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Best Indicators for Crypto Trading to try out

Trading indicators are essential trading tools used to gauge past and present financial trends. It is no news that predicting the outcome of future trends in the market can be very challenging. But with the right indicators, this task can be made easier. This piece will be exploring the best crypto trading indicators you can use to improve trading. 

What are trading indicators?

Indicators are used by traders to provide more clarity on market trends. The use of indicators has served as a profitable trading strategy. It takes data from the previous state of the market and uses them to predict the future market state. 

A trading indicator can either be: leading or lagging. Leading indicators predict the price action of a trade while lagging indicators show previous reports of a trade. Both indicators can be merged and employed to make trading decisions. 

What are technical indicators?

Technical indicators are patterns that traders use to predict price movements. As a trader, you may use technical indicators to understand the way price movements work in the market. 

The accuracy of technical indicators is questionable without a doubt. This has struck a question to technical analysts: Do technical indicators really work? When it comes to crypto technical analysis indicators, accuracy is not 100% guaranteed. But the goal is to have more accurate predictions than inaccurate ones, obviously. Once that is accomplished, technical indicators can create winning strategies. 

What are the best crypto indicators for technical analysis?

Regardless of the numerous trading indicators, people still look out for the one that is just right. Choosing the best technical indicators for bitcoin, ethereum and other crypto assets can greatly improve the accuracy of price predictions and overall trading performance. 

Here are the best indicators for crypto trading you can use:

Moving Average Convergence Divergence (MACD)

What is MACD?

MACD is an acronym and stands for Moving Average Convergence Divergence. MACD represents the average price of an asset over a particular period. 

The two types of MACD are simple moving average (SMA) and exponential moving average (EMA). Calculating a simple moving average requires you to find the average of prices of securities through a particular time frame. The EMA, on the other hand, is calculated in a similar way. The difference between these two is that EMA places more emphasis on recent prices. 

How to read a MACD chart?

Here are a few things to note when learning how to read a MACD chart:

  • MACD comprises three major lines: MACD line, signal line, and zero line. 
  • There is an uptrend when the MACD line rises over the zero line.
  • There is a downtrend when the MACD line falls below the zero line.
  • A bearish movement occurs when a MACD line dips below a signal line. A trade is said to be bearish when there is a continuous decline in price action. This is an indication that a trader should sell to avoid further losses.
  • Conversely, a bullish movement occurs when a MACD line rises above a signal. A trade is said to be bullish when there is a continuous rise in price action. This is an indication that a trader should sell to make returns.

Relative Strength Index (RSI)

What is RSI?

RSI is an acronym that stands for relative price index. It is an indicator that evaluates past and current price movements to determine securities that are overbought or oversold. 

An asset is said to be overbought when it has experienced a rapid uptrend within a short period. This occurs when the demand for an asset increases. The rise in demand thereby causes a relative increase in price that rises above the upper band.

An asset is said to be oversold when it has experienced a rapid downtrend within a short period. The price of an oversold asset is usually below its true value which leads to an increase in supply. 

How to read RSI indicator?

Now that you know how it works, you can now learn how to read RSI. RSI uses an oscillator that has an upper boundary of 100 and a lower boundary of 0. The RSI is overbought when its level is above 70. Conversely, it is oversold when its level is below 30. To determine the RSI of an asset, you need to understand the calculations behind it. 

Here is a step-by-step guide on how to calculate RSI:

  • Determine the upward change (U) and downward change (D).
  • Find the average of the Upward change (AVgU) and the average of the downward change (AVgD).
  • Calculate the Relative Strength (RS). 
  • Find the RSI using this formula:
    RSI= 100–100/(1+RS).

On-Balance Volume

What is OBV?

OBV is one of the best indicators for crypto trading that stands for On-Balance Volume. OBV shows the relationship between trading volume and price, and how one affects the other. Joseph Granville brought this indicator into the limelight and used a spring analogy to describe it. He explained that when there is a sudden increase in trading volume without a price change, the price would eventually rise or fall. 

When choosing this indicator, you need to have a proper understanding of how to use and read OBV. Here are the main instances to look out for when reading OBV charts:

  • An uptrend can occur when there is a decrease in price and an increase in OBV. This is known as a bullish divergence.
  • A downtrend can occur when there is an increase in price and a decrease in OBV. This is known as a bearish divergence.

How to calculate OBV?

The calculation for OBV depends on the situation of the trade. Here are the three possible scenarios and their respective calculations. 

  • When the present closing price of an asset is greater than that of the previous day:

             OBV= Previous day OBV+ Present volume

  • When the present closing price of an asset is the same as that of the previous day (no change):

            OBV= Previous day OBV

  • When the present closing price of an asset is less than that of the previous day:

            OBV= Previous day OBV- Present volume

Bollinger Bands

What are Bollinger Bands?

Bollinger bands is a type of crypto chart indicator that assists traders in navigating trading entry and exit points. A major element employed in the use of Bollinger bands is the standard deviation. Standard deviation is simply how far apart the current price of an asset is from its usual price. In trading, prices tend to deviate as a result of volatility. But there is usually an average point at which the price falls. Standard deviation is measured by how much the price moves closer or further from the average price point. Bollinger bands are good examples of a buy-sell indicator.

How to read Bollinger Bands?

When learning how to read Bollinger bands, you need to consider the things that make up the chart. Here are the major things you would find in a Bollinger band:

  • The lower band
  • The upper band 
  • The middle band

The middle band represents the average price of an asset. The lower band represents the lowest point in which the price is expected to move while the upper band represents the highest point in which the price is expected to move. The upper and lower bands of the indicator contract with decrease in price and expands when there is an increase in price. 

Bollinger band is also a means to determine if an asset is overbought or oversold. The price of an asset is overbought when it moves towards the upper band. Meanwhile, the price of an asset is oversold when it moves towards the lower band. 

Although this indicator is widely used, people often wonder how accurate are Bollinger bands? Just like many other indicators, Bollinger bands are not 100% accurate. Not all data produced by Bollinger bands are correct but the indicator has proven true many times. A trader should also use their knowledge and precision when using this indicator. 

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Ichimoku Cloud

What is an Ichimoku Cloud? 

An Ichimoku Cloud is an indicator used to measure support and resistance levels and other relevant data, including trading momentum. The Ichimoku cloud chart contains so much information that with just a glance, you can decipher a lot. But attaining this level of understanding is not easy as the charts may seem complicated. This is why you need to learn how to use and read the Ichimoku cloud. 

How to use Ichimoku Cloud?

Here are some things to note when you want to use Ichimoku Cloud:

  • The Ichimoku cloud has two major lines. The leading span A line, as well as the leading span B, work hand in hand.
  • There is an uptrend when the leading span A rises above the leading span B. This is known to be a bullish indicator. 
  • There is a downtrend when the leading span A dips below the leading span B. This is known to be a bearish indicator.
  • An uptrend is about to occur when the cloud turns green. Conversely, a downtrend is about to occur when the cloud falls downward and turns red.
  • Together with the Leading Spans, Ichimoku Cloud indicator also plots a Conversion Line, a Base Line and a Lagging Span. 

Having seen the features of the Ichimoku cloud, one might ask: does the Ichimoku cloud work? The answer lies in the numerous testimonies of traders that have used this indicator. It has been known to be very effective and reliable. Even greater results are reaped when paired with other indicators like RSI. 

Moving Average 

What is the Moving Average? 

A moving average is an indicator that uses the average price of future trends to determine present ones. It is calculated by adding all the prices of a security over a period, y and dividing it by the number of periods, y. A moving average indicator is continuous because it is frequently calculated.  

The two main types of moving average traders use are Simple Moving Average (SMA) and Exponential Moving Average (EMA). The SMA calculates the average price of a security over a particular time frame.  The EMA performs the same operation but lays more emphasis on recent prices during calculation. 

How to use Moving Average?

A moving average can determine when an asset is experiencing an uptrend, downtrend or when it is ranging. When the price rises above the moving average line, it is a signal to buy. But if it falls below the line, it is a signal to sell. 

Divergences

What are divergence indicators?

A divergence occurs when the price of a security moves in an opposite direction with the indicator. Just from the look of it, divergence sounds like a strange concept. But the truth is, it can either be positive or negative! A divergence is positive when the price of an asset hits a low but the indicator hits a rise in price. This signifies that there is a possible uptrend coming soon. Likewise, a divergence is negative when the price of an asset is high and the indicator signifies a low. 

How to use a divergence indicator?

  • A good indication to take action is when you spot a divergence (either bearish divergence or bullish divergence). If you have the patience and nerves to wait for a triple divergence, or even a quadruple one, then the market will reward you.
  • A stop-loss order can be placed when the price reaches a certain level against you to avoid further losses.
  • Timely price confirmation is important in determining the right entry point. 

Now that you have learned about the best indicators for crypto trading, you can now put them to use. Note that you can use more than one indicator simultaneously. But to do so, a proper understanding of indicators is needed. This article is your ultimate guide in tackling decisions relating to the best indicators for crypto trading, what they are and how to use them. 

 

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Top 5 Trading Strategies, Most Popular in 2022

In the world of trading, many factors come to play in driving a trader’s decision in the market. But to become a successful trader, you have to follow some strategies to guide your choices. Trading strategies keep traders firm in their principles and prevent careless decisions driven by emotions. This article will be digging deep into the top 5 trading strategies you can follow. 

What is a trading strategy?

Trading strategies are a set of techniques followed by traders to make profitable returns on their investments. Simply put, trading strategies are rules to follow when making trading decisions. 

It is no news that many traders in the stock market tend to make decisions out of panic especially when they sense a change in price levels. This is often associated with the disposition effect. The disposition effect occurs when investors sell assets of a higher value and keep assets with depreciating value. Trading strategies exist to eliminate such problems giving rise to following a set of rules in the market regardless of news or personal emotions. 

The provision of different strategies ensures that each type of investor can have a particular technique that suits them. Trading strategies are dependent on various factors like portfolio diversification, tax, leverage, and market capitalization, among others.  

Top 5 trading strategies

Here are the top 5 most popular trading strategies you can employ:

1. Day trading strategy

What is a day trading strategy? A day trading strategy involves the buying and selling of securities within 24 hours. This type of trading strategy is short-term as profit is made due to small movements in price in under 24 hours. A simple day trading strategy you can use is buying the dip. This entails buying an asset at a low price and selling when there is an increase in value.

Note that day trading strategies are not only used in stocks trading but also crypto trading. Similarly, crypto day trading entails that crypto assets are traded in under 24 hours. Since crypto is very volatile, this method could yield profitable returns or set you up for a great risk. Hence, you have to carefully weigh the options before employing this technique. 

Here are the pros and cons of day trading strategy: 

Pros 👍
  • It offers protection from overnight risk.
  • The volatility of day trading can yield profitable returns.
  • Availability of multiple strategies.
Cons 👎
  • Day trading involves constant monitoring since returns are made within a short period.
  • Like many short-term trades, it is very risky.
  • A high level of research and knowledge is required.

2. Swing trading strategies

What is a swing trading strategy? A swing trading strategy is a speculative strategy that centers on making smaller returns over a short timeframe. This strategy makes use of technical analysis to identify market entry and exit opportunities. Technical analysis is a common tool in trading used for making predictions in the market. It employs previous market data and charts to foresee a possible outcome to occur in the market.

Unlike day trading strategies, swing trading could last from days to months so you don’t have to constantly monitor the market. For this reason, it is often seen as an easier alternative to other demanding forms of trading. 

A high probability swing trading strategy would be the obvious no-brainer buy low and sell high in an uptrend, buy high and sell low in a downtrend. This is the fundamental rule of trading. You can look at it from the standpoint of cultivating cattle. You buy them when they are young and tender and sell them when they are mature at a higher price. However, the reverse is the case in a downtrend. Downtrends are characterized by the decrease in the price action of a security with time. In this case, an investor sells securities at a lower value than it was bought as the price action decreases thereby making a loss. 

Here are the pros and cons of swing trading:

Pros 👍
  • It does not require as much time and attention.
  • Sufficient profit can be derived from a single trade.
  • Swing trading enables easier market analysis leading to more relaxed decisions.
Cons 👎
  • Since technical analysis is a very important factor, a wide knowledge has to be involved. 
  • Overnight risks can be a threat as the market could make a drastic turn while you are asleep.
  • Capital is tied a lot longer than day trading.

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3. Scalping Trading Strategy

What is a scalping trading strategy? A scalping trading strategy is a technique that focuses on making returns from small fluctuations in the market and reselling at a fast rate. To properly understand this concept, we will be digging into what scalping means. 

What does scalping mean in trading? Scalping involves making as many profits as possible with high trading volumes. Although profits may be relatively small, the trading of many securities at a fast rate could account for its accumulated high returns. 

Scalping trading is a very competitive space that requires immense discipline and attention. A huge loss could destroy all the profit a scalper has previously worked hard to make. Hence, the goal in scalping is to keep profits relatively higher than losses. Market making is a scalping stock trading strategy used in the market. In this strategy, scalpers simultaneously place a bid and offer on a stock. This method is highly competitive and difficult to keep up with as scalpers have to compete with market makers. Another scalping strategy requires buying several securities and selling at a slight price movement. 

We should not neglect the fact that scalping has a high risk and can severely damage a trader at a wrong move. Suppose a trader does not have a stop-loss order or an exit strategy, they might face serious risks. This begs the question: do scalp trading strategies work across markets? The answer is yes! Scalping strategy can be very beneficial if you are well equipped with exit strategies. 

Here are the advantages and disadvantages of scalping:

Pros 👍
  • Scalping can yield very high returns with the right exit strategies.
  • It allows for the trading of several securities daily.
  • High movement in the market is not a cause for attention in scalping. This strategy centers on smaller timeframes with a relatively smaller individual trading profit. 
Cons 👎
  • Short-term predictions can be extremely difficult.
  • A consistent profit is needed to yield great results.
  • Regular monitoring is required. 

4. News trading strategy

What is news trading? News trading is a technique of trading where press releases, social and economic announcements are used to make investment decisions. The news plays a huge role in market trends which is why traders use news announcements to make trading moves. A news trader is always up to date with the news and economic reports because any slight announcement could affect the market drastically. But the effect of the news on the market is often short-lived so a trader has to fully utilize the news trading strategy in the moment. 

For a trader to be successful in news-based trading, they need to understand how to parse news to build a trading strategy. This involves planning strategies beforehand and recognizing if the announcements are worth acting on. 

Here are the pros and cons of the news trading strategy:

Pros 👍
  • News trading yields high profit since the effect of the news on the market can be very influential.
  • Trading the news does not last for a long time. Hence, monitoring one trade is not necessary as you will exit quite fast.
  • News trading can be carried out automatically.
Cons 👎
  • A trader might make wrong predictions leading to a loss.
  • Some brokers deceive traders on news announcements to fuel transactions. 
  • The opportunity to trade the news does not come frequently.

5. Buy and Hold trading strategy

What is the buy and hold trading strategy? The buy and hold trading strategy deals with buying securities at a low price and keeping them for months or years before selling them. It is known to be a long-term and safer form of investment. The buy and hold trading strategy is a preferable form of investment for investors that don’t have time to constantly monitor the market or engage in technical analysis. 

Here are the pros and cons of the buy and hold trading strategy:

Pros 👍
  • The buy and hold strategy reduces risk. Since there is enough time to manage your portfolio and work on strategies, the risk is reduced. 
  • It offers lesser trading costs as frequent trading is minimized. 
  • Frequent monitoring and attention are not needed.
Cons 👎
  • It takes time to yield profit.
  • Liquidity is limited since the ability to withdraw money for short periods is halted.
  • It does not give a trader the chance to be flexible. 

Now that you understand the different trading strategies, you can implement the one that suits you in your investment. Deep understanding is needed before employing any strategy so this article about top 5 most popular trading strategies can always be a useful tool. Ensure to weigh the pros and cons before delving into trading strategies so you won’t be found wanting. 

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How to Automate Crypto Trading Strategies

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.

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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.
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How to Create the Best Crypto Trading Strategy

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.

Automate crypto trading
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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, you can start with a free trial. Secure your spot! 🚀🚀🚀

 

Vestinda Trading Strategy Builder

Vestinda Trading Strategy Builder

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