Understanding the Crypto Spot Market (Part 2)
In the previous part, we learned about the basis of the Spot market, today let us go through the most well-known trading strategies for crypto spot trading that can help you get favorable returns.
Well-known trading strategies for crypto spot trading
Day trading in cryptocurrency involves taking positions in the market and closing them out the same day during trading hours. Due to the fact that deals are frequently initiated and completed in a single day, it is also referred to as intraday trading. The sole purpose of day trading cryptocurrencies is to gain from fast changes in the market. Due to the volatility of cryptocurrencies, day trading in the market could be quite profitable. Day traders rely on scalping strategies to accumulate multiple little wins which in turn grow their portfolio.
The investment strategy known as "HODLing," which is a misspelling of "hold," requires investors to purchase cryptocurrencies and hold them for an extended period of time. This makes it possible for investors to gain from a growth in the asset's value. When investing for a long time, HODL enables investors to profit from long-term value growth. Investors can benefit from the HODL strategy by avoiding short-term volatility and the risk of selling low and purchasing high during panic periods.
Market participants often look to seasoned professionals for support and resistance levels on a daily basis. Since "resistance" refers to the upper limit where the price may rise, a resistance level is a price that is higher than the current price. A "Support" level is always lower than the current price since it represents a point below which a cryptocurrency price is not anticipated to fall.
Increased trading volume is used in this trading approach to boost profits. Despite the risk, a savvy trader adheres to the margin requirement and other crucial guidelines to prevent unfavorable trading outcomes. Scalpers consider the bitcoin asset, historical trends, and volume before deciding on an entrance and exit point within a day.
High-Frequency Trading (HFT)
HFT is a form of the algorithmic trading strategy used by quant traders. This involves developing trading algorithms and bots that enable quick entry into and exit from a bitcoin asset. Such bots need a strong basis in mathematics and computer science, as well as the creation of complex market concepts. Therefore, seasoned traders would gain more from it than beginning traders.
To profit from their cryptocurrency or Bitcoin trading tactics, traders rely on arbitrage possibilities. In the trading strategy known as arbitrage, a trader buys cryptocurrency in one market and sells it in another. Between the buy and sell prices, there is a spread.
Due to the disparity in liquidity and trading volume, traders could be able to turn a profit. To take advantage of this chance, they open accounts on exchanges where there is a big price differential for the cryptocurrency they are trading.
Finding the best entry and exit positions in a crypto market requires understanding that timing the market is almost impossible. A wise cryptocurrency investment approach is dollar cost averaging (DCA). DCA refers to investments with fixed, recurrent payments. Investors can build long-term wealth and avoid the time-consuming job of market timing by employing this strategy.
Exit strategy, however, can be difficult using the DCA plan. Determining when to depart could also be helped by reading technical charts. Investors in cryptocurrencies should monitor oversold and overbought levels before making a choice.
How to spot trade on Bitget
Once you've created a Bitget account, spot trading on the platform is a straightforward procedure. Let's examine the exchange view on Bitget and discover how to execute a spot deal. On the Bitget homepage, click [Spot] to access the Spot trading interface.
Now you'll see the trade view, which has a few interesting aspects.
1. The cryptocurrency trading pair and other market data, such as daily price change and volume, are visible at the top.
2. The order book lists each open buy and sell order for an asset, sorted by price. Buy orders are in green, while sell orders are in red. When placing a market order to buy an asset, you accept the price that is currently being offered. Your order will move up to the next lowest requested price if it still needs additional volume to fill it.
3. This area displays a chart with customisable historical pricing information. TradingView, which is already included in the window, provides you with access to a comprehensive range of technical analysis tools.
4. You can search for different trading pairs in the top right corner. By clicking on the tiny stars, you can save your favorite cryptocurrency pairs and select the cryptocurrency pair you want to trade on the spot market. Keep in mind that you are not required to purchase cryptocurrency using fiat. You can also use the spot market to exchange any additional cryptocurrencies you may have for different coins and tokens.
5. You will create your buy or sell orders in this section. You can see that it is now listed under [Spot]. You can select [Limit], [Market], or [Stop-limit] orders from the list below.
Let's examine the simplest spot trade you may execute: a market order. In this scenario, you want to buy bitget tokens (BGB) for $1,000 (USDT). You only need to enter 1,000 into the [Total] section and click [Buy BGB] to accomplish this. You will get $1,000 (USDT) worth of BGB from the exchange, and the exchange will promptly transmit the USDT to the seller. That’s it!
Spot trading on spot markets is one of the most often used ways for traders, especially newcomers, to engage in trading. Even if it's straightforward, it's always a good idea to be aware of all of its advantages, disadvantages, and remedies. You should consider combining your understanding with technical, fundamental, and sentiment research in addition to the essentials.
This September, Bitget has brought great and exciting news: you will be able to enjoy ZERO-fee spot trading across ALL pairs, applying for both Bitget Spot Trading and Bitget Spot Grid Trading. Yes, you’ve heard it right! Find out more detail here!
Disclaimer: This article is for educational purposes only and is not intended as investment advice. Qualified professionals should be consulted prior to making financial decisions.
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