Fiat-Crypto Trading Strategies – How Do You Use Them

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One very common question that crypto newbies frequently ask is whether it is possible to buy cryptocurrency using fiat money.

Well, yes you can certainly do that.

This is, in fact, what is commonly referred to as fiat crypto trading. So you can buy Bitcoin or Ethereum using US Dollars, or another conventional currency.

Now, when it comes to buying cryptocurrency, people tend to adopt different strategies. Not everybody involved in the crypto market is involved in trading; some consider crypto trading their passive income source. However, the majority of beginners start their journey by purchasing crypto with their fiat money or local currencies. Debit cards, credit cards, bank transfers, and bank deposits are some of the methods you can use to purchase digital assets faster.

As a beginner, once you have accumulated a sufficient amount of crypto, your next step should be to adopt a trading strategy that leverages efficiency and profitability.

In this article, we shall take a look at the most popular crypto trading strategies, their advantages, and how to use them effectively.

DCA trading strategy

DCA, short for dollar cost averaging trading strategy, is ideal for beginners. DAC is one of the most popular long-term fiat-crypto trading strategies where the users split their cryptocurrency buying into different time frames. Once you have deployed the DCA trading strategy, you are allowed to make cryptocurrency purchases every week, once every two weeks, or monthly.

Speed, convenience, and eliminating emotion from trading are the chief benefits experienced by the traders as the DCA strategy can be automated completely. Other added benefits include:

  • It helps in minimizing the impact of market volatility
  • Help you understand the best time to trade and reduce the risk of purchasing at the wrong time.
  • The users can enjoy other benefits from long-term appreciation.

Algo trading

As the crypto market is active 24X7, algo trading, otherwise called algorithmic trading, has gained major attention today, and the popularity is constantly growing among traders.

Automated trading helps in reducing human interference, and the same is with algorithmic trading. However, Algo trading is best suited for those who don’t have enough time to spare and still want to trade long term.

Once you set up all the trading instructions, the system will automatically execute traded whenever it senses a suitable opportunity. This means that trading will happen continuously, even when you are fast asleep. Human emotions can have a significant impact on trading. Trading with sentiment will make it difficult to make better and more informed trading decisions. Once you have adopted the Algo trading strategy, the emotion interference will be eliminated as the process is completely automated. This will also help you stick to the trading plan set during the initial period. The significant advantage of removing emotion from trading is that algo trading enforced trading disciple even when the market is facing high volatility. This way, panic selling, and other unwanted decisions will be completely wiped out. In addition, Algo trading makes the market analysis and trade execution faster and more accurate. This will prevent unintended human errors and makes it convenient for even beginners to use this strategy.

Here are the two essential trading strategies that work well for algo trading

  1. Moving averages

The moving averages are chart indicators popularly known as the golden cross or death cross trading strategy. This strategy uses two indicators representing the mean average of the crypto assets over a certain period of time.

  1. RSI lines

RSI, short for relative strength index, is another chart line measuring tool that calculates the total number of gains and losses in the past two weeks.

Conclusion

When you are new to the crypto market, it is better to start out with automated trading strategies until you get the hang of the trading techniques. Once you have a firm grip in the crypto trading world, you can use the other trading strategies to reap profits in a very concise period. The ones mentioned in this article are the most commonly used strategies for fiat-crypto trading, especially for beginners. You can choose from any of the above, learn about them and deploy them according to your preference.


The author Allan Smith is a professional finance writer specializing in personal finance. He has worked in the finance sector for a long time. He believes that everyone’s economic and life situation is isolated, and he keeps this fact in mind while providing personal finance advice in his blog Day to Day Finance. All the people seeking financial guidance are in different stages of life. Allan loves to explore every possible angle of personal finance so that anybody can get help.