Beginner’s Guide: Trading Cryptocurrency Strategies for $50 a Day

Introduction

In the world of cryptocurrency trading, beginners often find themselves overwhelmed by the complexity and volatility of the market. However, with the right strategies and tools, anyone can navigate the crypto trading landscape and make profitable trades. In this article, we will explore three crypto trading strategies for beginners, focusing on how to spot trading patterns on charts, implement trades, and use a crypto trading system like BuyBit. Whether you are new to crypto trading or looking to improve your skills, these strategies will provide you with valuable insights and techniques to enhance your trading success.

Spotting Trading Patterns on Charts

Before diving into specific trading strategies, it is crucial to understand how to identify trading patterns on charts. One of the fundamental concepts in technical analysis is support and resistance levels. Support is the price level at which the market tends to stop falling and bounce back up, while resistance is the price level at which the market tends to stop rising and reverse downwards.

To spot support and resistance levels on a chart, you can use tools like TradingView, which offers free charting capabilities. Simply draw horizontal rays on the chart to mark the levels where the price has previously found support or resistance. These levels act as reference points for future trades.

In addition to major support and resistance levels, it is also essential to identify local support and resistance levels within the current price range. These levels are closer to the current price and can provide valuable insights into potential trading opportunities. By drawing rectangles or using other drawing tools, you can mark these local support and resistance levels on the chart.

Implementing Trades on a Crypto Trading System

Once you have identified trading patterns on the chart, it’s time to implement your trades on a crypto trading system like BuyBit. BuyBit is a popular platform that offers a deposit bonus of up to $4,000 for new users. To get started, you need to set up an account on BuyBit and deposit funds.

For the purpose of this article, we will focus on trading bitcoin and ethereum on BuyBit. After selecting the desired cryptocurrency, you can access the charts and enter your orders on the right-hand side of the platform. It is important to note that day traders often prefer using derivatives on BuyBit for day trading, as it allows them to trade with their own money without leverage.

Trading Strategy 1: Double Bottom Pattern

The first trading strategy we will explore is the double bottom pattern, which is a trend reversal pattern. This pattern suggests that a bottom has been found, and the price is likely to move higher. To trade this pattern, you need to identify a downtrend where sellers are pushing the price down. When the price meets a support level and bounces off it twice, it indicates strong price support at that level.

To implement this strategy, you would wait for the price to break out of the double bottom pattern’s resistance level. This breakout serves as a signal to enter a long position. You can place your stop-loss slightly below the pattern’s height and set your take-profit level at the height of the pattern. By doing so, you ensure a favorable risk-reward ratio for your trade.

Trading Strategy 2: Falling Wedge Pattern

The second trading strategy we will discuss is the falling wedge pattern, which is a reversal pattern within a wider uptrend. This pattern suggests that the price is temporarily pausing in the uptrend before continuing its upward movement. To trade this pattern, you need to first identify the wider support and resistance levels that define the uptrend.

Once you have identified the uptrend, look for a falling wedge pattern within it. This pattern is characterized by a series of lower highs and lower lows, forming a wedge shape. When the price breaks out of the wedge pattern to the upside, it signals a potential continuation of the uptrend.

To implement this strategy, you would enter a long position on the breakout of the falling wedge pattern. Place your stop-loss within the pattern or at the resistance level of the wedge. Set your take-profit level at the height of the pattern, which can be determined by drawing a trend line from the start of the pattern to the breakout point.

Trading Strategy 3: Bear Flag Pattern

The third trading strategy we will explore is the bear flag pattern, which is a reversal pattern within a downtrend. This pattern suggests that the price is temporarily pausing in the downtrend before continuing its downward movement. To trade this pattern, you need to identify the major support and resistance levels that define the downtrend.

Once you have identified the downtrend, look for a bear flag pattern within it. This pattern is characterized by a sharp decline followed by a consolidation phase, forming a flag shape. When the price breaks out of the flag pattern to the downside, it signals a potential continuation of the downtrend.

To implement this strategy, you would enter a short position on the breakout of the bear flag pattern. Place your stop-loss within the pattern or at the resistance level of the flag. Set your take-profit level below your entry price, as you are going short in this case. The height of the flag pattern can serve as a guide for determining your take-profit level.

Frequently Asked Questions

Q: How long do these patterns typically take to play out?

A: Patterns like the ones discussed in this article can take weeks or even months to fully develop and play out. It is important to be patient and wait for the perfect opportunity to trade these patterns rather than taking trades with unfavorable risk-reward ratios.

Q: How can I manage my risk when trading on leverage?

A: When trading on leverage, it is crucial to calculate your liquidation price and set a stop-loss to limit your potential losses. By using the leverage calculator provided by your trading platform, you can determine your liquidation price and adjust your position size and leverage accordingly. It is also advisable to use appropriate risk management techniques, such as setting a maximum percentage of your trading capital to risk on each trade.

Q: Can I trade these patterns using spot trading instead of derivatives?

A: While derivatives are often preferred by day traders for their flexibility and leverage options, you can certainly trade these patterns using spot trading as well. Spot trading involves buying and selling actual cryptocurrencies without leverage. The key is to identify the patterns on the charts and execute your trades accordingly, regardless of the trading method you choose.

Q: Are these patterns guaranteed to be profitable?

A: No trading strategy or pattern is guaranteed to be profitable. The cryptocurrency market is highly volatile and unpredictable. These patterns serve as potential signals for trading opportunities, but it is essential to conduct thorough analysis, consider market conditions, and manage your risk effectively. It is recommended to practice on a demo account or start with small positions before committing significant capital to any trading strategy.

Conclusion

Crypto trading can be a profitable venture for beginners if they employ the right strategies and tools. By learning how to spot trading patterns on charts, implementing trades on a crypto trading system like BuyBit, and utilizing specific strategies like the double bottom pattern, falling wedge pattern, and bear flag pattern, beginners can enhance their trading success. However, it is important to remember that trading involves risk, and thorough analysis, risk management, and patience are crucial for long-term profitability.