Trading 101: Top Trading Strategies for Stagnating/Ranging Markets

2021/06/24 04:07:46

Are you currently distancing yourself from the stagnating or adversely-ranging crypto market? Well, that's a natural reaction, particularly in these unpredictable times. The media brings our attention to the negatives, but an experienced investor sees a drawback in any market for what it truly is: a sizable opportunity.

It’s no secret that cryptocurrencies are volatile and high-risk investments. Attempting to trade crypto assets without a laid down practical plan can often lead your efforts down the drain. This is especially true for stagnant and ranging markets.

When forecasting the crypto market, we lean more towards outright bear and bull markets and neglect the possibility of stagnant and ranging markets. Clearly, such conditions aren't conducive to generate profit with the traditional trading strategies.

In essence, a stagnant market, as the name implies, means the value of an asset is neither improving nor shrinking; it is stagnant. While in a ranging market, the asset's price moves back and forth, from the lower to the higher and vice versa.

Although some analysts argue that there is no perfect trading strategy for these conditions, this article will highlight a few of the proven strategies to help you maximize your profits.

Ranging Markets

Support and Resistance Trading

Before even attempting to trade in a ranging market, you must mark the relevant support and resistance levels. While it’s not always necessary to trade support and resistance, marking them provides you a clearer view of how the market is performing or its form of ranging.

However, suppose you now decide to trade in the ranging crypto market using support and resistance; the concept is quite straightforward. Once you’ve marked the relevant levels, anytime the price reaches the resistance mark, you should consider selling, and whenever it reaches the support mark, you should buy.

Pros

You can predict what the price does around the resistance and support level.

Reasonable risk-reward ratio.

You can enhance your trading entry with reversal candlesticks featured in this strategy.

Cons

Price may break the level, and as such, not obey them.

Sometimes, you may experience false breaks or spikes.

False Breakouts Trading

Closely monitor the market for false breakouts, also called fakeouts. A false breakout is a practical approach to trading in a ranging crypto market. Usually, it features pin bar candlesticks, sticking off resistance and support levels. In a false breakout, instead of the price breaking into a trend, it keeps ranging. While fakeouts can trap other traders, such as breakout traders, crypto traders in the ranging market see it as a blessing, which presents the perfect opportunities to sell or buy assets.

When trading in the ranging market, try not to chase the price when there is a breakout. Usually, range breakouts can be relatively strong and may carry your profits with them. Suppose you caught on the unfavorable side of this strategy; the best thing to do is to cut the loss and waiting for another entry chance. Besides, it’s not always advisable to trade back towards the range following a breakout. However, you can use the retest of boundaries as exit opportunities.

Predicting a Breakout

Volume is an effective way to know when there's about to be a breakout. Suppose there's a lot of trading volume; this may sometimes denote that a breakout is about to occur. Breakout succeeds trading volumes.

Pros

It requires no extensive knowledge. It's just price action trading with relatively straightforward rules that even beginners can understand.

The risk-reward ratio is reasonable.

Cons

You can easily miss a false breakout signal.

False breakout signals can still be false.

Stagnant Markets

Invest in Tokenized Crypto Funds

Suppose you want to profit from any strategy mentioned earlier without needing to manage a portfolio; tokenized crypto funds might be the best option for you.

You’ve probably heard of traditional investment funds. In essence, they are a pool of investor capital, managed by professional investors. These specialists adopt a range of effective strategies, including the previously discussed ones, to help you earn returns on every capital within the fund. As an investor in the pool, you get benefits by gaining access to the skills of other professional traders, while the trader benefits from your capital. Essentially, it is a win-win situation.

Pros

Access to the skills of other traders;

Generate sizable ROI;

You can make a profit from any market condition.

Cons

The tokens can be relatively expensive.

Crypto Lending

This is one of the most exciting strategies for you; suppose you are the type that doesn't feel like you're the most excellent trader. It requires developing a cryptocurrency portfolio. However, you don't have to sit near a trading terminal, searching for patterns or risking cash. All you have to do is lend your assets to others and earn some interest, similar to a bank deposit.

Do you believe that making more money with your money is better than just holding? Then you can leverage this space.

Pros

You earn irrespective of market conditions;

No experience required;

No trading skills required.

Cons

You lose control of your funds. In essence, you are sending it to someone with the hope to get it back someday with profit. However, if you fall into the hands of scammers, you may not get your assets back.

Stake your assets

Staking is another straightforward strategy to earn in a stagnant market. As a user, you buy a crypto asset via an exchange or your preferred means. Then you lock it on any crypto wallet supporting staking. As the funds remain locked for some period of time, you receive rewards. It is just like a bank deposit, but decentralized and online.

Pros

Low entry and easy way to generate passive income.

Simple and easy to understand.

Cons

A drop in asset value may hurt your investment.

Relatively low profit.

Bottom Line

In this time, when the cloud of uncertainty and panic currently envelops the crypto trading space, experienced investors always come out on top. By accessing the right trading strategies with a cool head, it is possible to transform that ranging or stagnant market into a profit. Support and resistance trading, predicting a breakout, staking and crypto lending are all practical weapons your should have in your arsenal.

Tokenized crypto funds are viable options for you if you want to benefit from every market condition without doing any work. Simply purchase a token, and just this is enough to launch yourself into a new reality of awesome gains in the ecosystem, with guidance and protection from the whales. Summarily, with all these strategies, you can rest assured of success in your subsequent trading efforts.


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