Chapter 5: Core Trading Strategies for Crypto

Trading: More Than Just Buying and Selling

Cryptocurrency trading is more than pressing “Buy” and “Sell.” Success comes from having a plan, managing risks, and choosing the right strategy—whether you want to “HODL” long term or try your hand at more active approaches.

“Buy low, Sell high. Sound simple, right? But of course, it’s not that simple… You will lose money, you will have bad trades, you will get better at it.”

HODL vs. Active Trading

HODL: Buy and Hold

“HODL” is crypto slang for “hold on for dear life.” The idea is simple:

• Buy assets like BTC or ETH and hold them regardless of market swings.
• Over time, this can be a good way to ride out volatility, especially in a market known for wild ups and downs.
• Best for: Beginners, long-term believers, anyone not wanting to stress about daily price changes.

“Most of the time, you can wait it out and make your money back. But there are times when you should cut your losses and try another trade.”

Active Trading

Active traders buy and sell frequently, aiming to profit from price moves.

• Involves watching charts, using technical or fundamental analysis, and reacting to news.
• Requires discipline and a trading plan.

Common styles:

• Day trading: Open and close positions within a day.
• Swing trading: Hold for days or weeks, riding larger trends.
• Scalping: Make small, frequent trades for tiny profits (be aware: fees add up quickly).

Technical Analysis Basics

Technical analysis uses price charts and statistical indicators to predict future moves. Key concepts:

Support and Resistance

• Support: A price level where many buyers tend to purchase, preventing further decline.
• Resistance: A point where sellers clash, keeping the price from rising higher.
• Traders try to buy at or above support, sell at or near resistance.

Candlestick Charts

• Each “candlestick” shows how price moved during a certain period.
• Candlestick patterns can hint at future price direction.

Moving Averages

• A moving average smooths out price data.
• Crossovers (when short-term and long-term averages cross) can suggest good times to buy or sell.

“Learn about stocks and forex trading online. Plan it ahead. Before you buy, work out the price you will sell or stop-loss. And try your very best to keep to it.”

Fundamental Analysis in Crypto

Instead of only using charts, look at the bigger picture:

• Project news and updates
• What problem is the coin solving? Is there adoption?
• Market sentiment (how are traders and media talking about it?)

Quick Sources:

• Cointelegraph, Binance Academy, Reddit, Twitter for real-time commentary

“The recent growth in value is not due to usage adoption growth of cryptocurrencies, but just for trading, investment or even gambling… Meme coins getting to top 10, you should be ‘worried’.”

Diversification and Portfolio Management

Don’t “go all in” on a single coin. Even major projects can drop fast.

• Spread your bets among several established coins (e.g., BTC, ETH, BNB).
• Consider stablecoins (e.g., USDT, USDC) as “cash” within your trading account to buy dips or lower risk.

Risk Management—Don’t Lose It All

Only Trade What You Can Afford to Lose

Crypto is volatile. Never gamble money you can’t replace.

Stop-Loss Orders

A stop-loss order automatically sells your asset if the price drops to a set point, helping limit your losses.

Trading Journal

Track every trade, your reasoning, entry/exit points, profit/loss, and lessons learned. Even a simple spreadsheet helps.

“You should only ever trade money you can afford to lose… It is very much about confidence.”

Example: Planning a Basic Trade

Suppose you believe ETH will rise.

1. Check the chart for support and resistance.
2. Decide your buy price (near support), target sell price (near resistance), and stop-loss.
3. Place a limit buy order, and set a stop-loss order.

Sample Table:

Key Takeaways

• Choose a core strategy that matches your time, appetite, and skills.
• Use both technical and fundamental analysis for better decisions.
• Always plan your trades, set stop-losses, and track performance.
• Don’t overtrade: fewer, more thoughtful trades beat lots of rushed ones.
• It’s normal to make mistakes. Each trade teaches you something new.

Next, we’ll explore more advanced features—including bots and automation—so you can take your skills to the next level!