Should you go long or cut short on some major cryptocurrency or the pair? Stay tuned while we explain the most optimal cryptocurrency trading strategy for short- and long-term gains with minimum risks.

First, the obvious. The cryptocurrency market is one volatile beast that makes Forex a child’s game.

On one hand, that’s exactly what the intraday margin traders want. On the other, that poses a serious risk to investors and practically deters all those who are looking to make a long-term investment.

Is there a way to hedge the risk and make money in both instances? Yes.

Best cryptocurrency trading strategy for intraday margin trading

You are going to use 3 basic analyses: fundamental, technical, and sentiment analysis.

Fundamental analysis

Unlike the dollar or euro where you can rely on macro and microeconomic data, the political situation, jobless rates and specific financial moves of the central banks, none of that exists in cryptocurrencies. But there are two things you can use to your advantage.

First, the news and rumors on the influencing crypto media.

Will the Bitcoin community execute a new fork anytime soon? If they do, what will be the underlying purpose of that fork? How will it affect the long-term value and/or stability of Bitcoin?

Second, the development perspective of some newly proposed blockchain and/or currency. If it goes live, what would be the fundamental influence on the market? In other words, will it disturb the market in general and affect a certain major cryptocurrency?

Technical analysis

Charts. Plain and simple.

So far, and due to the lack of any serious historical data or central governing over the cryptocurrency market, the cryptocurrency investment community is heavily relying on the technical analyses, using the traditional indicators such as moving averages (that have to be adjusted to the fast-moving, highly volatile cryptocurrency market), RSIs, Bollinger lines, Fibonacci, trading volumes, etc.

That said, charts are basically rules on their own, but only if you know how to follow them in cryptocurrency trading.

For that, you basically need only one indicator found on MT4 and few other popular trading platforms. It’s called On Balance Volume (OBV).

What you do is simple

1. Overlay BTC/USD chart with ETH/USD chart
2. Activate OBV indicator
3. Draw the resistance line on all three windows
4. Look for the smart money divergence between BTC and ETH
   1. If ETH breaks through the resistance or makes a new swing high while BTC is still below the resistance, you can expect the BTC price to soon follow the trend (if the OBV indicator is following the trend)
   2. To predict that, see if the OBV is increasing in the direction of the trend
   3. If it does, wait for BTH to break through resistance and place the BUY order while placing your stop-loss under the breakout candle when OBV reaches 105,000
   4. Do the opposite with the downward trend (SELL order)

This is the most used professional trading strategy in intraday cryptocurrency margin trading.

Of course, it’s not a magic wand and you need to really familiarize yourself with how OBV works because no single indicator can be 100% accurate. After all, when you are looking at the training charts, you can see the future trend prior to and after the training point used by your coach. In reality, you can’t see the future; you have to predict it! So tread with caution; otherwise, there is a risk of losing your money.

Sentiment analysis

Most traders rely on the news coming from the influencing media such as Bitcoin.org, bitcointalk.org or Coinbase. And that news is further discussed and sometimes even initiated on relevant subreddits. Thus, make Reddit and Coinbase your primary sources of information because that’s where the news and rumors are coming to life and consequently triggering the herd in a predicted way.

You want to be among the first to recognize the future short-term trend and the possible moment of recovery to double your gains.

People move in more or less predictable patterns. It’s your job to learn those patterns starting with the candlestick ones many are relying on.

However, it would be wise to allocate some funds into long-term investment even though many will advise you against that.

The most optimal cryptocurrency trading strategy for the long-term investments

If you are planning to invest in cryptocurrencies to acquire a long-term asset, you should buy only the top three on the list, and those are Bitcoin, Ethereum and from the most recently, Litecoin.

Although, you should focus on the first two.

Bitcoin is already priced more than gold, with Ethereum slowly following the upward trend.

Given the fact that the supply of Bitcoin is limited (the last will be minted approx. in the year 2140), it’s reasonable to believe that the price will break through $10,000 in the near future. So, holding 10-100 Bitcoins as the long-term asset sounds like a good investment.

Although, as you know, there are no guarantees, so don’t follow blindly because your losses may exceed your balance.

That said, with the smart approach, you may not only make money on short-term trading but also accumulate additional long-term wealth if everything goes well with the blockchain technology and cryptocurrencies.

We hope our guide sheds some light on the sometimes dark and confusing cryptocurrency trading strategy. If you want to learn more about cryptocurrency, check out Cryptocurrency Institute.