Crypto Trading Strategies & Tips (12 Day Trading Strategies)

Crypto trading strategies are something that every day trader needs to get ahead in the game, minimize risk, and increase potential profits. General strategies are different from crypto day trading strategies because you approach the market in a different way.

Day traders are short-term oriented while traders, in general, can hold positions for several days or weeks.

Most crypto traders find it difficult to create a robust and reliable crypto trading strategy that produces positive results and real profits.

The problem is not the market, or the indicators, it’s the lack of understanding of the market works and how to really set yourself up with the right approach.

If you are a margin trader I highly recommend that you read our guide on crypto margin trading strategies.

Basics of trading strategies

When most traders think about how to execute a plan they immediately think about confusing technical indicators, 50 charts on one screen, and 5 screens on one desk.

The truth could not be further away from that.

I’m going to tell you what a real strategy is and how you can easily create your own with a simple analysis.

They are not what most people think they are.

So I’m asking you to be open to new learning and think outside the box.

---

First, let’s get the concept of a trading strategy clear.

Trading strategies are only a way of reacting to certain behavior.

Read that two or three times and really think about what you just read.

This may sound a little weird in the beginning.

But I’m going to explain what I mean and how real professional traders trade the market with real a crypto trading strategy.

---

When you are analyzing cryptocurrencies you are faced with different behaviors.

The coin might be:

• Volatile
• Calm
• Big
• Small
• Positive
• Negative
• Euphoric
• In panic

These are all some of the many behaviors that you need to know before you start.

There are definitely many more types of behaviors and it’s up to you as a crypto trader to figure out your own coin.

You can almost see the cryptocurrency as a person with emotions and it’s your job to figure out how it feels and how you are going to approach it.

Remember that these are the basics of behavior.

But they hold for crypto as well.

---

Now, it’s up to you to analyze which kind of behavior your coin is putting up each day or week.

This is the first thing you do before you start applying your crypto trading strategy.

If you don’t know how the coin is behaving, you can’t know which strategy to use.

Okay.

So, let’s say that you wake up, have your coffee, and sit down in front of the computer.

And the chart looks like this:

This is a screenshot of the Bitcoin chart.

First of all, we can definitely say that the coin is positive because it’s in an uptrend.

It has experienced higher volume along with higher highs.

It is a little bit larger than usual thanks to the volume coming in and this makes it more volatile.

Related: How to read crypto charts

Now we have established the behavior first, then we apply the crypto strategy best suited.

In this case with Bitcoin, we are going to adapt to this specific behavior.

First of all, we are only going to look to take long positions because the market is in an uptrend.

Secondly, we know the coin is a little big bigger and more volatile than usual.

So we need to widen our stop loss a little and lower the position size.

I also know that Bitcoin normally tests the downside before it takes off higher again.

---

We have established how Bitcoin is behaving and this tells us how to best approach any cryptocurrency.

This is what strategies are about.

First, you analyze your coin.

Then you use your analysis to decide how you are going to approach the behavior.

Then you start to look for ways to enter the market with this information.

This is how they are built.

It’s not more difficult than that.

You can now start creating your own strategies today with the same principles.

A question you can ask yourself before you start is:

What crypto trading strategy do I need to use to enter a cryptocurreny with this behavior?

---

Strategies with high risk

We’ve explained what crypto trading strategies are and now we are going to dive deeper into specific a strategy and how to use them.

Those with high risk are used when we are comfortable taking on more risk.

High risk basically means that the cryptocurrency is behaving in a riskier way.

One example of such a strategy would be to enter the market when it’s:

• Very Volatile
• Has a higher volume than normal
• Is at an extreme high or low

First, you have established that the cryptocurrency is behaving riskily.

Now it’s time to decide how to enter.

This is where practice and experience come in very handy and this is something you learn with time.

Let’s look at a chart that is behaving in a risky way:

This is another screenshot of Bitcoin during the last crash.

It’s fair to say that the coin was behaving in a certain way during these days and weeks.

The behavior was:

• More volatile
• Bigger
• Was experiencing a higher volume
• Panicking

When you trade this chart you can’t use your standard stop losses or position sizes.

If you do so, you will be wiped out in minutes.

This happens in times when you are not using the correct strategy.

---

A good strategy here would be to first:

• Widen stop loss
• Reduce position size
• Choose short positions

When this is done we can start to look for setups in the chart, but at least we are using the right strategy for this coin.

A strategy with high risk is only applied in a risky environment.

Depending on what your personality is you may prefer to trade a more risky market.

This is up to every crypto trader to find out and then apply the correct strategy.

I have a good quote for this:

Risky trading strategies does not mean that you are risking more.

Strategies with low risk

By now you should have some idea of what a strategy with low risk means.

Exactly.

A strategy with low risk does not mean that you are risking less capital.

It basically means that you are deciding how to trade a less risky market.

I’m going to show another screenshot of Bitcoin from a while back.

This time the market was behaving less risky:

This screenshot was taken a few weeks after the latest crash when cryptocurrencies in general were behaving less risky.

We can establish that it was:

• Less volatile
• Smaller
• Was experiencing less volume
• Calm
• Slightly positive

Immediately when we see this behavior we can start to apply less risky entry-exit plans.

We can start by:

• Tightening the stop loss
• Increase position size
• Choose long positions

After we have established this approach we can start to look for entries.

In this example, Bitcoin is showing a completely different behavior and it’s up to you to recognize that.

Once you have recognized that, you are then able to choose what strategy you want to use.

---

Before we dive into some other strategies I’m going to end this section with some trading wisdom.

Deciding how to approach a cryptocurrency depends on how it is behaving at the moment.

But how can we trust that the behavior is going to stay with the same behavior?

This is where it gets interesting.

A behavior is always changing, but very slowly.

When you have recognized a behavior you can trust that the coin will keep acting this way for a while.

Not for a year or 5 months, but a while.

This depends on the chart you are trading.

Some coins are like some humans, they change mood very quickly and seem to act randomly.

But they are not.

Learning to recognize behavior is the first step.

Then apply the right crypto strategy.

Crypto trading strategies for low volatility

The reason I want to give you trading strategies for both low and high volatility is that cryptocurrencies are the master of both.

Sometimes the coin is acting crazy and it seems like it’s going to go through the roof or the floor.

Other times the market is doing almost nothing.

You need to know how to respond to this and choose among the ideas you have.

This is for two reasons.

First, to protect your trading capital.

Second, to maximize the profit potential.

---

In a low-volatility environment, you need to change your idea of how to enter and exit.

Since we’ve talked about the basics of trading strategies, I’m going to give you a little bit more advanced information.

But what can you do to maximize your profits and minimize your risk in a low-volatility environment?

Here is a low-volatility example we are going to use:

This example is from the past few weeks of Bitcoin.

What we know is:

• Uptrend
• Low volatility
• Small
• Low volume

When this is the case, you need to trust that the market is not going to do anything crazy.

Without this trust, you will not have the conviction to enter, ever.

We know that in a low-volatility environment the price does not swing up and down very much.

It doesn’t move away very from trading ranges very much.

If you see this and you decide to trade it, you know you can wait for the coin to drop down a little before you enter.

Now, we know it’s an uptrend and it is showing low volatility.

You know the market will not continue down for very long until it turns back up again when it drops.

This is your setup (blue arrow) and here you can use an even smaller stop loss and a bigger position to maximize your profit potential and minimize your risk.

---

Did you see what just happened?

We used a low-volatility crypto trading strategy and made it a little more specific about where we enter.

You can trade all your ideas this way.

When you learn the behavior of your cryptocurrencies you will know when it’s the right time to change the strategy a little.

This is a strategy you can use in any low-volatility environment.

---

Crypto trading strategies for high volatility

We just saw how to upgrade a low-volatility strategy and make it better.

But how can we trade a cryptocurrency with higher volatility that is riskier?

What you can do is use the same strategy that you use for any high-volatility environment and upgrade it a little.

---

In this example, we are going to look at the same crash from before but this time on a lower time frame:

We are looking at the same crash but this time in a 15 min time frame.

What we are going to do with the crypto trading strategy we learned earlier is very interesting.

What we know is:

• Negative
• High volatility
• High volume
• Bigger

When this is the case we usually widen our stop losses and reduce the position size.

But inside this chaos, there will be periods of lower volatility.

The market is not going to swing up and down like crazy for 3 weeks straight.

The volatility ebbs and flows, in and out.

So the strategy we are going to use here is a little different.

We know the coin is collapsing and we know it is showing high volatility.

We are going to react to this behavior but we are going to enter during a low volatility period.

Where I’ve put the arrow is a perfect example of a low volatility area in this high volatility segment.

When this happens you have your chance to enter with a tighter stop loss and a bigger position.

This is because we know that the cryptocurrency is on its way down and it’s just a matter of time before it resumes the downtrend.

Don’t get this wrong and think it’s super easy to enter and that every scenario will look like this every time.

It’s not.

But with practice, it becomes a lot easier.

Remember that this is a trading strategy and it’s a way for us traders to approach the current environment.

All we did was analyze the coin to realize that it was acting with high volatility.

Then we took this information and created a trading strategy around that.

The principles are simple and you should keep them like that.

First, you need to learn the basics of creating crypto trading strategies.

Then you can start bending these strategies to make them fit the current conditions.

The more you practice, the more strategies you will find to use.

---

Crypto trading strategies for retail traders

If you are just starting and you are looking for easy ways to make money in the markets I would recommend you to first follow the basics.

Learn how your chart is behaving and then apply the basic trading strategy.

One great way to learn quickly is to try your ideas in smaller time frames.

This way you will have more shots to fire and more time to practice.

---

I’m now going to give you a crypto trading strategy that any retail trader can use.

This is a screenshot from the 5 min chart of bitcoin:

This is a positive trend and we have relatively low volatility and low volume in general.

The cryptocurrencies often make tests on the downside to shake off weak bulls.

When this happens you need to react to this behavior.

This is where a basic crypto trading strategy comes into good use.

---

When you have analyzed the behavior you can get ready to enter the market.

We know the coin is in an uptrend with low volatility.

This is perfect for a low-volatility trading strategy.

Before the chart resumes the positive trend it generally likes to dry out the volume on the downside test.

What you need to do is to find the area in the test where the market hits the lowest volume.

This is often a good time to enter.

If you hit this entry correctly, you will enter when it’s time to move on.

And the coin is also very small.

You can tighten your stop loss and increase the position size slightly.

This also takes practice but it’s one of many crypto trading strategies for retail traders.

It’s easy to spot in the market and it’s easy to execute.

Try this in your own cryptocurrencies and be patient.

You may not execute the strategy perfectly in the beginning.

As long as you understand how a strategy works you are already ahead of many traders.

12 Crypto Day Trading Strategies to Boost Profits and Reduce Risks

Crypto day trading is a performance activity where traders get rewarded based on how good their strategy is and how well they use risk management. The best crypto day trading strategies come in many different forms and the truth is that not all strategies are a good fit for every trader.

Your strategy should be customized to your style of trading and the way you like to approach the market and the fact that each strategy can be used in different market environments makes them even more profitable.

It all boils down to who you are as a trader.

• Are you an aggressive trader?
• Are you a risk-averse trader?
• Are you a retail trader trying to find everything out?

Whatever your reason is for landing on this page I am sure that you will learn something new and fresh that you haven’t thought about before. I guarantee that you will exit this page with more knowledge and a better edge than you had before.

If you are trading cryptocurrencies on margin, check our guide on crypto margin trading strategies to learn how to make money with leverage.

Strategies you will learn

1. Focus on strong breakouts

You have probably traded for a while and you have come to the realization that you don’t know how successful traders actually make a living.

The answer to this question is that you need to focus your efforts on finding the best possible setups and allocate the most amount of money to these setups.

Crypto day trading does not provide a consistent stream of income where you make more or less the same amount of cash each month or every trade.

The way crypto traders make a living is by hitting it big a couple of times per month. This means that most of the trades they take are not providing enough money to support their commissions even.

The money comes from 2% of their trades which are traded in large breakouts and the reason breakouts are so powerful is because of the nature of how probability and momentum work.

In a true breakout, the market runs either up or down on extremely high volume, and it does so without looking back.

Strong breakouts don’t turn back to the range it was trading in before, instead, real breakouts carry on much higher, or lower for an extended period of time.

It is your job as a trader to identify when you see a possible breakout build-up and get ready to increase the position size and pull the trigger when it’s needed.

You will fail at first but after a while, you will start to learn how breakouts work and when to enter.

Once you enter a strong breakout setup with a large position you will make more money than you have made your whole career as a trader.

After a successful trade, you need to withdraw some of that cash and keep searching for the next strong setup.

2. Bot trading

Nowadays you don’t need to have a degree in coding to run a crypto trading bot and make good money.

AI crypto trading platforms have made it extremely easy for retail traders to automate their strategies and create powerful bots that can pretty much replace you as a trader.

Now, it may sound easy in theory, but it is a little bit more complicated than just pushing play and letting the algorithm do all work.

You first need to know basic trading theory and have some experience in trading the markets with a short-term strategy.

The best bot traders tend to be the kind of traders that come from a background of scalping and pure day trading.

You need to spend some time learning how the bot works and you need to be able to translate your strategy from thoughts into real rules or commands that the bot can adhere to.

Bot trading can be very effective once you learn how to use it and also which type of bot you should use for a different market environment.

You are not going to be successful by running the same bot without taking into consideration how the market is behaving.

Some bots do better in a choppy environment such as a trading range while others do much better in a trending environment.

The best way to get started is to learn the bot you are going to use and create at least three different types of bots so that you can change between them as the behavior of the market changes.

You will notice when your bot starts to function effectively as the profitability will go down which tells you that the market has changed and you need to swap between bots.

While your bot is trading the market you can spend some time working on other types of bots that can handle other types of market environments.

3. Use a smart stop loss

The best way to use a stop loss is to understand the level of volatility that is currently active in your marketplace.

Most traders get it wrong by using the same distance to their stop loss order which in turn will get them stopped out prematurely in 75% of the cases.

This is a big problem that can easily be solved with a couple of simple tools.

First, you need to know how much volatility there is in your traded coin.

The best way to find out the level of volatility is with the Average True Range (ATR) indicator.

This indicator will measure the magnitude of the price swings and it will give you a numeric translation that can be understood.

Once you have figured out how volatile your crypto asset is it is time to measure your distance and add your stop loss accordingly.

You need to play around with the ATR indicator to find out what level is considered as high, medium, and what is considered as low volatility.

Spend some time comparing the chart of your cryptocurrency and measure how much distance would have been required to stay away from the noise of the market without getting stopped out.

After a while, you will find out a smart distance to add your stop loss that will result in a higher win rate.

This doesn’t necessarily mean that you are going to make more money but it will keep you from losing less frequently, something that could be used to make more money.

When you have figured out the distance to your stop loss you only have to calculate your maximum risk per trade and size your position accordingly.

The smart stop loss system will force you to change your position size all the time as the market is changing, but remember, this is for the better.

Stop loss crypto exchanges with a trailing stop loss will give you a slight advantage if you don’t have much time to track your positions.

4. Focus on 5 coins or less

If you don’t know the behavior or the standard price action of the coin you are trading, then you are trading too many cryptocurrencies at the same time.

Proper day trading is based on pattern recognition which can only be obtained when studying a small number of charts every day.

It is literally impossible to trade 20 coins per day unless you are using an algorithm or bot that you have prepared with criteria beforehand.

Other than that, you can’t do it.

Well, you can do it, but you can’t do it well.

To increase your probability of success in cryptocurrency day trading you need to narrow down your targets to a few selected coins.

How do you choose which coins to trade and how do you find new crypto coins?

For starters, select some of the top 20 coins to be sure that they are going to be around for the years to come as many of the cheaper coins with a low market cap usually tend to get wiped out after a while.

Once you have found the coins you are comfortable with you need to start analyzing the charts religiously.

You need to spend enough time watching the price movement so that you can sense when there is a big breakout building up.

When you reach this level of awareness you will start to trade better because you will learn what is a good setup and what is a bad setup.

Professional traders are experts at recognizing good setups because they have to spend 10 years+ watching the charts of their favorite assets.

This is how you take your crypto day trading efforts to the next level.