crypto trading strategies

5 Effective Crypto Trading Strategies You Need To Know as a Filipino

Cryptocurrency trading in the Philippines has become a global phenomenon. The rise of digital currencies like Bitcoin, Ethereum, and others has given Filipinos a new avenue for investments and a novel way to generate income.

As of 2023, the revenue in the Philippine cryptocurrency market is projected to reach US$78.5 million, reflecting the robust growth of this sector. Additionally, it’s estimated that nearly 7 million Filipinos, representing 6.13% of the total population, now own cryptocurrency. 

However, navigating the crypto world is more a marathon than a sprint; it demands strategic foresight, comprehensive knowledge of market trends, and a measured approach. This guide will guide you through five effective strategies every Filipino stepping into crypto trading should know.

5 Effective Crypto Trading Strategies to Utilize

With the volatility of crypto trading, adopting strategic approaches is essential. The strategies differ based on individual risk tolerance, time commitment, and investment goals. Here are five key strategies that empower Filipinos to navigate crypto trading.

1. Dollar-Cost Averaging (DCA)

dollar cost averaging for crypto
Image Source: US Bank

The first strategy worth considering is Dollar-cost averaging, often abbreviated as DCA. This strategy entails purchasing a set amount of a specific cryptocurrency at regular intervals, irrespective of its price. 

This approach helps to spread out the investment over time, thereby reducing the impact of volatility and lowering the average purchase cost over time.

For instance, if you decide to invest PHP 5,000 in Bitcoin every month in your chosen cryptocurrency trading platform, irrespective of the market price, you would buy more Bitcoins when the price is low and fewer Bitcoins when the price is high. 

This strategy can be especially useful for beginners as it eliminates the need to constantly monitor the market and make decisions based on price fluctuations. Over time, this could lead to an average lower cost per bitcoin than a one-time lump sum investment.

DCA is a relatively safe and straightforward strategy, but it may take longer to see significant profits due to the gradual nature of your investment.

2. Swing Trading

swing trading chart
Image Source: Investopedia

Swing trading is another common strategy in the cryptocurrency market. It involves capitalizing on the market’s short-term price swings by buying low and selling high.

Traders using this strategy typically use technical analysis to identify the cryptocurrency’s price patterns and trends. They will then buy when they see a potential upward trend (or ‘bullish market’) and sell when they foresee a downward trend (or ‘bearish market’).

This strategy requires a good understanding of the market and the ability to accurately predict price movements based on various indicators and market news. However, swing trading can be a profitable strategy if done correctly.

Also, while swing trading can also be used in forex trading, when comparing cryptocurrency vs. forex, the volatility of the cryptocurrency market may make it more suitable for swing trading.

3. Scalping

cryptocurrency scalping chart

If you’re up for a fast-paced trading strategy, scalping might be for you. It involves making numerous daily trades to profit from small price fluctuations.

Scalpers, as traders using this strategy are called, aim to make many small profits, which can add up over time. However, scalping requires significant time and attention, as it involves constantly monitoring price movements and making quick decisions.

This strategy best suits those who can dedicate much time to trading and are comfortable with high-stress situations. It’s important to note that while the profits from each trade may be small, they can accumulate substantially over time.

4. Long-Term Holding (HODLing)

Unlike the previous strategies, which involve frequent trades, HODLing is a more passive approach. The term originated in the cryptocurrency community and stood for ‘Hold On for Dear Life.’ It refers to buying and holding cryptocurrencies for a long, regardless of any short-term market fluctuations.

This strategy is based on the belief that the value of cryptocurrencies will increase over the long term despite any temporary drops. For example, if you had bought Bitcoin in 2010 and held onto it, you would have made a huge profit by now, despite the numerous market fluctuations in between.

HODLing requires patience and a strong belief in the long-term potential of cryptocurrencies. It’s a good strategy for those who prefer a hands-off approach and are not bothered by short-term volatility.

5. Golden Cross/Death Cross Strategy

golden cross strategy chart
Image Source: Investopedia

The Golden Cross and Death Cross strategy is a powerful technical analysis approach used to identify market trends through the analysis of moving averages. 

A golden cross happens when a shorter-term moving average (typically 50-day) rises above a longer-term moving average (typically 200-day), signaling an upward trend. This phenomenon suggests a positive shift in momentum and serves as an indicator of potential market growth.

On the contrary, a death cross occurs when the moving average with a shorter timeframe crosses below the moving average with a longer timeframe, indicating a downward trend. Traders can use this strategy to make buying or selling decisions based on these crossovers and the market trends.

This strategy requires a good understanding of technical analysis and the ability to interpret charts. It can effectively identify potential market entry or exit points, but it’s important to note that it doesn’t guarantee success as markets are unpredictable.

Final Thoughts — Crypto Trading Strategies

Cryptocurrency trading can be an exciting and profitable venture for Filipinos. Cryptocurrency is also legal in the Philippines. However, it’s crucial to approach it with a well-thought-out strategy to minimize risks and maximize profits.

The five strategies discussed in this guide are just some of the many approaches traders can use, and it’s essential to research and understand each before implementing them. It’s also important to remember that no strategy is foolproof, and it takes time, practice, and patience to become a successful crypto trader. It’s also vital to invest in education by utilizing a reputable trading course to learn from experienced traders and gain valuable insights.

FAQs — Crypto Trading Strategies

Which strategy is best for beginners?

Holding or Dollar Cost Averaging is often recommended for beginners due to their simplicity and lower risk compared to other strategies. These strategies require less technical knowledge and time commitment, making them ideal for novice traders.

Are these strategies applicable only to Filipinos?

No, these strategies are universal and can be applied by any trader regardless of nationality. However, specific regulations and access to certain trading platforms may vary by country.

Can I use multiple strategies at once?

Yes, many traders employ a mix of different strategies depending on their risk tolerance and market conditions. For instance, you could hold some cryptocurrencies for the long term while actively trading others.

How do I choose the right strategy for me?

Choosing the right strategy depends on risk tolerance, investment goals, and the time you can dedicate to trading. Research and understand each strategy, consider your financial situation, and you might also want to consult with a financial advisor before making a decision.

Leave a Comment

Your email address will not be published. Required fields are marked *