No asset class is as volatile and dynamic as cryptocurrency. The price swings associated with even the most renowned cryptocurrencies can experience sharp dips and euphoric rises without warning, causing the stomachs of conservative traders used to traditional strategies to churn.
In a place like Singapore, where innovation and regulation go hand in hand, crypto traders have a unique edge as well as unique risks. Trading cryptocurrency requires a careful and methodical comprehensive strategy to reap profits and stay ahead.
While growing your investment under these conditions can be achieved, it’s also likely to make crypto trading mistakes and enter a pitfall where your capital plummets into oblivion.
If you’re familiar with easy and automatic crypto trading strategies like dollar-cost averaging and long-term HODLing but feel like you can step up your tactical game, then you’re in the right place. We’ll break down strategies you can apply in your next crypto trade to ensure that you stay ahead as a Singapore-based investor.
Let’s jump right into it.
Disclaimer: This article is for educational purposes and should not be taken as financial advice.
- Swing Trading
One advanced crypto strategy you can adopt is swing trading. This strategy is a speculative trading strategy wherein the trader buys or sells an asset before making a substantial price movement upwards or downwards.
The strategy utilises multiple indicators to anticipate the closing value of the crypto token.
Common tools that traders leverage in crypto exchange platforms like Independent Reserve Singapore include moving averages, which spot trend direction and strength of support or resistance; RSI, or relative strength index, which determines whether the asset is overbought or oversold; and MACD, or moving average convergence divergence, to gauge price momentum shifts.
Unlike day trading, which targets small and quick price changes within the same day, swing trading spans several days to weeks and aims to profit from broader market moves. Traders typically hold positions across multiple sessions, focusing on sustained trends rather than reacting to daily fluctuations.
When the signals look optimal for the buyer’s overarching financial goals and align with their entry and exit zone, that’s when they execute a buy or sell order to reap the profit. A good swing trader also has a specified cut-loss limit to ensure that the value of their investment doesn’t dip farther than they’d like if trading conditions plummet suddenly.
This reduced time commitment is optimal for Singaporeans who often live a busy lifestyle, balancing their career, personal lives, and other commitments. It’s still a fairly involved process if your goal is to make profits, but it won’t take up a large chunk of your time, making it ideal for experienced traders who want to ride the momentum of a token and time their entry and exit optimally.
- Day Trading
Day trading is often the go-to strategy for beginners looking to move beyond passive investing. It’s risky, but can be incredibly fulfilling and profitable if you know how it works.
This trading strategy focuses on making small and frequent gains in the market. Unlike traditional day trading in the stock market, which operates in market hours, crypto users can day trade 24/7, as the market is open all day in Singapore and the rest of the world.
Day trading requires constant attention to the market and charts. Traders use short timeframes of about 15 minutes or less to gauge entry and exit points. They also use a combination of different technical strategies to predict potential price jumps or dips in the market.
For instance, it’s common for many traders to use tools like Bollinger bands to identify price reversals and breakouts when day trading. Day traders also look at the volume of each price movement in a certain timeframe to gauge the strength of the move, a term known as volume analysis.
In any case, day trading is an effective method of reaping profits in crypto. If done right, traders can easily beat the average market growth rate. However, the chance of getting a bad call is also high, especially for beginners, so it’s ultimately up to the individual’s risk tolerance if they see day trading as a potential strategy to implement in their crypto trading journey.
- Sentiment Analysis
While relying solely on user sentiment is not the most foolproof strategy in established markets like stock markets, it’s actually a viable gauge of a token’s short-term and long-term value in the crypto space.
Emotions and social media chatter are big drivers of price trends in the crypto space, particularly for smaller, liquid crypto tokens. Advanced crypto traders can get a comprehensive picture of a crypto token’s current worth by reviewing how it’s perceived and viewed in social media platforms like X and Reddit.
The reason why sentiment analysis is useful is because of its ability to detect shifts in market psychology before they’re reflected in price charts. Crypto market prices aren’t always driven by token fundamentals; many investors are in the space in the hope of riding a quick profit. Lots of investors pick tokens to invest in based on emotions like fear, greed, and hype.
Typically, the primary drivers of price changes are none other than a few influential characters in the space itself. It’s a good idea to follow crypto influencers, especially the ones with a large following, to get notified of any potential shifts in user sentiment as early as possible.
Knowing how the market views a token is a key part in predicting a crypto’s price movements. It’s not something to solely take into account, but it should be reviewed as part of a larger process to ensure that you’re getting a complete picture of the coin’s value.
- Margin Trading
Margin trading is a high-risk trading strategy that involves leveraging funds from a broker or lender to increase your position size. It allows traders to control an exponentially larger amount of crypto than their own. This is a high-risk venture, as while the highs can be high, the losses can also be devastating.
Many platforms offer adjustable leverages from 2x to 100x to give traders a personalised leverage scheme that fits their trading preference. Most traders stick with lower ratios and implement a stop loss to ensure that they don’t completely wipe out their position.
This trading strategy involves plenty of risk, as even just a small 5% dip can be enough to wipe your trading capital dry. Furthermore, you’ll also have to pay for interest on the borrowed amount at a later agreed-upon date. Given all this, it’s crucial to approach margin trading with caution, strategy, and clear thinking to avoid exposing yourself to unnecessary risk when opening a position.
- Arbitrage
Another trading strategy that crypto traders can use is arbitrage. This strategy is relatively low-risk and involves the trader being aware of the price of the same crypto asset across two or more exchanges.
An arbitrage trading strategy goes like this: First, the trader identifies an under-the-radar and low liquidity alternative token. Then, the trader checks multiple exchanges to see if there are any price gaps for that token. If there’s a difference, the trader quickly buys from the cheaper exchange and sells it at the more expensive exchange for profit.
To profit from this trading method, acting fast is key. Expert traders typically use bots to execute this action before them, and they do this in less than a minute. That said, you’ll still have to factor in real-world frictions like transaction fees and withdrawal delays that may erase any initial advantage you may have.
We hope these strategies will serve you well in your crypto journey. Besides picking the optimal strategy, it’s also important to choose the right crypto exchange platforms and tokens to ensure that you’re making the most out of each transaction.
Best of luck!
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