can provide insights into when it might be smart to buy or sell a coin, long before other traders.
While there is no single “best” crypto trading indicator, those mentioned above are considered amongst the most popular tools used by both beginner and advanced cryptocurrency traders.
At this point, it should be said that improper use of these strategies may result in losses. There’s no such thing as an easy and guaranteed strategy. If there was, everyone would be doing it.
Even with these tools, traders can still easily misread or wrongly forecast the markets and experience losses, so trade cautiously, master the trading tools you use, and be prepared for surprises.
Crypto trading offers a 24-hour market with low transaction fees and access to powerful advantages like margin trading and stop-loss orders, allowing traders to have greater control over their investments.
With a proven strategy, and a patient and cautious approach, trading Bitcoin and other cryptocurrencies can be mentally rewarding, challenging, and for a select few, financially rewarding. But in all of those cases, hard work and research are always present… so don’t think crypto trading is the easy financial fix.
There’s no way to know if the current Bitcoin range is low, so long-term investing/holding is perhaps not a good idea.
Opening and closing trades within one session is a much more popular strategy, so consider keeping a diary. Make your market observations at set times of the day and take into account the days of the week when making your overall analysis.
Look for legitimate and confirmed reasons for a price move. Some news sites will randomly link disasters, war, Covid, and US inflation to crypto price actions, with no explanation. Most times, it’s just a coincidence. A broken watch is right twice per day. If news pairs an event with a crypto price fluctuation, confirm that the price mechanics are legitimate.
Last, crypto exchanges have had a lot of negative publicity recently. Exchange hacks, scams, stolen wallets… if you want to avoid all of that fuss, consider trading contracts instead of coins.
CFD contracts derive prices from the underlying coin and offer the same profit/loss potential, but with CFD trading you can convert your equity back to cash instantly with Exness. Leverage can be adjusted to match market volatility, and a CFD trading account is considerably safer than most, if not all exchanges, because of regulatory requirements.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.
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