2 Cryptocurrency Trading Strategies: Rules, Backtesting, and Returns Insights

The crypto market has been subject to high volatility which is one of the thrills that drive investors and traders alike. With high volatility comes substantial profit (and loss). Over the years, traders have tried and applied different strategies to increase their performance in the market. How can you make a cryptocurrency trading strategies?

Cryptocurrency trading strategies are the method and process traders and investors apply in the market to have a profitable edge. There is no suitable strategy for everyone, as each strategy is unique to the individual executing it.

In this post, we look at a cryptocurrency trading strategy and make a backtest with strict and mechanical trading rules.

Are there any Cryptocurrency Trading Strategies?

Due to the volatile nature of the crypto market, traders flock to the market looking for huge profits. However, many have lost more than they thought they would. The few who have been able to take home substantial profit owe their success to having a good strategy. With all the noise and news in the market, it’s easy to lose track of what is important and that is to execute your strategy properly without external influence (news and trading).

In the crypto world, a trading strategy is your guide to navigating the market. It is how you know when to buy and when to sell crypto so you don’t trade out of gut feelings. Some traders simply adapt what they have been using in the mainstream market like stocks, bonds, and the futures market.

Many have attempted using fundamental analysis, but that doesn’t seem to work so well in cryptos, as every project claims to render nearly the same services. Some focus on technical analysis using technical indicators, such as the RSI indicator, MACD, moving averages, or simply identifying chart patterns and other price action patterns.

There are also novice traders and investors that mostly base their buy and sell on the FUD and FOMO community (social media). They buy based on influential personalities’ recommendations about a particular project. For instance, the DogeCoin frenzy was fueled mainly by Elon Musk, CEO of Tesla (click here for a Dogecoin trading strategy). While some have been lucky and made good enough profits, others got on the bandwagon too late, only to realize they have been dumped on.

By and large, crypto strategies are individualized, so you must find what works for you and stick to it. We always prefer quantified strategies but you must realize that the crypto market changes a lot, so be ready to keep tweaking your strategy or switching to a new one.

Cryptocurrency trading strategies

Here are some more crypto strategies: