What is day trading?

Day trading is a style of trading in which the trader executes intraday strategies to profit off of short-term volatility in the price of a financial instrument. Unlike swing traders, day traders typically do not hold a position overnight. They finish the day flat regardless of their position won or lost.

Day trading can be very lucrative since you execute a large number of positions in a short amount of time, but it can also lead to a fast loss of the account. If you do decide to manually day trade, you need to be aware of the mental and psychological toll it can have on your personal life. It is generally a bad idea to day trade when you are processing a break up for example. In such a situation, it’s better to look away and avoid trading at all costs, to avoid the potentially high cost. Or, you could have been making passive money with the help of Vestinda smart algorithms and tools!

Day trading crypto is often so volatile that it feels like riding a $DOGE space ship, beating daddy musk on a diamond hands road trip to the moon.

Are there day trading rules for crypto?

The most important rule in any form of trading is the preservation of capital.  It does not matter how often you can be right if a single trade can wipe out your account and all your hard-earned money. In cryptos, you need to be extra careful because of how volatile they are in nature.  There are also intrinsic risks associated with crypto products like Defi where your money could be lost to a hack.

However, unlike the US stock market, and similar to the CME futures, you are not subject to the pattern day trading rules. This rule stipulates that if you make more than 3 transactions per week, you will need to have at least $25,000 in your account. If the account value drops below that, you will no longer be permitted to trade. You can get that revoked only once after which, things get complicated

In crypto, however, you can trade with as low as $100 which can be great if you want to get started, or you need to deploy a small capital to test the strategy that you wrote on Vestinda.

Another problem you need to be aware of if you are deploying a cross-exchange arbitrage is related to the potential for wallets to be down for maintenance. This happens when an exchange forbids users to withdraw or deposit a coin for a limited or indefinite amount of time. During this event, the price of this coin can change violently due to traders liquidating the coins that they risk never being able to withdraw.

One last note you might want to be mindful of is related to taxes and withdrawal methods back into fiat. Depending on which jurisdiction you are in, you might be taxed as high as 30% like in France, while others might ban you from doing crypto business altogether like in China.

Advantages of day trading crypto

Day trading crypto is similar to what you would do in the stock market, but there are a few key differences compared to the traditional financial markets which give day trading crypto a big advantage.

First of all, crypto never ‘closes‘ and trades 24/7. This can make a big difference based on your time zone. If, for example, you trade the US stock market, you will need to wait for it to open at 9.30 AM New York time. However, if you are living in Europe, that time is around 3.30 PM for you, while if you are in Asia, this can be as late as 7.00 PM.

Another advantage of crypto is its volatility. You can trade penny stocks, but they are too risky due to the lack of liquidity, meaning that you risk finding yourself holding a bag. Bitcoin, on the other hand, is an incredibly liquid asset, that can be traded with leverage, and that is highly volatile. All of which are golden items to any day trader.

Given the programmatic nature of crypto, they can be easily day traded by the means of algorithms. This is not usually straightforward in the traditional markets where most of the time, just getting access to data like OHLC, is paid, and you might need to pay more to get LVL 2 data.

Crypto exchanges have, from day one, always had both an HTTP API, and a streaming API. This means that you can use tools like Vestinda to build highly sophisticated crypto portfolios and day trading strategies.

Last but not least, crypto leveraged products, like futures or options, allow you to trade with small capital. For example, you can trade with a $100 account on Binance futures. However, if you want to trade CME Nasdaq futures with a broker like AMP, you need to have as little as $1,700 to hold a micro NQ position overnight, and as high as $17,000 to hold a mini NQ contract.

Steps to build your crypto day trading strategy

In order to build a crypto day trading strategy, you can use similar ideas from day trading forex or the stock market. However, you have access to information such as volume and live order book data that would not be normally available in forex or CFD’s. Volume and order books can be used to spot areas in which whales are waiting with sitting orders. 

Whales can be either institutions waiting to buy at certain levels or stop losses grouped in a zone. In either case, these are strong liquidity areas and often serve as magnets.

Simple technical analysis is also very popular in crypto trading. The RSI, the MACD, Ichimoku, and moving averages are often used to build simple strategies. You can create such strategies using Vestinda, and automate your day trading strategies.

Automate crypto trading

You can also employ other day trading strategies:

  • Scalping: this strategy attempts to make numerous small profits on small prices changes throughout the day
  • Range Trading: this strategy is based on the idea of using support and resistance areas to buy the low and sell the high until a breakout is confirmed with a potential new trend.
  • News-based trading: this strategy typically tries to find trading opportunities by scouting news for potential pumping coins or ideas. Twitter is a notorious location for such data mining. Back when Trump was the US president, some of his tweets had a direct impact on the stock market. The same has happened after Elon Musk tweeted about both BTC and DOGE.
  • High-frequency trading (HFT): this strategy uses sophisticated algorithms to get in and out of trades at a  very high speed. The idea would be to exploit market inefficiencies no matter how small they can be, as long as they are profitable. You can use Vestinda to create HFT strategies.
  • Arbitrage: This strategy finds discrepancies between the price of an asset based on where it is located. For example,  you can do cross-exchange arbitrage, or arbitrage between a spot of an asset, and a futures asset.

Best crypto coins for day trading

In day trading, the best coin or asset to trade is the one that will be offering the highest return on investment. Ironically, but household names such as bitcoin or Ethereum, are rarely of interest to day traders, unless you have a deal with an exchange that would give you rebates.

The problem is that there are too many stakeholders interested in Bitcoin, meaning that the price, while volatile, is not as volatile as other smaller coins. For example, when Bitcoin might be up 10%, another small coin, like MANA or RUNE, might be up 50%.

Can you make money day trading crypto?

Day trading can be very lucrative, be it in crypto markets or traditional markets. Let’s say that you decide to risk 1% of your capital and that you win on average with a 3:1 risk-reward ratio.

If you trade on a higher timeframe, you will need to wait longer to get a signal. Sometimes weeks pass by without any. While, in day trading, you can get a couple of signals in a single hour. When you combine this with leverage, you can essentially aim to make it much faster.

How to choose the best crypto day trading platform?

No matter what, the crypto exchange and the trading platform that you use, can make or break your day trading career. You need to make sure to choose an exchange that provides:

  • Reliable connectivity, especially in times of high volatility
  • Big variety of coins. The more, the better, because it increases your chances of coming across a volatile coin, which would greatly increase your profits.

Why choose Vestinda to build your crypto day trading strategies?

Vestinda is a brand-new platform that can take your day trading to the next level.

  1.  You can build your own trading strategy first with an easy-to-use, no code strategy builder
  2.  You can backtest your trading strategy before using it in simulation mode
  3. Once you make sure that your strategy is profitable, you can use Vestinda to deploy it on the supported exchanges. Currently, supported exchanges are Binance, Kraken, and Poloniex.
  4. You have tools that help you do proper risk management. For example, commissions are taken into consideration when calculating returns.
  5. The most important thing in trading is data. You need to make sure that you have up to date, and real-time data. Something that is taken care of in Vestinda.

If you’re a beginner at trading, you have probably heard about paper trading but might not be 100% sure what it is or how it works. This trading mode has been quite a common way to practice for a lot of crypto traders out there, and has established a high level of relevance within the finance world. It is also called demo trading, so we will use the 2 terms interchangeable in the article.

What is Paper Trading?

This essentially involves buying and selling crypto assets in simulation mode. Its intention is to replicate real-world market conditions without putting your own capital at risk. 

You can think about paper trading as a car driving simulator, where you can drive in a virtual environment before you are eligible to drive in the real world.

You are using demo account funds to drive your trading strategy to success through the usage of an online cryptocurrency exchange or brokerage, and as such, aren’t putting any real money at risk.

You are usually required to use or connect to an online brokerage or exchange to access demo trading functionality. Even though trading is simulated, you need live data in order to make decisions on buying or selling your assets. What you usually need is at least the price of the assets and the order book; and it must be as up-to-date as possible.

You can access paper trading either in the form of a web-based trading platform or through a mobile/desktop tracking software that you will download and install on your device.

How to do Paper Trading or Open a Demo Account?

In order for you to be able to engage in paper trading, you need to open a trading account within a platform. In the majority of crypto exchanges and brokerages, this is referred to as a “demo account.” Search for this option and create your account first. 

1. Demo Account on the Exchange or Broker

A demo account gives you an amount of virtual crypto assets in the very beginning, where you can start trading by opening positions. The account shows market movements, mimicking real price. Hence, you can practice buying and selling and following position returns to validate and improve your trading strategy.

Your exchange is not offering you a demo account or do you need more advanced paper trading functionality? You can go with option 2.

2. Trading Platform That Offers Paper Trading Functionality on Top of the Exchange or Brokerage

This is an option that offers you the opportunity of exploring trading in simulation mode on top of any crypto brokerage or exchange out there from a single user interface. Additionally, you can use functionalities that are not available on the exchange.

Typically, there is also no requirement to make a deposit in order to gain access, as the platform comes pre-loaded with a specific balance. 

However, you need to know that you cannot withdraw any money gained by either of these options, as you were not using real money to trade in the first place. You were just using virtual crypto assets to test out trading strategies that will potentially prove to be profitable. However, they only will be profitable the moment you engage in live trading with them.

Think of paper trading as trying out free samples of a specific new food that’s on promotion at a supermarket. You can taste it for free, and it won’t cost you anything, but the moment you decide to buy it for yourself, you’ll need to pay for it.

How to use a Paper Trading Platform?

When it comes to crypto paper trading, you are essentially looking for a platform that will help you simulate trades. You need to find a platform that offers you a simulation on top of the exchange or brokerage in question. Specifically, these trading simulations are built using the order book and the real price from the exchange.

Manual

You can use charts like in live trading and buy or sell configurations that are similar with the ones used on a live exchange. You can use technical analysis to make your decisions, but in the end no money movements will be done.

Additionally, you will see charts about orders that are filled, canceled, and rejected. 

Automated

This allows you to test your trading strategy in current market conditions without having to stay in front of the screen the whole time. Another advantage of automated paper trading is that you can deploy multiple trading strategies in parallel easier and still have time to enjoy life.

An important feature for beginners is finding a paper trading platform that allows you to reset the account balance at any time, as this trading process will involve a lot of trial and error initially.

Pros and Cons for Paper Trading

Pros:

  • It helps you validate a trading strategy on the current market conditions.
  • You get access to trade analytics, and see the results trade by trade with ease.
  • You can validate multiple strategies and multiple assets risk-free.

Cons:

  • You aren’t using real money, so you cannot really make any withdrawals or earn money this way.
  • As you are not risking real money, you are not sure if your emotions will not mess up with your trading in real life.
  • Since you aren’t using real money, you can take risks that you wouldn’t otherwise consider. As far as investing goes, if you can’t imagine losing your money, you may not be ready for live trading.

Paper trading vs. Live trading

  • In paper trading, you make stress-free trades and can really get creative with your strategies as a result. 
  • Paper trading does not account for order partial fills or for orders that are not filled at all and this can be a massive drawdown in real trading when you miss an important trade.
  • Slippage and commissions may differ in paper trading when compared with live trading. Make sure the platform you choose takes this into account and models it close to real world numbers.

How to Choose the Best Paper Trading Platform?

If you are looking for the best paper trading platform, ensure that it gives you a paper trading functionality that has analytics to validate your assumptions and works as similar as possible with live trading (data is not delayed, slippage is taken into considerations, order book is accounted for order fills).

Why Choose Vestinda as Your Main Paper Trading App?

  • you can build your own trading strategy first with an easy-to-use, no code strategy builder
  • you can backtest your trading strategy before using it in simulation mode
  • once you’re confident with your strategy, you can test your assumptions on any integrated exchanges by starting your strategy in paper trading mode with just a click of a button (no separate account in Vestinda, no paper trading account needed at exchange)
  • commissions are taken into consideration when calculating returns for paper trading 
  • data used is from the live exchange and is up-to-date (as much as the exchanges offer it) 
  • orders fills are modeled based on the real order book 

If you are a crypto trader, you know how demanding crypto assets trading can be. In order to keep up with the highly volatile crypto market you either follow the charts 24/7 or you pay the opportunity cost. Even if you have a high degree of expertise, time is actually the most important asset you have to invest to turn profitable. So you may want to consider to automate your crypto trading strategies.

In order to spot market movements, you scan huge piles of information from various sources, perform different analyses using technical indicators, use on chain market intelligence or watch for signals. It calls for 100% concentration in entering and exiting positions at the right time. And for mastering emotions like a pro.

But why spend all that time when there is a better way to trade crypto? 

You can automate your crypto trading strategy to save yourself most of the hustle and get extra perks: 

  • earn more money than you would earn when trading manually 
  • and get back your time

This article will help you understand what automated crypto trading is, how to choose the best crypto trading platform, and how to automate your crypto strategy. 

So, let’s get started.

What is Automated Crypto Trading?

Automated crypto trading refers to the use of a software, also known as a trading platform, to automate your positions in the crypto assets market with the purpose of making a profit and never miss out on an opportunity. 

What Can Automated Crypto Trading Platforms Offer?

  • Some give you the possibility to build your own conditions and automate those for entering and exiting the market. 
  • Other software also have embedded algorithms that analyze the market to find out if the right conditions for buying or selling crypto assets are met. These then go ahead to either buy or sell the crypto assets autonomously or provide the trader with a signal.

Types of Crypto Trading Automation Platforms

  • Most automated crypto trading platforms act as intermediaries and trade on your behalf on any of the integrated Crypto Exchanges. This is done in a secure way; you connect your credentials from different Exchanges and allow the platform to place orders for you. 
  • Some trading platforms offer both an Exchange and a quant zone where traders can build their own strategies.
  • Other automated crypto trading platforms offer downloadable trading bots that can be managed locally or on a server. These bots are also referred to as crypto trading robots and can be activated or deactivated anytime.

How Does Automated Crypto Trading Work?

We’ll focus on how to automate using a platform that works on your behalf in your Exchange account.

Step 1

You start by finding your preferred automated crypto trading platform and creating an account.

Step 2

In order to automate your crypto trading, you first have to build a trading strategy.

Step 3

Once you create your strategy, you validate it through heavy backtesting.

Step 4

As an optional step, you can run your strategy in Demo Trading until you are confident enough to commit real money.

Step 5

Connect your preferred Crypto Exchange and start automating. The platform will take it from there and run your strategy day and night, without you having to watch the market continuously.

There is a last step: You take your time back and enjoy life. :)

Advantages of Using a Platform to Automate Crypto Trading Strategies

Using an automated crypto trading platform offers the following advantages:

  • Saves time – You can free up the countless hours you would otherwise spend analyzing the market to find optimal opportunities for opening and closing positions in the market.
  • No emotional trading – Robots do not have emotions (yet) and will therefore not place revenge trades or let emotions mess up the plans of winning in the market. 
  • Sticks to the plan – Since the automated trading platforms use software, they are able to stick to the set trading parameters no matter the conditions or outcomes unless the parameters are changed to new ones. This allows you to stick to your trading strategy, while you enjoy your life.
  • Helps boost trading skills – You can use automated trading platforms to quickly test and validate or invalidate your trading strategies and find out what works and what doesn’t more quickly than if you were to do that manually. This also allows for an iterative process that enables you to fine-tune your trading strategies.
  • Faster response to market conditions – Automated crypto trading uses a software to analyze the market and place trades. Therefore, the trades are opened and closed faster than if they were being opened or closed manually. This is a huge advantage since crypto assets prices are very volatile and delays in opening or closing trades, after conditions in your trading strategy are met, could lead to lower profits or in a worst-case scenario, losses.

Things to Consider Before Using an Automated Crypto Trading Platform

Before settling to use a specific automated crypto trading platform, you should consider the following things:

  • Technical issues may occur with the Exchanges you’re trading on or within the automation platform. Choose a platform with focus on building the best product. Make sure there is a good team behind and technology is always up to date.
  • You need experience in order to build good strategies that give you a positive alpha. But this goes for manual trading also :) On some platforms you can choose ready-made strategies or you can copy trade other traders out there.
  • Make sure you don’t get caught in the dreams of getting rich fast. An automation platform is about … well, automating your current trading strategies. And we all know there is no getting-rich-fast strategy. Or maybe it is? 

How to Choose the Best Platform to Automate Your Crypto Trading Strategies

When choosing an automated crypto trading platform, you should consider the following:

  • Flexibility – Can you control the entire life cycle of your trading plan? Can you build strategies that cover most of your ideas? Can you combine different data points and use different tick intervals for your indicators?
  • Backtesting – Can you test your assumptions on historical data
  • Demo trading – Can you simulate your strategy before using it?
  • User fees – Some automated crypto trading platforms require you to pay a certain amount of fees to access the platform’s services. Make sure you pay for the right amount of features.
  • Compatible Crypto Exchanges – Some crypto trading automation platforms are integrated with a specific list of Crypto Exchanges. Look up and see if your preferred Exchanges are on the list. Does it also offer crypto portfolio tracking?
  • Nature of the automated crypto trading platform – Some provide external trading signals for you to use in placing and closing orders while others go ahead and autonomously place and close the trades without any intervention. If you want full control over creating your own trading strategy and rules, there are also options for you. Just make your choice.
  • The assets that you intend to trade – Some automated crypto trading platforms only support a bunch of the assets out there. 
  • Security – check if the platform follows security standards and how good the technical team is. 
  • Customer support – How easy is it for you to get your questions answered? Choose a platform that offers fast support and the team is always trying to improve their product.

Why Choose Vestinda to Automate Your Crypto Trading Strategies?

Vestinda allows both beginners and experienced traders to automate trading strategies. Our promise is to help you take back your time and experience life while we take care of delivering high quality automation execution on your strategies. 

Below are some of the reasons that makes Vestinda one of the must-try automated crypto trading platforms out there:

  • Easy to use – You simply drag and drop various tools like technical indicators to build trading strategies. Implementing your trading ideas will become a breeze. In time, you will feel like you’re doing it with your eyes shut.
  • Backtesting – It allows you to validate your ideas using past market prices. You can go as far back as the asset was listed on the Exchange and you get advanced statistics on how your strategy would have performed.
  • Demo trading – Still not confident after Backtesting? You can try paper trading your strategy on the current market conditions for a while before staking real money.
  • Very flexible – You can build any trading strategy by combining different custom indicators, each with different tick intervals. Logical conditions, math equations or indicator compounding, you name it. All inside our Strategy Builder.
  • Accurate automation and execution – Any condition in your trading rules is evaluated in a snap. Then the order reaches the Exchange in a few milliseconds to make sure you get the best possible execution.
  • Most popular Crypto Exchanges are integrated within the platform. Choose your preferred one and start automating.

One thing is clear in trading: your strategy needs an edge in the market. The easiest way to find out whether your strategy can make money is to validate it on historical data. This article will teach you how to backtest a trading strategy and what to consider when using a backtesting platform.

What is Backtesting?

Backtesting is an easy way to ascertain the viability of a trading strategy by checking how it performs on historical data. If a strategy performs well in backtesting, it shows that it will likely do well in live trading, giving you the confidence to try it out.

In terms of backtesting definition, it is the process of simulating a trading strategy on the historical price action of a given market. It involves using a backtesting software to replay historical price action so that you can trade the strategy as though it is a live market. In most cases, you also get analytics on the results of the strategy or you can even visualize performance on a chart.

What are the Advantages of Backtesting a Trading Strategy?

Some of the advantages of backtesting a trading strategy include:

  • It allows you to validate your trading system on historical data and different market conditions;
  • You get the analytics on how the system/strategy worked in the market;
  • With those analytics, you can make objective decisions about the strategy so you don’t overestimate its profitability. In this way you’ll avoid risking your hard-earned money on a system that is doomed to fail;
  • Backtesting offers you a basis for optimizing the parameters of your strategy;
  • You can invalidate very fast wrong assumptions;
  • You can test new indicators in just a few seconds without committing real money;

What are the Limitations of Backtesting a Trading Strategy?

Backtesting is great, but it also comes with pitfalls. See below some of the limitations:

  • Slippages and delayed order executions may not be taken into account and those factors can affect profitability in the real market setting;
  • You need to make sure that trading fees and commissions are included in the overall profitability of the strategy;
  • Backtesting alone does not test for the robustness of the trading strategy — a strategy that performed well on backtesting may not perform well in live trading, because the market condition has significantly changed from what it was in the past;

What is a Backtesting Software?

A backtesting software is a web platform or an application that allows you to backtest your trading strategy. It can be a trading platform that has the capacity to replay historical price action along with the readings of any technical indicators so that your strategy can be implemented as though it was in real-time.

There are many free backtesting software options out there that you can use. Yet, those free ones may not offer you everything you need. They usually don’t have enough data and may limit you to a few indicators.

However, there are some good third-party backtesting software that have many built-in technical indicators and drawing tools. These paid ones normally track the most important analytics you need for evaluating the performance of your strategy. Most of them also account for some of the pitfalls like slippages or fees and offer you a robust approach to validate your trading strategies.

The best backtesting software should be simple to use and easy to set up (as it is cloud-based and needs no infrastructure), with enough historical data that is available in multiple timeframes.

How to Backtest a Trading Strategy?

There are certain steps to follow when backtesting trading strategies. While they may vary depending on the nature of trading strategies, these are the key steps to follow:

Step 1: Convert your trading strategy to a trading system

To easily backtest your strategy, you need to convert it to a trading system by writing out the criteria for the various components of your trading system.

Depending on whether you plan to trade in one direction (long-only) or both directions, your trading system should have the following components:

  • Entry conditions: the criteria for entering a position. It can have as inputs technical indicators, time-based decisions, portfolio balance or any other factor the trader considers relevant for entering the market.
  • Exit conditions: the criteria for exiting a position. Besides the inputs mentioned above, the exit condition can also include some safeties like take profit, stop loss, trailing stop loss etc.
Step 2: Specify the market and the timeframe you want to test the strategy on

Your strategy should be tested for the market you want to trade it in. A strategy that works on S&P 500 Index may not work on gold, while the one that works on gold may not work on Bitcoin. Also, some strategies can be used on the daily candles, while others turn out to be more profitable on intraday levels like 1 minute or 5 minutes.

Step 3: Specify the historical period where you want to test the system

Even if you don’t plan to spare a part of the historical data for walk forward optimization, you need to state the length of your testing period. It’s wise to choose multiple periods with different market conditions.

Step 4: Implement your trading system on the historical price action

Set your backtesting software to replay the historical price action and execute the strategy you want to test. Then follow how your conditions are met for entry and exit.

Step 5: Evaluate results and iterate on your strategy

If you got it from strike 1, then lucky you. But most of the time you need multiple iterations. Don’t lose faith – try again with different inputs and fine-tune your strategy.

 

How to Evaluate Your Backtesting Results

These are the major performance statistics you must check when evaluating your backtesting results to determine the sustainability of the strategy:

  • Number of trades: This tells you whether the results can be repeatable. The lower the number of trades analyzed in backtesting, the less reliable the result.
  • Profit factor: This is the total profit divided by the total loss (including commissions) for the entire trading period. It indicates the amount of profit per unit of risk. A profit factor of more than 1 indicates a profitable system.
  • Average holding time: This is the average length of time that a position was opened in the market. 
  • Comparison with Buy and Hold: This shows you how the results of the strategy compare to the passive investing method of buying the asset and holding it all through the backtested period.
  • Maximum drawdown: This is the difference between the higher amount and lowest amount your capital reached during the backtesting. A high drawdown is a bad sign. 
  • Volatility: This shows how your returns fluctuate. The less the volatility, the more suitable the strategy is for that market.

Other statistics to monitor include:

  •       Profit per trade
  •       Profit per month
  •       Win rate
  •       Sharpe ratio

Final Words

We learned how to backtest a trading strategy. You can use backtesting as an easy way to ascertain whether a trading strategy can make money by checking how it performs on historical data. Join Vestinda and make sure you add this step in crafting your strategies.

Traders who stick to a well-thought-out investment strategy have an edge over the ones that do not. So let’s see how to create the best crypto trading strategy for you.

Strategies allow you to make more educated decisions by analyzing a lot of data. Hence, gaining maximum out of your investments. Strategies will vary from trader to trader, depending on personal risk tolerance as well as financial goals, however, it is an essential part of navigating the market.

Investing in crypto assets without a trading strategy is like jumping in the ocean without learning how to swim first. 

What Are Crypto Trading Strategies?

Crypto assets are by far one of those investments that have the highest risk associated with them. Trading them without a plan is risky and has the potential of leading to a loss of invested capital. 

A crypto trading strategy means following a plan when you engage in the process of buying or selling different crypto tokens. It is a system based on predefined rules and criteria which are used when making trading decisions.

Factors to Take into Consideration When Creating Your Crypto Trading Strategy

In order to turn your strategy into a profitable one, you need to mind the following:

  • liquidity – On a market with good trading volumes, the spread between BID and ASK will always be lower. You need to account for large spreads when building your entry and exit rules. Take profit and stop loss should also be set accordingly. 
  • trading pairs – A strategy that works on Gold may not work on Bitcoin. Make sure you backtest on the asset that you want to trade.
  • market volatility – There are different types of trading strategies. Some work great following the trend, others are more suitable for sideways movement of the market, while others can capture the most value from big price changes. Use the right tools to identify the market you’re trading in.

Steps to Create the Best Crypto Trading Strategy

Step 1: Research

Before even investing a dime within a crypto asset, the first thing you will need to do is due diligence and research on the projects you are interested in. While Bitcoin and Ethereum are largely dominant on the market, make sure you do research on as many alternative crypto assets, known as altcoins out there.

Investing in a crypto project without learning what it is about is like traveling to a foreign country without learning its navigational layout or bringing a GPS – you can get lost easily.

For example, there are alts out there that contribute to the changes in the real world, while others contribute to on-chain performance, or serve as a governance token for the future of specific projects where the more tokens users hold, the more power they have. 

Step 2: Set Risk Levels & Goals

Make sure that you develop a common understanding of risk across multiple crypto assets so you can manage a strategy that is cost-effective when it comes to the risk involved in it. You also need to achieve a better understanding of the risk in order to get a competitive advantage. Here you will also need to build safeguards and learn how to respond effectively to crucial risks.  

Step 3: Choose Your Asset

After you have done your due diligence, and have set your specific risk levels and goals, it is now time to pick the crypto asset that you will be investing in. 

The interesting thing to note here is the fact that you do not have to limit yourself to a single crypto asset. It is recommended that you branch out into multiple crypto assets to diversify. Also, you never quite know when one can spike up in value tremendously. 

Step 4: Choose a tick interval for your strategy

You have to read the charts using different tick intervals to follow price actions and identify patterns. Use technical analysis to your advantage and adjust strategy when the market conditions change. Use time frames such as 3 minutes, 5 minutes, 15 minutes, 1 hour, 4 hours, or 1 day to better choose your entry and exit moments.

Step 5: Choose entry & exit rules

The entry point is the price at which you will decide to buy a crypto asset, while an exit point is a level at which you will sell. You can choose to build your entry and exit conditions by using technical analysis patterns, on-chain data intelligence. The sentiment of the market can also play a major role in the decision-making process.

Step 6: Backtest your assumptions

Backtesting is this general method through which you can see how well a strategy or a model has done; ex-post. This will help you assess the viability of a trading strategy and see how it would have played out on historical data of the crypto token in question. If this works, you will have the added confidence of using it going forward.

Step 7: Analyze results

Another key aspect of forming a good investment strategy is to evaluate it in order to predict its future performance and determine its sustainability. When you analyze the results efficiently, you can assess the financial strategy or create a new one based on the performance of the previous investment. Look at specific statistics that can help you understand how well the strategy performed (sharpe ratio, alpha, holding time, maximum drawdown etc.)

Step 8: Revise strategy

You have to adjust the conditions, as well as the risk levels, safeties, and other inputs based on how the market evolves throughout time. Keep updating your strategy to get the best possible outcome.

Tips to Improve Your Crypto Trading Strategy

Safeties

  • Stop-loss: A stop-loss is a type of protection that helps you manage risk, so you do not end up losing more than you wanted to. If the price of the asset moves against you with the percentage set, the Strategy will EXIT.
  • Take-profit: Obviously, it is a way to close a position at a profit. If the price of the asset moves into your favor with the percentage set, the Strategy will EXIT.
  • Trailing stop loss: The Trailing Stop Loss functionality works similar to the Stop Loss, only that it trails the price change if the price moves in your favor. Then, if the price changes direction against you with the percentage set, the Strategy will EXIT.

By taking advantage of all of these safeties you can improve efficiency. Plus it gives more peace of mind and helps you create the best crypto trading strategy for you.

Try Not to Risk More Than X% Out of Your Portfolio

Each position and investment that you make should not risk more than X% of your entire portfolio. This will typically be in the 2% range, but it can vary based on asset fundamentals and the entry signal’s strength. The position size refers to how much you can put into a specific crypto asset. For finding the appropriate sizing, you should consider your risk tolerance level, as well as the size of your account. 

Keep an eye on your entire portfolio

Track your crypto portfolio and make sure you have an overview of your net worth. It can give you a hint on how to size your positions, whether you are exposed to much or staying in cash, or how much of your portfolio is in different assets.

What Tools You Need to Create the Best Crypto Trading Strategy?

There are many tools out there available to help you in the creation of your crypto trading strategies. However, there are a few things you need to keep in mind before picking the right one: 

  • It needs to be flexible and easy to understand as well as use. 
  • You need to analyze how much data is available inside the platform and what kind of options you have when it comes to using them together. 
  • Check if you require any programming skills or not in order to use it.
  • The tool needs to give you various functionalities, such as backtesting on historical data, paper trading or live trading.
  • You should receive advanced analytics on the strategy results, that will help you make an educated decision going forward.
  • You should be able to see your investments easily after you start a strategy and see the results in a simple way.

Why Choose Vestinda to Create Your Crypto Trading Strategies?

Vestinda empowers your investments in digital assets. You can build trading strategies that you can use to automate the entire investment process.

It offers you all of the aforementioned features, and you can even invent unique algorithms with the easy-to-use, rich and flexible drag and drop strategy builder.

 

See the main reasons you should try our strategy builder:

  • You can use close to 100 technical indicators
  • Different tick intervals can be used in the same strategy for each indicator. Combine them to come up with new trading ideas and boost your profit.
  • Conditions for entry and exit can be defined as simple as A+B; build expressions using logical, arithmetic and relational operators – nothing that a primary school child doesn’t know :)
  • Create strategies with no programming skills, in a savvy interface that makes it all a breeze.
  • Build new indicators by combining different ones together in mathematical formulas; You can even use indicators compounding on multiple levels.
  • This is all powered by a powerful backtesting engine that offers full historical data for all of the assets on the integrated exchanges.
  • You also get access to our advanced analytics module that will help you make informed decisions on how to improve the strategy.

On top of that, it’s free for new sign ups during Private Beta. Secure your spot! 🚀🚀🚀

 

Vestinda Trading Strategy Builder

Vestinda Trading Strategy Builder

Following your crypto portfolio should be as simple as a walk in the park, right? In the always changing crypto market, where innovations and new features are offered on a rapid pace by different players, crypto portfolio tracking is becoming a more complex topic.

 

What is a Crypto Portfolio?

A crypto assets portfolio is a series of investments across a number of digital assets. It could be a combination of Bitcoin, Litecoin, Ethereum, Dogecoin or others, with different weights to suit the risk appetite of the investor.

The exact mix of assets isn’t relevant to the definition, but you may want to focus on the exposure you get and on the weights that are right for you.

 

How to set up a Crypto Portfolio?

Step 1: Asset allocation

Since the goal of a financial portfolio is to optimize returns for your tolerance of risk, you need to know how to best determine an asset allocation that conforms to your personal investment goals.

Step 2: Build portfolio by choosing the initial weights for each asset

As with more conventional investments such as stocks and bonds, crypto assets portfolios should contain a good balance between investments. In the case of the crypto market, this can mean splitting those investments between more established projects like Bitcoin or Ethereum and more innovative new providers.

Step 3: Rebalance portfolio based on market conditions

Once you understand how to set up a portfolio, the next step is to keep pace with the ever changing crypto market.

 

What is a Crypto Portfolio Tracker?

A crypto portfolio tracker is an application (mobile or web) that lets you know how much your portfolio is worth at any given moment. It will track and display your investments in multiple crypto assets in real time.

The software connects with various exchanges to provide updates and to display current balance to the users. Many will also connect your crypto wallets.  

 

Why do You Need an App to Follow Your Net Worth?

As mentioned in the beginning, crypto portfolio tracking becomes more complex with diversification. And we know you should diversify.

Many crypto exchanges deal with a restricted number of crypto assets while others offer different functionalities. You may use staking on Kraken or Earn on Binance and at the same time trade Futures on FTX. In order to build a diverse portfolio, multiple exchanges are needed. That’s why crypto portfolio trackers come to the rescue: they offer a unified dashboard where you can follow your entire net worth, just one click away.

With a rising number of crypto assets and exchanges, it makes sense to utilize a crypto aggregator to easier follow your investments. Of course it’s possible to use traditional spreadsheets, but this is time consuming and requires constant monitoring and manual updating.

In contrast, by having all crypto in the same place, you can instantly assess your net worth overview and automatically monitor profit and loss. Essentially, a crypto tracker gives back your time. Now you can put more focus on your investment decisions or simply enjoy your profits.

 

How to Track Your Crypto Assets Portfolio

It’s important to know how to manage a crypto assets portfolio effectively, without giving away most of your time. As hinted at in the previous section, there are really only two ways in which to do this:

One option would be for you to undertake the task yourself by utilizing spreadsheets and updating your results manually. There are crypto traders who keep track of their crypto in this way and some may prefer it. It may feel that it gives them a greater sense of control, but in the end it’s just Excel :)

 

Obviously, a better solution lies in finding a tracker. The most flexible of these can be used as an app for iOS and android, as well as the web, and they return real time results. You can monitor as much as you want, as the platform will automatically sync your balances across exchanges. 

 

How to Choose the Best App to Manage Your Portfolio?

There are many crypto trackers on the market. So how do you choose the right one? 

You should be looking for a portfolio tracker that ticks a number of boxes: 

  • It should integrate with an extensive range of financial institutions. As we’ve seen, there are many potential exchanges and an increasing number of outlets where crypto can be purchased.
  • There are more than 11k tokens on the market at this point so an effective crypto tracker should integrate as many assets as possible.
  • New assets should be added as soon as they hit the market. Make sure your preferred solution reacts fast.
  • Real time results with 24/7 monitoring is a must. Needless to say, the data gathered from those various exchanges should be accurate. 
  • A crypto tracker should be secure. In a crypto world where hacks are tried every day, you want to work with the best technology.

 

Why Choose Vestinda to Track Your Crypto Portfolio?

Vestinda successfully checks all of those essential requirements. On top of that, it’s free for new sign ups during Private Beta.

Meet Vestinda’s portfolio tracker superpowers:

  • Accurate history of the portfolio shown on a chart from the moment you connect your exchanges.
  • Automatic syncing of assets from the connected Exchanges – you don’t have to manually enter each of their assets balance or trades.
  • Great UX – you can monitor your portfolio both on desktop and mobile, 24/7 at one click. Multiple charts and different views give you a simple and crisp overview of your holdings.
  • The portfolio tracker will allow you to isolate and monitor a specific exchange. With a click of the button you can switch back to the unified dashboard which outlines all of your investments in full.

 

Want to check out these superpowers?

Create your account and follow your net worth smarter with a best in class crypto portfolio tracking app!

 

Vestinda Portfolio Tracking

Vestinda Portfolio Tracking Dashboard