7 Best Crypto Leverage Trading Strategies For 2022

Leverage trading is a great way to increase your profits. But we can also not deny the fact that it is highly risky, and you might lose all your funds if you don’t use the right trading strategy. So in case you are wondering how to get the most out of crypto trading, then I am here to share some of the best crypto leverage trading strategies with you.

So let’s get into the topic right away

1. Range Trading

Range trading is one of the popular trading strategies available out there. It is an active investing strategy that identifies a range at which the investor buys and sells over a short period of time.

For instance, if a cryptocurrency is trading at $45 and you believe that it will hit $50 over the next several weeks, you might want to buy the crypto and sell it when your target hits.

You need to follow the same strategy again and again until you believe that the crypto will no longer move up.

Also, in this case, you will need to pay attention to overbought and oversold zones. Overbought means that traders have purchased the currency more than they should, and the price will fall anytime soon.

Similarly, if crypto is undervalued, then it indicates an oversold zone. As a result, the price of the coin will go up.

To figure this out, you can use different indicators. However, one popular indicator for this would be the relative strength index or RSI.

2. Trend trading

Trend trading is another great strategy that relies on technical analysis. The main goal over here is to detect the direction of the market momentum and place trades accordingly.

Trend trading is a medium term strategy which is best suited for the trading styles of position traders or swing traders. The trader is required to open their position as long as the trend continues.

However, the price of the asset may go up or down. If you believe that the market is in an uptrend, then you take a long position if you think that the market is in a downtrend, then you short the crypto market.

To trade trends, you will need to use various indicators to identify the potential market move. However, there will be a lot of moves against your expectations or in the direction you want the market to move.

But these little moves shouldn’t really confuse you, and you should not take a trade in a hurry. Often these market moves turn out of fake signals, and you will end up making a loss.

3. Breakout trading

Breakout trading is another popular strategy for entering a given trend as early as possible. Then you wait for the price to break out of its range.

Breakout trading is a common practice that is used by day traders and swing traders. This is a short to medium term trading strategy.

As a trader, you will look for price points that indicate the start of a period of volatility of a change in the market sentiment. And by entering the market at a correct level, these breakout traders will be able to catch a trading opportunity and bank on profits.

Also, in breakout trading, it is pretty common to place a limited entry order around the levels of support of the resistance. So the breakout trade will get executed automatically.

Furthermore, most of the breakout trading strategies are based on volume levels. As the theory assumes that when volume levels start to increase, there will be a breakout from the support or resistance level.

4. Reversal trading

Reversal trading is also one of the best leverage trading strategies out there. This one is based on identifying when a current trade is going to change its direction. Once the reversal in the market happens, as a trader, your job is to understand the trend and take a position in the market.

Reversal trends can happen in both ways. As it indicates the market sentiment. A bullish reversal trend would indicate that the market has seen enough downtrend, and it’s time to move up and vice versa.

However, often the market simply retraces itself. As a result, it is important for you to understand that there is an actual trade reversal and not a fake indication. To figure this out, you can use various indicators and technical analysis.

5. Gap trading

Next, there is the gap trading. A gap usually happens when no trading activity takes place in the market. This is a common thing we get to see when a trading instrument’s price moves sharply high or low and nothing in between.

However, gap trading is suitable for the day trader that watches these price gaps from a previous day and seeks opportunities between this and the opening range of trading for the next day.

Also, an opening range that rises above the previous day’s close is a gap that usually signifies going long, while an opening range that is below the previous day’s close signifies an opportunity to go short.

6. Momentum

One popular trading strategy would be momentum trading. It is completely based on price trends and the direction they are taking. This happens when there is a heavy price movement, and the traders are selling and buying assets for a period of time. Once there is a price change, the momentum changes in a different direction.

7. Scalping

Lastly, you can try out scalping. In this trading strategy, you place very short term trades with small price movements.

Scalp traders usually have a disciplined exit strategy as a large loss can eliminate many other profits that they have accumulated over the period of time.

Scalp traders also operate in a different way than other traders in the market. They are known to take out their profits before the market has a chance to move.

The scalp traders usually operate on a risk/reward ratio of around 1/1. Also, it is common for scalp traders not to make a large profit with each trade. Instead, they focus on increasing their total number of smaller winning trades.

Final Words:

So those were some of the best crypto leverage trading strategies. However, before using any of the strategies, it is important that you understand how the market works and how to execute the strategies. Else be prepared to face huge losses.

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