The following article talks about trading crypto and covers only a few edges to crypto trading I’ve discovered. It is, of course, for entertainment purposes only, and is not intended to be investment advice. Always do your own research on these topics and enjoy the crypto journey we all have embarked on! Also, if you are serious about trading crypto, both the spot and derivatives markets, I highly recommend FTX Crypto Exchange. I have been trading crypto since 2013, and this exchange developed by traders for traders, is by far the best in class. You can save 5% on trading fees if you sign up with the link above.
Once you’ve learned a few of the basics about crypto, one of the first things you’ll realize is that crypto prices are extremely volatile, especially alt coins. This makes them a great option for day trading, position trading, swing trading, etc. However, in order to be consistently profitable in trading, you need an edge. Something that consistently provides you with profitable returns and manages downside risk, so you don’t blow up your account.
In this short article, I will share 3 Crypto Trading Strategies or EDGES I’ve learned that have given me consistently profitable returns on my trading. This is in no way, an exhaustive training course on the dozens of technical trading signals like RSI, Bollinger Bands, MACD crossovers, or Fibonacci retracement levels. Each of those is useful in gauging the probability of your trades closing in profit. If you’ve never heard of these terms, spend some time learning about market structure, technical analysis and the mental and emotional aspects of trading. That being said, I am simply going to share the trading edges that I have discovered, that are specific to crypto.
First off, for these trades to have the best possible outcomes, we should be in a crypto bull market. So far, a crypto bull market has happened every four years, and coincides with the Bitcoin Halving event programmed into the Bitcoin software code.
1. The Broken Base Trading Strategy
This strategy takes advantage of market psychology, stop losses set by traders as well as liquidations (where an exchange force sells leveraged positions once collateral for that position drops below a safe level). It only works consistently in a crypto bull market, but in terms of probabilities, it has a 99% win rate which is truly incredible. Essentially, you are looking for a chart that has a strong ‘base’ where the price has bounced from and moved up significantly. If this area of support is breached, it triggers stop losses, liquidations and panic selling. The strategy involves layering into a long position below this ‘broken base’ and then selling in profit just below the broken base area. Here’s why. The price will return to ‘close the gap’ 99% of the time, resulting in a winning trade 99% of the time. For a more detailed explanation, check out this list of resources from QuickFingersLuc (who first popularized the strategy a few years ago).
There is a charting website that will automatcially draw the bases for you and even several free Telegram Alerts to notify you when price drops below x percentage of a broken base.
2. The Bitcoin Futures Funding Rate Trading Strategy
If you are trading the Bitcoin futures market, funding rate is what longs pay shorts (every hour or every 8 hours, depending on the exchange). If funding is positive, longs pay shorts, and the majority of market participants is expecting the price to move up. If funding is negative, shorts pay longs and the majority are expecting price to move down. Knowing what the funding rate is doing in real-time, gives you an edge in predicting where price will likely go next.
One of the best tools available to see real-time Bitcoin futures funding rates charted on a graph alongside price action, is the CryptDexPro subscription created by quant trader and software developer, Joe McCann. The proprietary set of signals and training videos he has developed, give an edge unlike any other in the world of Bitcoin derivatives trading.
Alongside the signals provided with the subscription, you can learn a lot about Joe’s trading style on his free JoesCrypt Telegram channel and Market Mercenaries discussion group, also on Telegram.
3. The 1 Day MACD Crossover Trading Strategy
In a macro bull crypto market, if you buy (or go long) the bullish 1 Day MACD crossover, the probability of the price continuing upward is extremely high. At that point, you can start taking profits based on other indicators like Fib extension lines, daily volume, RSI and candlestick patterns. This strategy takes some time and patience to nail your entries and exits consistently, but it is a winning strategy, all things considered. You can learn more about this strategy on Investopedia’s article Bullish and Bearish MACD Crossovers.
That sums up three of my favorite crypto trading edges that give me consistent returns in the market. I am always looking for new edges, so feel free to share any you’ve discovered in the comments below.
Happy Trading!
