6 simple strategies and practices for beginners in quantitative digital currency trading

Saying that "trading digital currencies can be profitable" can be seen as a modest understatement. Since many digital currencies have undergone several year-over-year improvements, they perform better in terms of ROI than many other asset classes.

However, picking and choosing the right trading opportunities and trading strategies can be difficult - especially when there are numerous indicators that often conflict and sometimes confuse technical analysis.

It is wise to learn some more basic trading strategies first before you start trading digital currencies and enter the world of overly complex metrics and advanced technical analysis (TA).

This article will discuss some of the simplest strategies for beginners to start trading cryptocurrencies to help them take the first step - using market sentiment, trading volume, price fluctuations, fundamental indicators, and chart patterns to identify trading opportunities.

Before you start trading in digital currencies, it's important to take a step back and carefully consider the amount you're willing to risk. Remember, the digital currency market is ruthless. While it does have the potential to bring huge gains, it can also lead to painful losses - so caution is advised.

Even with the best trading strategy, everyone will eventually lose. The key is to win more often or more often than not, and avoid some common mistakes that beginners often fall victim to.

Simple trading strategies for beginners

• The long-term holding strategy (HODL method)

• Trading strategies during the day

• The scalping trade strategy

• Swing trading strategies

• RSI trading strategies

• Avoid the scam of making large amounts of money in the form of a scam.

If you can't afford a little loss, sooner or later you'll have to take all the losses. - Ed Seykota

The long-term holding strategy (HODL method)

By far the simplest strategy on the above list is the long-hold strategy, also known as the simple hold or hoodling fallacy - a commonly used intentional misspelling in the digital currency community.

Holding is simple (and also the hardest) because it usually requires little knowledge to succeed - as almost all mainstream digital currencies experience significant long-term growth.

The rules are simple: buy a digital currency that you think is promising in the future and hold onto it for a few months or years. For example, you can use fiat currency to buy Bitcoin from a mainstream exchange and check its price again in five years.

Unlike other strategies, there is absolutely no need to check the price regularly and this should actually be avoided to prevent short-term price fluctuations from getting you into a situation where you sell prematurely. Instead, the price should only be checked after an extended period of time - if you have reached the return you are looking for, you can sell.

Holding is of course not the most effective strategy on this list, and there is no guarantee that the digital currency will continue to evolve into the future. In addition, the purchase price is not always optimal most of the time, as digital currencies often see sharp price fluctuations in a short period of time.

Thus, using the practice of using the cost averaging leverage (i.e. regularly planning to buy a fixed amount of a particular investment) can improve the long-term holding strategy to some extent. For example, if you buy 1 BTC for $7,000 and then buy another BTC for $6,400 a few days later, the average cost of each BTC paid is now $6,700.

Cost averaging is intended to protect you from a major price crash shortly after investing by averaging your purchase price. This can provide some protection against major market fluctuations and is particularly useful in a falling market.

In any case, when we are looking to invest in a coin, especially as a beginner, we recommend doing some basic fundamental analysis first. This means checking whether the reason for the coin's growth is indeed there - including checking its competitors, community interest, and team skills.

Tip: Sometimes ignorance is bliss when it comes to long-term holdings. Over a long period of time, most powerful cryptocurrencies experience significant price fluctuations. Avoid checking prices regularly, as this can lead you to exit a profitable market prematurely.

In the inventor's quantification platform, the above strategies are implemented by quantifying transactions, which is just as good, you do not even have to pay attention to the price itself, a well-written program will help you to automatically place orders and automatically trade under the trading logic you want.

The following are some of the classic investment strategy frameworks that readers can improve or expand upon according to their needs.

The daily pricing strategy

function main() {
   Log(exchange.GetAccount());

   
   //最近一次投资的日期
   var lastInvestDate = '';

   while (true) {
       //每次轮询，间隔时间为60秒
       Sleep(60 * 1000);

       //如果当前日期和最近一次投资日期相同，说明当天已经投过了，跳过
       var now = new Date();
       var date = now.toISOString().slice(0,10);
       if (date == lastInvestDate) {
           continue;
       }

       lastInvestDate = date;
       Log("日期: " + date);

    
       exchange.Buy(-1, singleInvestAmount);
   }
}

For more information, please see:https://www.fmz.com/strategy/151259

The above policy is in the inventor's quantification platform, please choose JavaScript language.

There's also a Python-based betting strategy:

def onTick():
	
	exchange_count = len(exchanges)
	for i in range(exchange_count):
		account = exchanges[i].GetAccount()

		marketName = exchanges[i].GetName()
		depth = exchanges[i].GetDepth()
		Log("Market ",marketName,exchanges[i].GetCurrency(),"Account Balance [",account["Balance"],"] Stocks[",account["Stocks"],"]")
		if account and depth and account["Balance"] > accountLimitMoney :
			bidPrice = depth["Asks"][0]["Price"] 
			if bidPrice <  maxBidPrice :
				amount = orderAmount
				if amount <= account["Balance"]:
					exchanges[i].Buy(amount)
				else:
					Log("Account Balance is less than bid Amount")
			else:
				Log("Bid Price >= maxBidPrice, not process")
		else:
			Log("Account Balance <= accountLimitMoney")
def main() :
	while 1:
		
		onTick()
		time.sleep(orderTimeInterval)

For more information, please see:https://www.fmz.com/strategy/54256

Trading strategies during the day

Day trading is essentially the opposite of long-term holding. It is defined as the act of buying and selling trading tokens within the same day, often even multiple times a day, to profit from small price fluctuations.

Due to the inherent great volatility of the price of digital currencies, day trading can generate huge profits. However, day trading certainly carries a greater risk than long-term holding, as it is easy to lose most of the profits if you try to trade a currency that is about to crash. Therefore, when day trading, it is important to use only the amount you can afford and set appropriate limits in the process to prevent any serious losses.

In the field of digital currencies, the price of any currency changes rapidly. Many digital currencies can experience normal price fluctuations of up to 5% in a day due to micro and macro changes in supply and demand. Remember to always stay calm and stick to your plan.

Because the market moves so fast, it is possible to make a good profit with only two to three trades a day. Also, be careful because day trading will consume a day faster than you think. Once your small volume starts to stabilize profitably, you can gradually increase your volume.

You can use a lot of useful technical indicators to find good entry points, including EMA, RSI and MACD - but you should note that there are no 100% effective indicators.

Hint: The valuation of most digital currencies is heavily influenced by market sentiment. In this industry, the old adage of buying rumors and selling news is often true.

The following is a simple two-line policy written using the inventor's quantification platform My language, which you can try to extend by noticing the My language option on the edit policy page.

DIRECTION:=0;         // 方向控制
                      // Direction control

VAR2:=(HIGH+LOW+CLOSE)/3;
VAR3^^MA(VAR2,PARAM1);
VAR4^^EMA(VAR3,PARAM2);
BOOL1:=CLOSE>REF(C,1) AND HIGH>REF(HIGH,1) AND CLOSE>OPEN;
BOOL2:=CLOSE<REF(C,1) AND LOW<REF(LOW,1) AND CLOSE<OPEN;

BUYPK:=BARPOS>PARAM1 AND CLOSE>VAR3 AND BOOL1 AND VAR3>VAR4;
SELLPK:=BARPOS>PARAM1 AND CLOSE<VAR3 AND BOOL2 AND VAR3<VAR4;

BUYJ:=CLOSE>BKPRICE AND BUYPK;
SELLJ:=CLOSE<SKPRICE AND SELLPK;
SELLS:=CLOSE<BKPRICE*(1-PARAM3*0.01);
BUYS:=CLOSE>SKPRICE*(1+PARAM3*0.01);

BKVOL=0 AND BUYPK AND DIRECTION>=0,BPK;
SKVOL=0 AND SELLPK AND DIRECTION<=0,SPK;
BKVOL>0 AND BUYJ,BK;
SKVOL>0 AND SELLJ,SK;
SELLS,SP;
BUYS,BP;
AUTOFILTER;

For more information, please see:https://www.fmz.com/strategy/129079

The scalping trade strategy

Looking for a fast-paced trading strategy that can quickly generate reasonable returns? A scalping trading strategy may be right for you. Although scalping is even faster than intraday trading, it is also more risky and can only be executed on currencies with a higher trading volume and circulation.

Peel trading is the use of very small fluctuations in the price of a currency over a short period of time, such as one minute, three minutes and five minutes. For digital currencies, peel trading is more efficient than traditional markets, not least because of the large volatility of its price.

Currently, almost all digital currencies with high trading volumes can be scalped. The only exceptions are stablecoins such as Tether (USDT) and True USD (True USD), which tend to have much lower volatility.

To make your job easier, we recommend that you only try the scalping strategy on the world's mainstream major digital currency exchanges or popular trading platforms, and only pay attention to the top 30 currencies by market capitalization - for example Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH) - as these tend to have the greatest volatility and spread.

In the market, small price changes are usually more frequent than large changes, usually between 0.5% and 1% in one minute, and also during low volatility. That is why, whether the market is up or down, you can make a profit every day by shedding your hair.

The scalping trading strategy is one of the most exciting trading methods; however, it is also the most risky one, as a huge loss can quickly wipe out all the small gains you have accumulated before. Therefore, a strict stop loss is necessary.

This method is certainly not for the timid and may require a long time of validation to be successful.

To increase your chances of success, you can implement this strategy using various volatility indicators. The simplest for beginners may be the Brainstorming Band, but you can also use the Average True Range (ATR) or the Volatility Index (VIX) to help you trade.

When the upper and lower Brin lines are farther apart, the fluctuations are highest, and when they are closer together, the fluctuations are lowest. The logic of this strategy is that you should look for the cut-off point in the furthest time period of the Brin line.

Tip: The scalping strategy is most effective with lower transaction fees, but this should not be at the expense of costs. Try to find a balance between volume and transaction fees, as if these are not taken into account, the fees may encroach on most of your profits.

The following is a framework for Brainstorm-based strategies written in JavaScript based on the inventor quantification platform, which you can fill with your own strategy logic.

For more information, please see:https://www.fmz.com/strategy/28128

This strategy was written by the inventor, the quantum programmer Little Little Dream, in conjunction with the inventor's built-in library of functions, the framework is very clear and rich, the various parameters and formulas that can be used directly are all well written, and with detailed code annotations, it is very easy for beginners to understand, you can even directly put your idea about the strategy logic of the Blink Lane directly into the formula in the code.

Swing trading strategies

Unlike intraday trading, trading is done within a day, with swing trading taking slightly longer, usually around a week or two. Swing trading aims to earn greater returns over a longer period of time than intraday trading and scalping, making it an ideal strategy for beginners.

As a swing trader, you will focus mainly on daily and weekly charts, while shorter time frames are less important to you. A good swing trader will use technical and fundamental analysis to determine whether a digital currency will experience significant price fluctuations or whether there is enough momentum to change the trend.

This is especially important for digital currencies, as enough negative or positive news can easily change the multi-space momentum of the currency. It is important to be aware of new developments that may affect the price behavior you choose in time when trading swing.

Indicators such as the RSI or MACD are very useful when using longer time frames. Their chart patterns can also be used for swing trading and can provide a lot of information about when prices are entering or exiting.

Swing trading is suitable for those with small to medium-sized capital investments. It does not require a large amount of investment, as it is common for digital currencies to experience growth of 10-20% in a trading cycle.

Unlike scalping (sometimes intraday trading), this strategy does not require a strict stop loss - although we still recommend using a relatively close stop loss to protect you from the effects of a major fall. As a beginner, we do not recommend swing trading in finance stock trading (securities trading) or leveraged trading, as this should be left to more advanced traders.

Tip: As a beginner, we do not recommend going against the trend. The digital currency market has been on the rise for the past year, so it may be more difficult to make a vacancy.

Below is the MACD Strategy Framework (My Language), an inventors' quantification platform that you can try and experience.

//MACD
MACDVALUE:=EMA(CLOSE,FASTLENGTH)-EMA(CLOSE,SLOWLENGTH);
AVGMACD:=EMA(MACDVALUE,MACDLENGTH);
MACDDIFF:MACDVALUE-AVGMACD;

//MA1、MA2
DMA1^^MA(C,L1);
DMA2^^MA(C,L2);
买入开仓价:=VALUEWHEN(BARSBK=1,O);
卖出开仓价:=VALUEWHEN(BARSSK=1,O);
BUYCONDITION:=MACDVALUE>0 && DMA1>DMA2 && MACDDIFF>0 && C>DMA1 && REF(C,1)>REF(DMA1,1);
SELLCONDITION:=MACDVALUE<0 && DMA1<DMA2 && MACDDIFF<0 && C<DMA1 && REF(C,1)<REF(DMA1,1);

//开仓条件
BKVOL=0 AND BUYCONDITION,BK;
SKVOL=0 AND SELLCONDITION,SK;

//离场条件
BKVOL>0 AND (REF(MACDVALUE,1)<0 OR REF(DMA1,1)<REF(DMA2,1)),SP;
SKVOL>0 AND (REF(MACDVALUE,1)>0 OR REF(DMA1,1)>REF(DMA2,1)),BP;

// 启动止损
SKVOL>0 AND HIGH>=卖出开仓价*(1+STOPLOSS*0.01),BP;
BKVOL>0 AND LOW<=买入开仓价*(1-STOPLOSS*0.01),SP;
AUTOFILTER;

For more information, please see:https://www.fmz.com/strategy/128134

RSI trading strategies

A trading strategy based on the Relative Strength and Weakness Index (RSI) is one of the most common beginner strategies and can be a powerful trading method under the right conditions.

The RSI is a simple dynamic indicator used to measure the speed and change in recent price movements to help identify overbought and oversold markets.

Most traders usually set the RSI to be in the 30-70 range. If the RSI falls below 30, it means the currency is oversold and the price may recover soon, while an RSI above 70 may indicate an overbought digital asset and the price may sell out.

To better understand the RSI, let's look at an example of a Bitcoin (BTC) transaction:

As you can see from the chart above, the RSI (purple line) over-extended at 12 points, briefly crossing the 30s several times before the price rebounded. A few hours later, the RSI touched 70, and BTC entered a downtrend.

At first glance, this seems to be an absolutely reliable strategy, but don't be fooled. RSI is not always accurate. Over-expansion of currencies for a long time, staying above or below 30 without a significant price response is relatively common.

It is therefore crucial to set your stop loss below your entry price, which will allow you to exit your position as the RSI continues to fall. If your stop loss is activated, you may need to closely monitor the RSI and other intensity indicators to determine if you should re-enter below a lower RSI in order to prepare for a peak shortly afterwards.

Tip: Longer time frames such as the 4-hour chart and the daily chart are best used to identify oversold or overbought opportunities using the RSI.

Here is an inventor's RSI-based statistical suite strategy for a quantification platform, which you can rewrite, add your own logic, or expand on the functionality and logic of this strategy.

For more information, please see:https://www.fmz.com/strategy/157366

This strategy was created by the inventors of the quantification platform user quant777 and its main functions are:

A statistical strategy based on the RSI indicator can also have a high probability of winning in a bear market. The strategy analyzes the RSI data of the market and short-sells once it captures the predefined K-line shape.

Supports trend tracking at any level (minutes K, hours K, days K, weeks K, etc.) Supports arbitrary trading pairs (ETH/BTC, BSV/BTC etc.) Support for any exchange Detailed strategy reports (including strategy status, transaction history, etc.) Supports up to 10 customization parameters

Avoid the scam of making large amounts of money in the form of a scam.

As you continue to study trading strategies, you are almost certain to come across something called the "big money" scam. These groups tend to offer extraordinary profits to the audience based on false or often misleading statements.

Typically, the sellers will attempt to organize a large purchase of a particular asset to raise its price, and then dump the asset to the so-called lobby investors who want to participate in the operation.

However, the fact is that the owners of the group are often one of the few who profit from this market manipulation - buying a large number of coins before announcing a large-scale withdrawal (sending a token token) and then dumping it on the participants who receive the token.

While it is technically possible to profit from these groups, this is highly unlikely and will almost certainly cost you money in the long run. Therefore, we recommend that you avoid these and any similar groups, including the so-called crying monkey groups.

Hint: In the traditional market, big-money transactions and assets are illegal and a form of market manipulation.

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